On Jul. 01, 2020, Federal Circuit affirmed district court’s
decision which found Enbrel® patents valid in a challenge by Sandoz.
Background:
Hoffmann-La Roche Inc. (“Roche”), its exclusive licensee Immunex
Corp., and exclusive sublicensee Amgen Manufacturing, Ltd., initiated patent
infringement suit pursuant to the Biologics Price Competition and Innovation
Act (“BPCIA”) act against Sandoz which filed Biologics License Application
(“aBLA”) to market Erelzi®, a biosimilar version of Immunex’s biologic drug,
Enbrel®. Enbrel® is covered by the patents-in-suit: U.S. Patent Nos. 8,063,182 and
8,163,522. The patents-in-suit are directed to the fusion protein etanercept
and methods of making the same. Etanercept is made by combining a portion of a
75 kilodalton (“kDa”) human tumor necrosis factor (hTNF) receptor protein with
a portion of immunoglobulin G1 (“IgG1”). During district court proceeding
Sandoz stipulated to infringement but asserted that patents-in-suit are
invalid. After a two-week bench trial, New Jersey court entered final judgment
for Immunex and Roche, holding that Sandoz failed to prove that the asserted
claims of the patents-in-suit were invalid. Sandoz appealed.
Court’s
analysis:
On appeal, Sandoz argued that the patents-in-suit are invalid for
(1) obviousness-type double patenting; (2) failure to meet the written
description requirement; and (3) obviousness.
(1)
obviousness-type double patenting (OTDP):
Sandoz asserted that the patents-in-suit are invalid for OTDP over
several patents filed by Immunex Corporation. Specifically, Sandoz argued that patents-in-suits
are owned by Roche but these patents were assigned to Immunex and thus there is
common-owenership which is required for OTDP. Thus all substantial rights in
the patents-in-suit transferred to Immunex pursuant to the “2004 Accord
& Satisfaction agreement”. Borrowing from 35 U.S.C. § 281 case law,
Sandoz argued that an agreement that conveys “all substantial rights” in a
patent is tantamount to an assignment of ownership. In Sandoz’s view, this “all
substantial rights” test—to date used only to determine who may sue for
infringement as a “patentee” pursuant to 35 U.S.C. § 281—should apply in the OTDP
context as well. Federal Circuit agreed with Sandoz that the “all substantial
rights” test can be informative in determining common ownership in the OTDP
context, but it concluded that the agreement at issue here did not transfer all
substantial rights from the assignee, Roche, to the exclusive licensee,
Immunex.
Court said that the main issue here is whether an assignment transferred
all substantial rights in the patents-in-suit to Immunex. For this court must
ascertain the intention of the parties to the license agreement and the
substance of what was granted by examining the ‘totality’ of the agreement. Review
of the Accord & Satisfaction agreement reveals the following: Section 3.5 of the agreement
gives Immunex the first right to rectify any suspected infringement, at Immunex’s
sole expense and under its sole control, by instituting suit or by sublicensing
the patents. Roche is required to cooperate in any Immunex-initiated
infringement suit, including by participating as a party only to the extent required
by the court in order to bring suit. But, under Section 3.6, Roche retains the secondary right to sue if Immunex
fails to rectify any infringement within 180 days after written request by
Roche. After this 180-day notice period, Roche may, at its sole expense and
under its sole control and direction, initiate suit. Immunex further has a
duty to cooperate in such a Roche-initiated suit. Notably, “the right to
rectify infringement under . . . Section 3.6 is solely with” Roche. As to
alienation rights, under Section 11.4, neither party may assign its rights to
third parties without the written consent of the other.
Sandoz argued that these provisions, taken together, effectuated a
transfer of all substantial rights from Roche to Immunex. Sandoz points to
Immunex’s “paid-up, irrevocable, exclusive license” and “first right to rectify
any alleged infringement” on the one hand, and Roche’s loss of control over licensing
and litigation activities on the other, to argue that Roche was “stripped of
any of the traditional attributes of ownership.” Sandoz also contended that
Immunex’s ability to drive the prosecution of the patents is another indication
that Roche transferred all substantial rights. Immunex responded that Roche is
still the effective patentee because it retained several key rights under the
Accord & Satisfaction. Immunex points to: (1) Roche’s secondary right to
sue; (2) Roche’s right to practice the patents for internal, non-clinical
research; (3) Immunex’s option to convert the license into an assignment by
paying an additional consideration of $50,000; and (4) Roche’s right to veto
the assignment of Immunex’s interest under the agreement to any unrelated
party. Federal Circuit agreed with Immunex and held that based on the totality
of the Accord & Satisfaction, Roche did not transfer all substantial rights
in the patents-in-suit to Immunex. As such, the Immunex Patents and the
patents-in-suit are not “commonly owned,” and obviousness-type double patenting
does not apply.
