Court Opinion

ID: 9349217
Source: CourtListenerOpinion
Date Created: 2022-12-21 15:00:54.125331+00
Date Added: 2024-06-11T16:46:24.105709
License: Public Domain

Case: 22-1394    Document: 49    Page: 1   Filed: 12/21/2022

        NOTE: This disposition is nonprecedential.

   United States Court of Appeals
       for the Federal Circuit
                  ______________________

    ARIUS TWO, INC., BIODELIVERY SCIENCES
            INTERNATIONAL, INC.,
            Plaintiffs-Cross-Appellants

                            v.

 ALVOGEN PB RESEARCH & DEVELOPMENT LLC,
 ALVOGEN MALTA OPERATIONS LTD., ALVOGEN,
        INC., ALVOGEN GROUP, INC.,
              Defendants-Appellants
             ______________________

                   2022-1394, 2022-1449
                  ______________________

     Appeals from the United States District Court for the
 District of Delaware in No. 1:18-cv-01395-CFC-CJB, Chief
 Judge Colm F. Connolly.
                  ______________________

                Decided: December 21, 2022
                  ______________________

     HOWARD W. LEVINE, Dechert LLP, Washington, DC, ar-
 gued for plaintiffs-cross-appellants. Also represented by
 SHYAM SHANKER, New York, NY; JENNIFER SWAN, Palo
 Alto, CA.

    JEREMY LOWE, Leydig, Voit & Mayer, Ltd., Chicago, IL,
 argued for defendants-appellants. Also represented by
Case: 22-1394     Document: 49     Page: 2    Filed: 12/21/2022

 2                                       ARIUS TWO, INC. v.
                   ALVOGEN PB RESEARCH & DEVELOPMENT LLC

 DAVID AIRAN, GREGORY BAYS, KEELIN BIELSKI, JAMES
 SANNER, STEVEN H. SKLAR, ASHLEE SZELAG.
                ______________________

     Before CHEN, CLEVENGER, and CUNNINGHAM, Circuit
                         Judges.
 CHEN, Circuit Judge.
      This Hatch-Waxman case involves an appeal and cross-
 appeal of the district court’s decision finding some asserted
 claims of U.S. Pat. Nos. 8,147,866 (’866 patent), 9,655,843
 (’843 patent), and 9,901,539 (’539 patent) invalid for obvi-
 ousness while finding the remaining asserted claims not
 invalid. With respect to the asserted claims found not in-
 valid, defendants-appellants Alvogen PB Research & De-
 velopment LLC, Alvogen Malta Operations Ltd., Alvogen,
 Inc., and Alvogen Group, Inc. (collectively, Alvogen) have
 not shown the district court erred in making certain evi-
 dentiary and procedural findings against Alvogen. Plain-
 tiffs-cross-appellants Arius Two, Inc., and Biodelivery
 Sciences International, Inc. (collectively, BDSI) have
 shown that the district court applied an incorrect burden
 of proof when considering the long-felt need and unex-
 pected results of the asserted claims found invalid for obvi-
 ousness. We therefore affirm-in-part, vacate-in-part, and
 remand.
                        BACKGROUND
                               A
      The asserted claims recite methods and devices for ad-
 ministering buprenorphine, an opioid, using a bi-layer film
 placed inside a patient’s cheek. See, e.g., ’866 patent col. 3
 ll. 6–31. The bi-layer film includes a bioerodable mucoad-
 hesive (BEMA) layer containing buprenorphine and a
 backing layer located between the BEMA layer and the oral
 cavity. Id. at Fig. 4A–4C and col. 3 ll. 25–31. The district
 court found that after placement inside the cheek of a
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 ALVOGEN PB RESEARCH   & DEVELOPMENT LLC

