On Jul. 01, 2020, Federal Circuit affirmed district court’s decision which found Enbrel® patents valid in a challenge by Sandoz.
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.
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-IgG1protein, 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.
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…”