(2) Written Description:
On appeal, Sandoz argued that the district court erred in
concluding that the priority application for the patents-in-suit disclosed
possession of the claimed invention. Specifically, Sandoz argued that the
priority application did not include written description support for (1) the
full-length p75 DNA sequence; and
(2) the claimed p75-IgG1 fusion protein.
According to Sandoz, the ’013 Application described a fusion
protein based on the truncated/mutated p75
DNA sequence disclosed in Figure 4 of the patent, not the full-length p75
sequence used in etanercept. Sandoz contended that the fact that the
full-length p75 sequence was known in the prior art is of no moment because the
real issue is exactly which p75 sequence Roche had in its possession as of the
time of the filing of the priority application. In Sandoz’s view, the district court’s
finding of adequate written description impermissibly rests on information
outside the patent. Federal Circuit disagreed with Sandoz & said that it is
well-established that a patent specification need not re-describe known prior
art concepts. District court properly concluded that the inventors possessed
the full-length p75 DNA sequence. The specification identifies both p55 and p75
TNFRs. According to the district court, the Smith 1990 article, referenced in
the priority application, shows that a POSA would have known the entire p75
sequence at the time of the invention. The Smith 1990 article guided a POSA
that the “entire nucleotide sequence is available upon request and has been
deposited with GenBank, accession number M32315.” The court also credited the
testimony of Immunex’s expert, who opined that a POSA would have been
encouraged from the disclosure in the priority application to look to Smith,
and therefore, the full-length p75 protein. As to Sandoz’s arguments that later
amendments show that the Roche inventors did not have possession of the full
p75 sequence at the time of invention, the district court correctly noted that
actual reduction to practice is not required to show possession.
With respect to p75-IgG1
protein, Sandoz argued that the priority application did not adequately
demonstrate possession of the claimed p75-IgG1 fusion protein. Sandoz repeated
its arguments that the Figure 4 truncated sequence was “preferred,” and points
out that to arrive at the claimed invention, a POSA would have had to select
the “never-referenced” full Smith sequence. Sandoz also argued that the
specification disclosed a range of immunoglobulin classes, and even if the IgG1
and exon-encoded hinge were described as possible options, the priority
application provided no “blaze marks” that would have led a POSA to their
selection. Federal Circuit again disagreed with Sandoz & said that the
specification identified four preferred fusion proteins, including the claimed
p75-IgG1 fusion protein, and that Example 11 provided the steps required to
make these fusion proteins. Citing expert testimony, the court concluded that
Example 11 discloses this concept with p55, and a POSA would have followed that
example to create etanercept based on the claims and specification. The
district court’s findings are supported by the as-filed specification and are
not based on the language of the issued claims. Therefore, district court’s
written description analysis is not clearly erroneous.
(3) Obviousness:
Sandoz appealed the district court’s obviousness analysis, arguing
that (1) the district court’s motivation to combine analysis erroneously
focused on the inventors’ subjective motivation rather than the claims’
objective reach with respect to treatment part; and (2) the district court’s
analysis regarding objective indicia of non-obviousness was legally erroneous.
Federal Circuit said that although Sandoz criticizes the district court’s focus
on the therapeutic anti-inflammatory effect of TNFR binding proteins, that
focus was a result of the arguments and evidence presented at trial and in the
parties’ post-trial submissions. Therefore, district court’s analysis regarding
motivation to combine was not legally erroneous because the treatment of
illnesses that involve TNF is a stated objective of the claimed invention; the
arguments at trial were focused on therapeutic effects of the claimed invention
(and not on their benefits as diagnostic and research tools); and at least two
of the asserted claims are directed to pharmaceutical compositions. Next,
Sandoz argued that the district court incorrectly analyzed the required nexus between
the claims and the objective indicia of non-obviousness, such as clinical
success, long-felt need, and failure of others. Federal Circuit said that district
court correctly found that there was a sufficient nexus between the claimed
invention and the various objective indicia of non-obviousness. Nexus is
appropriately presumed in this case where the court concluded that the claims
are directed to the active ingredient in Enbrel® and its method of manufacture.
Thus, Federal Circuit did not see clear error in the district court’s findings
regarding the objective indicia of non-obviousness.
REYNA, Circuit
Judge, dissent:
“…The
majority determines that obviousness-type double-patenting does not apply here
because appellee Immunex is not a common owner of the patents-in-suit. The
majority’s common ownership determination hinges on its interpretation of the
2004 Accord & Satisfaction between Roche, the licensor of the
patents-in-suit, and Immunex, the exclusive licensee. Because I interpret the
2004 Accord & Satisfaction as an effective assignment of the patents-in-suit
to Immunex, I would hold that Immunex is a common owner for obviousness-type
double patenting purposes. I would also hold that Immunex’s patents-in-suit are
invalid for obviousness-type double patenting in view of Immunex’s previously
issued U.S. Patent No. 7,915,225 (“the ’225 patent”) under the one-way test…”