 patient, the BEMA layer adheres to the cheek’s surface and
 is dissolved by saliva, allowing the buprenorphine to per-
 meate into the cheek’s tissue where it enters the blood. Bi-
 oDelivery Scis. Int’l, Inc. v. Alvogen PB Rsch. & Dev. LLC,
 576 F. Supp. 3d 184, 191-92 (D. Del. 2021) (Opinion). As
 the BEMA layer dissolves, the backing layer prevents the
 buprenorphine from entering the oral cavity and being in-
 gested. Id.
     BDSI sued Alvogen after Alvogen submitted an Abbre-
 viated New Drug Application to FDA for approval to mar-
 ket a generic version of BDSI’s Belbuca® drug product. Id.
 at 189. BDSI asserted the following claims against Al-
 vogen at trial:
       Claims 4 and 5 of the ’866 patent (the Pharmacoki-
        netic Claims), which claim pharmacokinetic proper-
        ties;
       Claims 9 and 20 of the ’539 patent (the pH of the
        Backing Layer Claims), which claim both a certain
        pH of the BEMA layer and a certain pH of the back-
        ing layer; and
       Claims 3 and 10 of the ’866 patent; and claims 8, 9,
        and 20 of the ’843 patent (the pH of the BEMA Layer
        Claims), which claim a certain pH of the BEMA
        layer.
 Id. at 189–90.
                              B
    After a bench trial, the district court found that the
 Pharmacokinetic Claims were not invalid, the pH of the
 Backing Layer Claims were not invalid, and the pH of the
 BEMA Layer Claims were invalid as obvious.
     As part of its obviousness findings, the district court
 determined that a skilled artisan would have known bu-
 prenorphine exhibits a high first-pass effect. Id. at 200.
 This means when buprenorphine is ingested, the liver
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 4                                       ARIUS TWO, INC. v.
                   ALVOGEN PB RESEARCH & DEVELOPMENT LLC

 breaks down the compound into less effective chemicals,
 thereby greatly decreasing the drug’s bioavailability be-
 cause less buprenorphine reaches the blood plasma. Id. at
 196. The district court also considered a prior art reference
 teaching an adhesive bi-layer film to administer a variety
 of drugs, including opioids, producing “excellent bioavaila-
 bility, fast onset, and sustained delivery.” Id. at 197–98,
 200 (citing J.A. 60929 at [0131]). The district court also
 found a skilled artisan would have considered both the sol-
 ubility and absorption rate of buprenorphine into the mu-
 cosal membrane in order to maximize bioavailability (as
 measured by the portion of the drug that reaches the blood
 plasma). Id. at 201; see also id. at 196. Specifically, the
 district court found that a skilled artisan would have rec-
 ognized buffering a buprenorphine solution to a pH range
 between about 4 and 6 would likely maximize bioavailabil-
 ity by providing good solubility and absorption. Id. at 201–
 02.
      The district court held the Pharmacokinetic Claims not
 invalid because Alvogen failed to show a skilled artisan
 would have been motivated to combine the prior art refer-
 ences and waived its inherency argument by failing to raise
 the argument in the pre-trial order. Id. at 202–03 n.4, 203.
 The district court also held the pH of the Backing Layer
 Claims not invalid because Alvogen failed to show the pH
 of the backing layer was inherently present in the prior art
 and because secondary considerations supported a finding
 of nonobviousness. Id. at 209. However, the district court
 held the pH of the BEMA Layer Claims invalid as obvious
 because a skilled artisan would have been motivated to
 combine certain prior art references with a reasonable ex-
 pectation of success to arrive at the claimed invention. Id.
 at 200–02, 206. With respect to the pH of the BEMA Layer
 Claims, the district court also stated BDSI had not: (1)
 “clearly and convincingly” shown evidence of a long-felt
 need, (2) shown the prior art taught away, or (3) shown un-
 expected results. Id. at 203–05.
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 ALVOGEN PB RESEARCH   & DEVELOPMENT LLC

    Alvogen timely appealed. We have jurisdiction under
 28 U.S.C. § 1295(a)(1).
                         DISCUSSION
     On appeal, Alvogen argues the district court clearly
 erred as to certain findings it made in holding the Pharma-
 cokinetic Claims and the pH of the Backing Layer Claims
 not invalid. On cross-appeal, BDSI argues that the district
 court applied the incorrect legal standard when consider-
 ing secondary considerations of nonobviousness regarding
 the pH of the BEMA Layer Claims.
     Obviousness is a mixed question of law and fact. We
 review the district court’s legal conclusions regarding obvi-
 ousness de novo and any factual findings for clear error.
 Merck Sharp & Dohme Corp. v. Hospira, Inc., 874 F.3d 724,
 728 (Fed. Cir. 2017). Whether a skilled artisan would be
 motivated to combine prior art references to find obvious-
 ness and whether secondary considerations support a find-
 ing of nonobviousness are factual issues. Novartis AG v.
 Torrent Pharms. Ltd., 853 F.3d 1316, 1327 (Fed. Cir. 2017).
 A factual finding is clearly erroneous only if “despite some
 supporting evidence, we are left with the definite and firm
 conviction that a mistake has been made.” Merck, 874 F.3d
 at 728.
                 I. Pharmacokinetic Claims
     Alvogen argues the district court clearly erred in find-
 ing that a skilled artisan would not have been motivated to
 combine three references 1 with a reasonable expectation of

