Court Opinion

ID: 4157675
Source: CourtListenerOpinion
Date Created: 2017-04-04 15:02:40.80652+00
Date Added: 2024-06-11T14:35:08.867702
License: Public Domain

United States Court of Appeals
      for the Federal Circuit
                ______________________

    NOVARTIS AG, LTS LOHMANN THERAPIE-
               SYSTEME AG,
                  Appellants

                           v.

        NOVEN PHARMACEUTICALS INC.,
                    Appellee
             ______________________

                 2016-1678, 2016-1679
                ______________________

   Appeals from the United States Patent and Trade-
mark Office, Patent Trial and Appeal Board in Nos.
IPR2014-00549,     IPR2014-00550,     IPR2015-00265,
IPR2015-00268.
               ______________________

                 Decided: April 4, 2017
                ______________________

    CHARLOTTE JACOBSEN, Fitzpatrick, Cella, Harper &
Scinto, New York, NY, argued for appellants. Also repre-
sented by NICHOLAS N. KALLAS, CHRISTOPHER EARL LOH,
JARED LEVI STRINGHAM.

   STEVEN J. LEE, Andrews Kurth Kenyon LLP, New
York, NY, for appellee. Also represented by CHRISTOPHER
JUSTIN COULSON, KULSOOM ZEHRA HASAN, MICHAEL K.
LEVY.
2                          NOVARTIS AG   v. NOVEN PHARM. INC.

    FRANCES LYNCH, Office of the Solicitor, United States
Patent and Trademark Office, Alexandria, VA, argued for
intervenor Michelle K. Lee. Also represented by NATHAN
K. KELLEY, KAKOLI CAPRIHAN, SCOTT WEIDENFELLER.
                ______________________

    Before PROST, Chief Judge, WALLACH and STOLL, Circuit
                           Judges.
WALLACH, Circuit Judge.
    The instant appeals concern inter partes reviews of
U.S. Patent Nos. 6,316,023 (“the ’023 patent”) and
6,335,031 (“the ’031 patent”) (together, “the Patents-in-
Suit”). In two separate final written decisions, the U.S.
Patent and Trademark Office’s (“USPTO”) Patent Trial
and Appeal Board (“PTAB”) found that various claims of
the Patents-in-Suit (“the Asserted Claims”) 1 would have
been obvious over the prior art. See Noven Pharm., Inc. v.
Novartis AG (Noven I), No. IPR2014-00549, 2015 WL
5782080, at *23 (P.T.A.B. Sept. 28, 2015) (finding the
disputed claims of the ’023 patent unpatentable as obvi-
ous); Noven Pharm., Inc. v. Novartis AG (Noven II), No.
IPR2014-00550, 2015 WL 5782081, at *23 (P.T.A.B. Sept.
28, 2015) (finding the disputed claims of the ’031 patent
unpatentable as obvious). The PTAB maintained its
findings when asked to reconsider them. See Noven
Pharm., Inc. v. Novartis AG (Noven III), No. IPR2014-
00549, 2015 WL 9599194, at *8 (P.T.A.B. Nov. 30, 2015)
(denying request to reconsider Noven I); Noven Pharm.,
Inc. v. Novartis AG (Noven IV), No. IPR2014-00550, 2015
WL 9599195, at *8 (P.T.A.B. Nov. 30, 2015) (denying
request to reconsider Noven II). Appellants Novartis AG
and LTS Lohmann Therapie-Systeme AG (together,

      1 The Asserted Claims include claims 1–2, 4–5, and
7–8 of the ’023 patent and claims 1–3, 7, 15–16, and 18 of
the ’031 patent.
NOVARTIS AG   v. NOVEN PHARM. INC.                        3

