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Novartis AG, LTS et al. v. Noven Pharmaceuticals, Inc. – Prior Judicial Opinions Don’t Bind the PTAB

After Novartis’ patents were found nonobvious by the Fed. Cir., affirming the Delaware District Court, defendant Noven filed for inter partes review (IPR) of U.S. Pat. Nos. 6316023 and 6335031, on rivastigmine and an antioxidant. The PTAB found the asserted claims obvious and Novartis appealed to the Fed. Cir., that affirmed (Novartis AG, LTS v. Noven Pharmaceuticals Inc., Appeal Nos. 2016-1678, 2016-1679 (Fed. Cir., April 4, 2017)).

Apart from the failed obviousness arguments, Novartis argued that the PTAB “unlawfully reached different conclusions than [the Fed. Cir.] and the U.S.  District Court for the District of Delaware (“Delaware District Court”), which addressed the ‘same’ argument and the ‘same’ evidence and found the Asserted Claims nonobvious.” The Fed. Cir. agreed with the PTAB that the present record differed from that in the prior litigation, even though they were “substantially the same” but went on to take the position that “even if the records were the same, Novartis’s argument would fail as a matter of law.”

The Fed. Cir. started by noting that the PTAB requires proof of invalidity using the “preponderance of the evidence” standard, rather than by clear and convincing evidence as required in D.C. litigation “meaning that the PTAB properly may reach a different conclusion based on the same evidence”. The Fed. Cir. quoted from Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131 (2016) that a “district court may find a patent claim to be valid, and the USPTO may later cancel that claim in its own review…the possibility of inconsistent results is inherent to Congress’[s] regulatory design.”

This led me to ponder other combinations of PTAB/D.C. “conflicts.” There are four of them, since in four of the combinations the PTAB and the D.C. come to the same conclusion which I will term, for example, PTAB (obv.)/D.C. (obv.) (we can assume that the PTAB decision and the D.C. decision were both affirmed by the Fed. Cir.)  So D.C. (patentable) and PTAB (obvious) is exemplified by this odd decision, wherein the D.C. found that the petitioner had failed to meet the (rigorous) clear and convincing standard but, somehow, had failed to meet the  (less rigorous) preponderance of the evidence standard. Apparently, this is OK with both the S. Ct. and the Fed. Cir. Are they both reaching the conclusion that patentees who are successful in litigation can have their patents “cancelled.” If the litigation has concluded, do they have to give any of the damages back to the defendants? That doesn’t seem fair, since the patent(s) in suit were presumptively valid when the D.C./Fed. Cir. reviewed them.

To look at some other pairs, how about D.C. (obvious)/PTAB (patentable). This makes sense considering the different burdens of proof—the PTO would have issued the patent but the defendant met the clear and convincing evidence standard– but I am not sure who would take this route.

Then there are the pairs in which the PTAB finds the patent valid but the D.C. finds it obvious and in which the PTAB finds the patent obvious but the district court finds the patent valid. In the first case plaintiff’s patent is affirmed by the PTAB – using a lower standard of proof – but the defendant later provides clear and convincing evidence that the patent is obvious. In other words, plaintiff can get a patent but can’t enforce it. In the second case, defendant-petitioner wins when the PTAB finds the patent invalid, but the D.C. finds that clear and convincing evidence of invalidity has not been provided. But can a D.C. suit be maintained if the patent has been “cancelled” by the PTAB?

In the both cases, estoppel under 35 USC 315(e)(2) kicks in. This section blocks petitioners  – I have labelled them as the defendants– who have obtained a final written opinion from asserting that the patent is invalid in the courts “on any ground that the petitioner raised or reasonably could have raised during [IPR].” If defendant petitions and loses (or wins) they are broadly estopped from using “new” 102/103 evidence in court. How “new” was discussed in Douglas Dynamics v. Meyer Products,(W.D. Wis. 2017) [2017-04-18 (68) Order. The Wisconsin court wrote:

“So until Shaw [817 F.3d 1293 (Fed. Cir.)(stating in dictum that no estoppel should apply to grounds that were petitioned, but not instituted] is limited or reconsidered, this court will not apply s. 315(e)(2) estoppel to [petitioned] non-instituted grounds, but it will apply s. 315(e)(2) estoppel to grounds not asserted in the IPR petition, so long as they are based on prior art that could have been found by a skilled searcher’s diligent search.”

Section 315(e)(2) doesn’t care if petitioner wins or loses at the PTAB. On the other hand, if the defendant petitions, wins and gets a final order from the PTAB, they will still have to defend their win in the courts, but can only argue 102/103 evidence that was used in the PTAB proceedings. However, at least in Wisconsin, the estoppel applies to any grounds (evidence) that a skilled searcher could turn up. How to prove a negative remains difficult, no matter what area of IP law demands it.


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