     1  R.E.S. Bullingham, et al., Sublingual Buprenor-
 phine Used Postoperatively: Clinical Observation and Pre-
 liminary Pharmacokinetic Analysis, 12 British J. Clinical
 Pharmacology 117 (1981) (Bullingham I); U.S. Pat. App.
 Pub. No. 2005/0147658 (Tapolsky); and European Pat.
 App. Pub. No. 0069600 (Todd).
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 6                                        ARIUS TWO, INC. v.
                    ALVOGEN PB RESEARCH & DEVELOPMENT LLC

 success to arrive at the Pharmacokinetic Claims. See, e.g.,
 Appellants’ Br. 37. Alvogen concedes, however, that it did
 not clearly articulate in its post-trial briefing that a skilled
 artisan would have been motivated to combine the refer-
 ences to arrive at the Pharmacokinetic Claims. Oral Arg.
 39:51–41:18. Based on the record before us, we do not dis-
 cern any clear error made by the district court in finding
 no motivation to combine the asserted prior art references
 to arrive at the Pharmacokinetic Claims. See Stryker Corp.
 v. Intermedics Orthopedics, Inc., 96 F.3d 1409, 1415 (Fed.
 Cir. 1996).
     Alvogen also argues the Pharmacokinetic Claims
 would have been obvious because they simply state an in-
 herent property of the otherwise obvious BEMA Layer
 Claims. Appellants’ Br. 45–46. The district court found
 Alvogen waived this argument by failing to raise it before
 trial. Opinion at 202–03 n.4; Order Granting Motion to
 Strike, BioDelivery Scis. Int’l, Inc. v. Alvogen PB Rsch. &
 Dev. LLC, No. 1:18-cv-01395, ECF No. 281 (D. Del. Sept.
 21, 2021) (granting BDSI’s motion to strike certain inher-
 ency arguments from Alvogen’s post-trial briefing). Al-
 vogen argues here, as it did at the district court, that its
 citation of cases generally discussing inherency in its pre-
 trial order avoids waiver. Appellants’ Reply Br. 49–50.
 However, Alvogen has not shown where in the pre-trial or-
 der it actually raises any argument with respect to the in-
 herency of the Pharmacokinetic Claims. Accordingly, the
 district court did not err in finding Alvogen’s inherency ar-
 gument waived. 2

     2    Contrary to Alvogen’s argument that the district
 court’s footnote 4 suggests Alvogen did not waive all possi-
 ble inherency arguments (Appellants’ Reply Br. 49), foot-
 note 4, when read in light of the district court’s order
 granting BDSI’s motion to strike Alvogen’s inherency
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 ARIUS TWO, INC. v.                                        7
 ALVOGEN PB RESEARCH   & DEVELOPMENT LLC

    We affirm the district court’s conclusion that the Phar-
 macokinetic Claims are not invalid.
            II. pH of the Backing Layer Claims
     Alvogen argues that the district court erred in finding
 the pH of the Backing Layer Claims not invalid because
 Alvogen showed that the claimed backing layer pH was in-
 herent in the prior art. See, e.g., Appellants’ Br. 54. Al-
 vogen explains its expert testified, and BDSI did not
 dispute, that the pH of the backing layer of Belbuca® was
 between 4.5 and 4.7. Alvogen’s expert further testified that
 Belbuca® and the prior art formulation have “identical in-
 gredients present in materially identical amounts,” and be-
 cause the formulations are nearly the same, one would
 expect both formulations to have the same pH, i.e., a pH
 between 4.5 and 4.7. Appellants’ Br. 58–60. Thus, Alvogen
 argues the prior art inherently includes the claimed pH
 range of the backing layer in the ’539 patent (between
 about 4.0 and about 4.8). Id.
     In response, BDSI highlights an inventor declaration
 submitted during the prosecution of the ’539 patent recit-
 ing results showing—on average—the pH of the backing
 layer of the prior art was 5.61, which is outside the ’539
 patent’s claimed range. Cross-Appellants’ Br. 52 (citing
 J.A. 69125).
     As a preliminary matter, Alvogen contends the district
 court abused its discretion by considering the inventor dec-
 laration as evidence because it is hearsay. Appellants’ Re-
 ply Br. 2–4, 61. BDSI responds that the district court
 properly considered the declaration because Alvogen en-
 tered it into evidence as an admission of a party opponent
 without limiting the purpose for which the declaration
 could be used and questioned its own expert regarding the