“Novartis”) contest numerous aspects of the Final Written
Decisions, including the PTAB’s conclusion that prior
judicial opinions did not control its inquiry and the
PTAB’s factual findings in support of its obviousness
conclusion. We affirm.
                         DISCUSSION
  I. Subject Matter Jurisdiction and Standard of Review
    We possess subject matter jurisdiction pursuant to 28
U.S.C. § 1295(a)(4)(A) (2012). “We review the PTAB’s
factual findings for substantial evidence and its legal
conclusions de novo.” Redline Detection, LLC v. Star
Envirotech, Inc., 811 F.3d 435, 449 (Fed. Cir. 2015) (cita-
tion omitted). “Substantial evidence is something less
than the weight of the evidence but more than a mere
scintilla of evidence,” meaning that “[i]t is such relevant
evidence as a reasonable mind might accept as adequate
to support a conclusion.” In re NuVasive, Inc., 842 F.3d
1376, 1379–80 (Fed. Cir. 2016) (internal quotation marks
and citations omitted).
  II. The PTAB Properly Concluded that the Asserted
Claims of the Patents-in-Suit Would Have Been Obvious
    A patent claim is unpatentable when “the differences
between the subject matter sought to be patented and the
prior art are such that the subject matter as a whole
would have been obvious at the time the invention was
made to a person having ordinary skill in the art
[(‘PHOSITA’)] to which said subject matter pertains.” 35
U.S.C. § 103(a) (2006). 2 Obviousness “is a question of law

   2    Congress amended § 103 when it passed the
Leahy-Smith America Invents Act (“AIA”). Pub. L. No.
112-29, § 3(c), 125 Stat. 284, 287 (2011). However, be-
cause the applications that led to the Patents-in-Suit have
never contained (1) a claim having an effective filing date
4                          NOVARTIS AG   v. NOVEN PHARM. INC.

based on underlying findings of fact.” In re Gartside, 203
F.3d 1305, 1316 (Fed. Cir. 2000) (citation omitted). The
underlying factual findings include (1) “the scope and
content of the prior art,” (2) “differences between the prior
art and the claims at issue,” (3) “the level of ordinary skill
in the pertinent art,” and (4) the presence of secondary
considerations of nonobviousness such “as commercial
success, long felt but unsolved needs, failure of others,”
and unexpected results. Graham v. John Deere Co. of
Kan. City, 383 U.S. 1, 17 (1966); see United States v.
Adams, 383 U.S. 39, 50–52 (1966).
     The PTAB found that the Asserted Claims of the Pa-
tents-in-Suit would have been obvious over several differ-
ent combinations of prior art references. See Noven I,
2015 WL 5782080, at *23; Noven II, 2015 WL 5782081, at
*23. The PTAB found that claims 1–2, 4–5, and 7 of the
’023 patent would have been obvious over a combination
of two prior art references—United Kingdom Patent
Application GB 2,203,040 (“Enz”) (J.A. 588–610) and
Japanese Patent Application 59-184121 (“Sasaki”) (J.A.
634–37)—and that claim 8 would have been obvious over
a combination of Enz, Sasaki, and two other references. 3
See Noven I, 2015 WL 5782080, at *23. The PTAB also
found that claims 1–3, 7, 15–16, and 18 of the ’031 patent
would have been obvious over Enz and Sasaki. See Noven
II, 2015 WL 5782081, at *23.

on or after March 16, 2013 or (2) a reference under 35
U.S.C. §§ 120, 121, or 365(c) to any patent or application
that ever contained such a claim, the pre-AIA § 103
applies. See id. § 3(n)(1), 125 Stat. at 293.
    3   The PTAB found that Novartis did not separately
argue the patentability of claim 8 of the ’023 patent, see
Noven I, 2015 WL 5782080, at *14, and Novartis does not
contest that finding here, see generally Appellants’ Br.
NOVARTIS AG   v. NOVEN PHARM. INC.                        5

    Instead of raising arguments on the basis of a specific
claim, patent, or Final Written Decision, Novartis raises
broad legal and factual arguments with application to
both of the Final Written Decisions. See Appellants’ Br. 6
n.1 (stating that the appealed decisions “are substantively
nearly the same” and that it will refer only to Noven II
throughout its brief), 35–65 (presenting arguments); see
also Appellee’s Br. 1 n.1 (agreeing to follow Novartis’s
convention and cite only to Noven II). After providing a
brief description of the Patents-in-Suit, we address No-
vartis’s arguments in turn.
                   A. The Patents-in-Suit
    The Patents-in-Suit belong to the same patent family,
with the ’023 patent having issued from a continuation of
the application that led to the ’031 patent. 4 Entitled “TTS
Containing an Antioxidant,” the Patents-in-Suit generally
disclose a “[p]harmaceutical composition comprising” a
compound commonly known as rivastigmine “in free base
or acid addition salt form and an antioxidant.” ’023
patent, Abstract; ’031 patent, Abstract. The rivastigmine
in the Patents-in-Suit “is useful . . . for the treatment of
Alzheimer’s disease.” ’023 patent col. 1 ll. 15–17; ’031
patent col. 1. ll. 14–16.
    B. Prior Judicial Opinions Did Not Bind the PTAB
   Novartis alleges that a fundamental legal error per-
vades the PTAB’s Final Written Decisions: the PTAB

