December 4, 2014

District Court Obviousness Determination Not Up to Par®

By Gregory S. DeLassus, Associate

Inherent obviousness over a combination of references

Par Pharma is the exclusive licensee of US 7,101,576, which claims a method of treating wasting diseases by administering megestrol acetate. This patent is listed in the Orange Book as covering Par Pharma’s MEGACE ES. When TWi Pharma filed an abbreviated new drug application to manufacture a generic version of MEGACE ES, Par sued for infringement of ’576, asserting several claims including Claim 1.

The limitations of Claim 1 relevant to the present case are: (1) that the megestrol acetate must be administered in an oral suspension with a concentration of about 40 to about 800 mg per 5 mL; (2) that the megestrol acetate particles in the suspension have an effective average particle size of about 2 µm with at least one surface stabilizer on the surface; and (3) that there be no substantial difference in Cmax according to whether the drug is administered to a patient in the fasting or fed state. TWi stipulated to infringement, but defended on the grounds that the asserted claims were invalid under §§ 101, 103, and 112 (for non-enablement). After a five-day bench trial, the district court held that all asserted claims were obvious, and explicitly declined to rule on the §101 and §112 issues. Par appealed.

The district court found that all structural limitations (#s 1 & 2 in the list above) of the asserted claims were known in the art (Par Pharma. v. TWi Pharma., No. CCB-11-2466, 2014 U.S. Dist. LEXIS 21704, at *42 (D. Md. Feb. 21, 2014)). The district court did not find all of these individual limitations in a single reference. Rather, the court relied on two different categories of prior art: references (such as the FDA-approved drug labels for 400 & 800 mg MEGACE OS, a predecessor to Par’s MEGACE ES) that teach the use of megestrol acetate at 400 or 800 mg daily dosage for treatment of wasting diseases such as AIDS and anorexia (Id. at *16); and references (such as US 5,399,363) that teach nanoparticle milling for poorly water soluble drugs (Id. at 34). The district court also found that there was a motivation to combine these various structural elements (Id. at *49), and that a person of ordinary skill at the time of invention could have reasonably expected success from such a combination (Id. at 62). Significantly, the district court explicitly found that the Claim 1 functional limitation (#3 in the list above) was not known in the art at the time of invention (Id. at *31). However, the district court considered that the functional limitation is the inherent result of the structural limitations (Id. at *45), and that therefore item #3 in the list above “adds nothing of patentable consequence.” Id. at *47.

On appeal, the Federal Circuit vacated the district court’s ruling and remanded for further proceedings. Judge O’Malley—writing for a unanimous panel that also included Judges Wallach and Hughes—noted that “the concept of inherency must be limited when applied to obviousness, and is present only when the limitation at issue is the ‘natural result’ of the combination of prior art elements.” Slip op. at 15, citing In re Oelrich, 666 F.2d 578, 581 (C.C.P.A. 1981). The Federal Circuit did not believe that the district court had applied this “high standard” when assessing obviousness. Slip op. at 16. Rather, the Federal Circuit concluded that “per the district court, the reduced particle size would, ipso facto, lead to a reduced food effect.” Id. This was not enough because “[w]hile it may be true that a reduction in particle size naturally results in some improvement in food effect, the district court failed to conclude that the reduction in particle size naturally results in ‘no substantial difference’ in the food effect.” Id.

The Federal Circuit remanded for additional findings about the degree of food effect improvement that would have resulted from the combination of prior art particle sizes and dosage regimes. The panel was careful to note that it agreed with every other aspect of the district court’s ruling, including the district court’s analysis of motivation to combine, expectation of success, unexpected results, commercial success, copying by competitors, long-felt need, and supposed teaching away. Slip op. at 17–25. The panel also hinted that the district court might do well to “consider TWi’s other grounds for invalidity, such as enablement…” Slip op. at 25.

This is obviously a victory for the patentee, but it is a bit surprising that the decision was so close. Although there are many C.C.P.A. and Federal Circuit cases affirming obviousness by inherency over a single reference, neither the C.C.P.A. nor the Federal Circuit have ever (to the best of the author’s knowledge) affirmed obviousness-by-inherency over a combination of references. One might have thought that this distinction alone would have settled the present case, without the need for remand and further fact-finding. “[T]he inherency of an advantage and its obviousness are entirely different questions… . Obviousness cannot be predicated on what is unknown.” In re Shetty, 566 F.2d 81, 86 (C.C.P.A. 1977) (quoted in slip op. at 14–15). Therefore, the district court’s finding that the megestrol food effect was not known at the time of invention should settle the matter, without need for further remand.

Instead, it is still possible that the district court could conclude on remand that the claimed Cmax values are the natural result of the combination of milling the megestrol particles in MEGACE OS 400 mg according to the ’363 milling techniques. In other words, it appears that the test enunciated in this case is that a functional limitation can still be inherent in a combination of prior art references so long as “the limitation at issue [is necessarily] present or the natural result of the combination of elements explicitly disclosed by the prior art.” Slip op. at 16.

It is hard to know what to make of this. It is trivially true that if one mills MEGACE OS particles down to the same size as the MEGACE ES particles, one will inherently achieve the same results as achieved with MEGACE ES, because one will have made MEGACE ES. However, as Judge Rich elsewhere observed “[o]f course [the result] is inherent, otherwise appellant’s invention would not work… . But… there is not the slightest suggestion that anyone knew of the existence of this inherent superiority until [the patentee] disclosed it. After all, Bell’s telephone was ‘inherently’ capable of transmitting speech…” (emphasis in original). In re Adams, 356 F.2d 998, 1002–03 (C.C.P.A. 1966).

Indeed, the C.C.P.A. explicitly repudiated “flow naturally from” or “natural result of” as the test for obviousness by inherency. See, In re Henderson, 348 F.2d 550, 553 (C.C.P.A. 1965). Rather, the test for obviousness by inherency over a combination of references has always been whether a person of ordinary skill at the time of invention would have expected the combination of asserted references to result in the claimed property. In other words, the claimed result must be predictable from the prior art. In re Naylor, 369 F.2d 765, 768 (C.C.P.A. 1967). Moreover, it is not enough that the prior art taught another advantage from the proposed combination, if it did not teach one to expect the claimed advantage. Henderson, 348 F.2d at 555.

In other words, the holding of this case is—so far—consistent with the holdings of other cases governing obviousness by inherency over a combination of references. However, the rule by which the Par court reaches its holding is not entirely consistent with prior precedent. Hopefully, if the district court reiterates obviousness on remand, Par will seek to clarify the law when the case comes back up to the Federal Circuit.