 argument, is properly understood as finding Alvogen’s in-
 herency argument waived.
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 8                                       ARIUS TWO, INC. v.
                   ALVOGEN PB RESEARCH & DEVELOPMENT LLC

 declaration’s content. Cross-Appellants’ Br. 53–54. Be-
 cause the inventor declaration was introduced by Alvogen
 without any limitation on its use, we find that the district
 court did not err by considering the inventor declaration for
 all that it discloses. See Ohler v. United States, 529 U.S.
 753, 755 (2000) (explaining that “a party introducing evi-
 dence cannot complain on appeal that the evidence was er-
 roneously admitted”).
     Regarding the district court’s finding that Alvogen did
 not show the pH of the backing layer to be inherent in the
 prior art, we find no clear error in the district court’s rea-
 soning. The district court weighed Alvogen’s expert’s tes-
 timony with BDSI’s inventor declaration and found that
 “the incompatible representations in the record” indicated
 Alvogen had not proven with clear and convincing evidence
 that the prior art taught a backing layer with the claimed
 pH. Opinion, 576 F. Supp. 3d at 208–09. The district court
 also found the only evidence offered by Alvogen to rebut the
 credibility of the inventor declaration was testimony from
 Alvogen’s expert stating the pH measured in the declara-
 tion “didn’t make sense.” Id. at 209 n.7. The district court
 also found changing the backing layer pH unexpectedly af-
 fected the bioavailability of buprenorphine—a lower back-
 ing layer pH resulted in increased bioavailability. Id. at
 209. We find no clear error in the district court’s findings
 and therefore affirm the district court’s decision holding
 the pH of the Backing Layer Claims not invalid.
             III. pH of the BEMA Layer Claims
     BDSI, on cross-appeal, argues the district court
 wrongly applied the clear and convincing standard when
 analyzing certain secondary considerations of nonobvious-
 ness—i.e., the long-felt need and unexpected results of the
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 ARIUS TWO, INC. v.                                        9
 ALVOGEN PB RESEARCH   & DEVELOPMENT LLC

 pH of the BEMA Layer Claims. 3 Alvogen contends the dis-
 trict court applied the correct standard and that any lan-
 guage in the Opinion indicating otherwise was
 inadvertent.
                              A
     The Opinion correctly states that the patent challenger
 must prove obviousness by clear and convincing evidence,
 id. at 194, and that a fact finder must consider secondary
 considerations of nonobviousness before reaching an obvi-
 ousness conclusion, id. at 193–94 (citing In re Cycloben-
 zaprine Hydrochloride Extended-Release Capsule Pat.
 Litig., 676 F.3d 1063, 1079 (Fed. Cir. 2012)). Secondary
 considerations must be established by a preponderance of
 the evidence. See Apple Inc. v. Samsung Elecs. Co., 839
 F.3d 1034, 1053 (Fed. Cir. 2016) (en banc).
      The Opinion does not explicitly identify a burden of
 proof by which the patent owner must prove secondary con-
 siderations. The Opinion did find, however, that BDSI
 failed “to show clearly and convincingly that Belbuca® an-
 swered a long felt, but unresolved need in medicine.” Opin-
 ion, 576 F. Supp. 3d at 203 (emphasis added). BDSI argues
 this statement shows the district court applied the wrong