   4      “A continuing patent application is an application
filed subsequently to another application, while the prior
application is pending, disclosing all or a substantial part
of the subject-matter of the prior application and contain-
ing claims to subject-matter common to both applica-
tions . . . .” U.S. Water Servs., Inc. v. Novozymes A/S, 843
F.3d 1345, 1348 n.1 (Fed. Cir. 2016) (internal quotation
marks and citation omitted).
6                         NOVARTIS AG   v. NOVEN PHARM. INC.

unlawfully reached different conclusions than our court
and the U.S. District Court for the District of Delaware
(“Delaware District Court”), which addressed the “same”
arguments and the “same” evidence and found the Assert-
ed Claims nonobvious in two prior opinions. Appellants’
Br. 29; see id. at 35–39, 46–47, 52–56, 60–62 (discussing
Novartis Pharm. Corp. v. Watson Labs., Inc., 611 F. App’x
988 (Fed. Cir. 2015) and Novartis Pharm. Corp. v. Noven
Pharm., Inc. (Noven D. Del.), 125 F. Supp. 3d 474 (D. Del.
2015)). In support of that position, Novartis relies sub-
stantially on a single sentence from our decision in In re
Baxter International, Inc. See, e.g., id. at 30 (discussing
678 F.3d 1357, 1365 (Fed. Cir. 2012)).
    Novartis’s argument fails on factual and legal
grounds. As an initial matter, the record here differed
from that in the prior litigation, meaning that Novartis’s
argument rests on a faulty factual predicate. With re-
spect to Watson, the PTAB found that it “does not control
here because [Appellee] Noven [Pharmaceuticals Inc.
(‘Noven’)] has presented additional prior art” like Sasaki
“and declaratory evidence that was not before the [c]ourt”
in that case. 5 Noven II, 2015 WL 5782081, at *2. Similar-
ly, as to Noven D. Del., the PTAB found that it did not
control because the parties provided additional evidence
that was not before the Delaware District Court. 6 Id.; see

    5   Mylan Pharmaceuticals Inc. initially joined Noven
as an appellee here, but later withdrew.
    6   Noven also argues that the “record additionally
includes four confidential Novartis documents that were
not of the record in Noven [D. Del].” Appellee’s Br. 11; see
id. at 11–13 (discussing the contents of the confidential
documents). The PTAB did not identify these documents
as the basis for not following Noven D. Del., see Noven II,
2015 WL 5782081, at *2, and neither will we, see Burling-
ton Truck Lines, Inc. v. United States, 371 U.S. 156, 169
NOVARTIS AG   v. NOVEN PHARM. INC.                       7

id. at *5 (identifying as new evidence two declarations of
Dr. Agis Kydonieus, two declarations of Dr. Christian
Schöneich, and one declaration of Dr. Alexander M.
Klibanov). Novartis tacitly concedes that the record here
is different. See Appellants’ Reply 7 n.1 (“The USPTO
and Noven argue that the parties submitted expert decla-
rations and deposition testimony that was not before the
Noven [D. Del.] Court. But neither disputes that these
materials are substantively the same as the experts’
testimony before the Noven [D. Del.] Court.” (emphasis
added) (citations omitted)), 11 (“The [PTAB] sought to
explain its rejection of this [c]ourt’s Watson decision on
grounds that Noven presented art and evidence in the
[inter partes review] that was not before the Watson
[c]ourt[]. While differences in the record could justify a
different outcome overall, under Baxter, they do not sup-
port the [PTAB]’s contrary conclusions on the specific
rivastigmine art and arguments previously adjudicated in
Watson.” (emphasis added) (citation omitted)). It is
unsurprising that different records may lead to different
findings and conclusions.
    Nevertheless, even if the record were the same, No-
vartis’s argument would fail as a matter of law. The
PTAB determined that a “petitioner in an inter partes
review proves unpatentability by a preponderance of the
evidence (see 35 U.S.C. § 316(e)) rather than by clear and
convincing evidence[] as required in district court litiga-
tion,” meaning that the PTAB properly may reach a

(1962) (“A simple but fundamental rule of administrative
law is that a reviewing court, in dealing with a determi-
nation or judgment which an administrative agency alone
is authorized to make, must judge the propriety of such
action solely by the grounds invoked by the agency.”
(internal quotation marks, ellipses, brackets, and citation
omitted)).
8                          NOVARTIS AG   v. NOVEN PHARM. INC.

different conclusion based on the same evidence. Noven
II, 2015 WL 5782081, at *2 (italics omitted). That posi-
tion comports with recent Supreme Court precedent,
which held that
    [a] district court may find a patent claim to be val-
    id, 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 adjudi-
    cation of patent claims.          As we have ex-
    plained . . . , inter partes review imposes a
    different burden of proof on the challenger. These
    different evidentiary burdens mean that the pos-
    sibility of inconsistent results is inherent to Con-
    gress’[s] regulatory design.
Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2146
(2016) (citation omitted). Thus, the prior decisions in
Watson and Noven D. Del. did not bind the PTAB.
    Finally, Baxter does not necessitate a different conclu-
sion. There, we stated that the USPTO “ideally should
not arrive at a different conclusion” if it faces the same
evidence and argument as a district court. Baxter, 678
F.3d at 1365. Novartis treats “ideally” in that passage as
a mandate. See, e.g., Appellants’ Br. 30 (citing the rele-
vant passage from Baxter and arguing that it “is legal
error” for the PTAB to reach a different conclusion).
However, the context in which that passage appears
demonstrates that we used “ideally” to connote aspiration
and, in fact, recognized that Congress has provided a
separate review mechanism before the USPTO with its
own standards. See Baxter, 678 F.3d at 1365 (“However,
the fact is that Congress has provided for a reexamination
system that permits challenges to patents by third par-
ties, even those who have lost in prior judicial proceed-
NOVARTIS AG   v. NOVEN PHARM. INC.                       9

ings.”). We will not imbue Baxter with a meaning that the
decision itself does not support.
C. Substantial Evidence Supports the PTAB’s Underlying
                    Factual Findings
    “As part of the obviousness inquiry, we consider
whether a PHOSITA would have been motivated to
combine the prior art to achieve the claimed inven-
tion . . . .” In re Warsaw Orthopedic, Inc., 832 F.3d 1327,
1333 (Fed. Cir. 2016) (internal quotation marks, brackets,
and citation omitted). “The answer[] to th[at] question[]
require[s] producing factual findings that we review for
substantial evidence.” Id. (citations omitted). Novartis
contends that substantial evidence does not support
several of the PTAB’s factual findings regarding the
motivation to combine Enz and Sasaki. See Appellants’
Br. 39–45, 48–52, 56–60, 62–65. We disagree.
     Before we address Novartis’s motivation to combine
concerns, we first must understand what Enz and Sasaki
disclose. The PTAB found that Enz discloses a transder-
mal patch containing rivastigmine and an acrylic poly-
mer. See Noven II, 2015 WL 5782081, at *7–10; see also
J.A. 588–610. The PTAB also found Sasaki teaches that
(1) “the therapeutic effect of a” compound combined with
acrylic polymer “tends to be greatly reduced due to the
breakdown and dissipation of the drug when . . . stored for
a long time”; and (2) if an antioxidant is added to the
combination, “the drug will be stably present without
breaking down.” Noven II, 2015 WL 5782081, at *8
(internal quotation marks and citations omitted); see J.A.
634–37. Novartis does not challenge these findings. See
generally Appellants’ Br.
    Turning to its motivation to combine arguments, No-
vartis argues that the record contains no evidence that a
PHOSITA “would have been motivated to add an antioxi-
dant” to rivastigmine “absent evidence of oxidative degra-
dation.” Id. at 40. First, Novartis avers that the record
10                         NOVARTIS AG   v. NOVEN PHARM. INC.