    3    BDSI also argues on appeal that the district court
 erred in its motivation to combine with a reasonable expec-
 tation of success analysis because even if a skilled artisan
 would have expected some increase in bioavailability after
 decreasing the pH of the BEMA layer, a skilled artisan
 would not have expected an increase to the degree ob-
 tained. Cross-Appellants’ Br. 69. We do not find this ar-
 gument in BDSI’s post-trial briefing and therefore do not
 consider it on appeal. See MeadWestVaco Corp. v. Rexam
 Beauty & Closures, Inc., 731 F.3d 1258, 1271 (Fed. Cir.
 2013) (explaining that a theory not ultimately raised at a
 bench trial is waived).
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                    ALVOGEN PB RESEARCH & DEVELOPMENT LLC

 standard in assessing long-felt need. Cross-Appellants’ Br.
 65–66. Alvogen argues that the district court’s word choice
 was inadvertent error, and regardless of the exact lan-
 guage used, the district court’s extensive analysis of the ev-
 idence presented and recognition that secondary
 considerations must be considered show the district court
 applied the correct standard. Appellants’ Reply Br. 21.
      Based on our review, the fairest reading of the Opinion
 is that it incorrectly required BDSI to prove long-felt need
 by clear and convincing evidence. We cannot say this is
 harmless error. While it is true the district court never ex-
 plicitly stated it applied the heightened “clear and convinc-
 ing” standard to BDSI’s evidence of secondary
 considerations, the district court did not state the proper
 standard either. Nor could we identify the correct standard
 being clearly stated for the district court in the parties’ pre-
 trial order. Furthermore, the Opinion’s analysis used the
 language of the heightened “clear[] and convincing[]”
 standard, and Alvogen has not persuasively shown that
 this was inadvertent. Although the district court thor-
 oughly analyzed the evidence presented at trial, the dis-
 trict court’s thorough analysis and recognition that
 secondary considerations must be considered do not indi-
 cate that it would have reached the same conclusion re-
 garding BDSI’s long-felt need evidence based on a more
 lenient standard. Therefore, we find the district court ap-
 plied an incorrect standard in considering the long-felt
 need of the pH of the BEMA Layer Claims.
                                B
     BDSI also argues the district court applied the same
 incorrect heightened evidentiary standard to its analysis of
 unexpected results, and under the correct standard, the
 district court should have found evidence of unexpected re-
 sults. Cross-Appellants’ Br. 66–69. Instead of arguing that
 the district court did not apply a heightened standard, Al-
 vogen responds to BDSI’s substantive arguments
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 ALVOGEN PB RESEARCH    & DEVELOPMENT LLC

 regarding the district court’s findings of unexpected re-
 sults. Appellants’ Reply Br. 25–30. Alvogen’s arguments
 here are no more persuasive than its arguments with re-
 spect to long-felt need. For the same reasons as discussed
 above, we find the district court did not apply the proper
 standard in considering the unexpected results of the in-
 ventions covered by the pH of the BEMA Layer Claims.
                             ****
     Because the district court should have considered the
 secondary considerations evidence presented to it under
 the preponderance of the evidence standard, we vacate the
 district court’s judgment regarding obviousness of the pH
 of the BEMA Layer Claims and remand. 4
                         CONCLUSION
     We have considered both Alvogen and BDSI’s remain-
 ing arguments and do not find them persuasive. For the
 foregoing reasons:
        We affirm the district court’s finding that the Phar-
         macokinetic Claims (claims 4 and 5 of the ’866 pa-
         tent) and the pH of the Backing Layer Claims
         (claims 9 and 20 of the ’539 patent) are not invalid;
         and
        We vacate the district court’s judgment that the pH
         of the BEMA Layer Claims (claims 3 and 10 of the
         ’866 patent; and claims 8, 9, and 20 of the ’843 Pa-
         tent) are invalid as obvious and remand for the sole

     4   Our decision to remand is not an invitation for ei-
 ther party to introduce additional evidence into the record.
 We only ask the district court to re-evaluate the evidence
 already presented at trial to determine whether the evi-
 dence—although not sufficient to meet the clear and con-
 vincing standard—is sufficient to meet the preponderance
 of the evidence standard.
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 12                                     ARIUS TWO, INC. v.
                  ALVOGEN PB RESEARCH & DEVELOPMENT LLC

        purpose of reconsidering the evidence already pre-
        sented at trial regarding long-felt need and unex-
        pected results under the correct evidentiary
        standard.
      AFFIRMED IN PART, VACATED IN PART, AND
                    REMANDED
                          COSTS
 No costs.