shows a PHOSITA “would only have added an antioxidant
when required to address a known oxidative degradation
problem” detected during testing. Id. Novartis ignores
the PTAB’s findings as to the PHOSITA’s skill in the art.
The PTAB found that a PHOSITA would have, inter alia,
“had knowledge of organic chemistry and been able to
analyze and recognize certain characteristics of a com-
pound based on its chemical structure.” Noven II, 2015
WL 5782081, at *7. The PTAB further found that “the
ability to predict reactivity based on functional group
properties is a foundation of organic chemistry, and a
[PHOSITA] would have understood that the presence of
particular functional groups in a molecule has conse-
quences,” such as degradation. Id. (citations omitted).
Ample record evidence from scholarly sources supports
the PTAB’s findings. See Robert T. Morrison & Robert N.
Boyd, Organic Chemistry 167 (6th ed. 1992) (J.A. 2892)
(providing that “[t]he atom or group of atoms that defines
the structure of a particular family of organic compounds
and, at the same time, determines their properties is
called the functional group” (italics and bold omitted)); see
also J. Guillory & R. Poust, Chemical Kinetics and Drug
Stability, in Modern Pharmaceutics 181 (Gilbert S. Bank-
er & Christopher T. Rhodes eds., 3d ed. 1996) (J.A. 1846)
(providing that “it is possible to anticipate the potential
mode(s) of degradation that drug molecules will likely
undergo” through “the application of functional group
chemistry”). The expert testimony of Dr. Schöneich
corroborates the content of these sources. See J.A. 1350–
52. Thus, substantial evidence supports the PTAB’s
finding that a PHOSITA would not have waited to add an
antioxidant until discovering degradation during testing,
but would have assessed a compound’s structure in ad-
vance of testing to determine whether an antioxidant
should be added.
    Second, Novartis alleges that Sasaki “does not men-
tion rivastigmine” or otherwise disclose that rivastigmine
NOVARTIS AG   v. NOVEN PHARM. INC.                         11

is susceptible to oxidative degradation and that the PTAB
reached the opposite conclusion by failing to read that
reference as a whole. Appellants’ Br. 48. To support its
position, Novartis cites the testimony of its expert, Dr.
Klibanov, and contends that the PTAB “wrongly dis-
missed this evidence of the art . . . .” Id. at 49. Novartis’s
argument fails for two reasons. First, Novartis predicates
its argument on the belief that the prior art must express-
ly disclose a motivation to combine; however, a “motiva-
tion to combine the relevant prior art teachings does not
have to be found explicitly in the prior art.” In re Kahn,
441 F.3d 977, 987 (Fed. Cir. 2006) (citation omitted).
Second, the PTAB addressed Dr. Klibanov’s testimony
and found that it was not relevant because it did not
address transdermal devices with acrylic polymer. See
Noven II, 2015 WL 5782081, at *11. Novartis’s argument
asks us to reweigh the evidence and give greater weight
to Dr. Klibanov’s testimony than did the PTAB, which we
may not do. See, e.g., Warsaw, 832 F.3d at 1333 (explain-
ing that the court “may not reweigh . . . evidence on
appeal” (citation omitted)).
    Finally, Novartis contends that substantial evidence
does not support the PTAB’s finding that a PHOSITA
would have predicted that “rivastigmine has the potential
to oxidatively degrade based on its [chemical] structure.”
Appellants’ Br. 60 (capitalization omitted). In support of
its position, Novartis again cites the testimony of Dr.
Klibanov, who purportedly testified that the chemical
structure of a compound cannot alone inform whether
that compound is susceptible to oxidative degradation.
See id. at 64–65. Novartis’s final argument fails for the
same reasons as its first two arguments: it ignores the
PTAB’s findings as to the skill in the art possessed by a
PHOSITA, and substantial evidence supports the PTAB’s
finding that a PHOSITA would have predicted that ri-
vastigmine has the potential to oxidatively degrade based
on its chemical structure. See J.A. 1350–51, 1846, 2892.
12                        NOVARTIS AG   v. NOVEN PHARM. INC.

Novartis asks us to give greater weight to the testimony
of Dr. Klibanov than did the PTAB, which we may not do.
See Warsaw, 832 F.3d at 1333.
                       CONCLUSION
    The PTAB found the Asserted Claims unpatentable as
obvious for additional reasons not discussed above. See
Noven I, 2015 WL 5782080, at *23; Noven II, 2015 WL
5782081, at *23. However, because we affirm the PTAB’s
conclusions that the Asserted Claims would have been
unpatentable as obvious on the grounds discussed, we
need not address the alternative grounds of unpatentabil-
ity. See In re Gleave, 560 F.3d 1331, 1338 (Fed. Cir. 2009)
(declining to address alternative grounds of unpatentabil-
ity when the court upholds one such ground). Therefore,
for the foregoing reasons, the Final Written Decisions of
the U.S. Patent and Trademark Office’s Patent Trial and
Appeal Board are
                      AFFIRMED