‘Deviations from Commensensical Path' Likely Lead to Nonobvious Patent Innovations

Bloomberg BNA’s Patent Trademark & Copyright Law Daily™is the IP industry’s premier news service, offering objective, timely,and reliable daily news coverage and commentary from leading IP law...

A patent underlying the Fortical nasal spray for postmenopausal osteoporosis was not obvious even in light of the patentee's prior patent and the Miacalcin oral formulation with the same active ingredient, the U.S. Court of Appeals for the Federal Circuit ruled Aug. 25 (Unigene Laboratories Inc. v. Apotex Inc., Fed. Cir., No. 10-1006, 8/25/11).

The court, in affirming a district court's nonobviousness finding, made at least two additions to its jurisprudence since KSR. First, the court repeated the KSR proposition that a design need or market pressure creates a path to obvious solutions of ordinary skill and common sense. The corollary, however, the court said, is that “deviations from that path are likely products of innovation.”

Second, the court updated its view in prior cases in the chemical arts that begin by identifying a “lead compound.” The court said that, for pharmaceutical formulations, functional and pharmaceutical properties may be more relevant than chemical structure, and a “reference composition” is thus a more accurate term for the starting point.

Different Formulations of Miacalcin and Fortical

William Stern was granted a patent (5,912,014) in 1999 on solid “oral salmon calcitonin pharmaceutical products,” and then another patent (6,440,392) in 2002 on nasal spray formulations with the same active ingredient. He assigned the patents to Unigene Laboratories Inc., which sought and received reissue (RE40,812E) of the ‘392 patent in 2009, during litigation of the instant case.

Unigene received Food and Drug Administration approval for Fortical, based on the ‘392 and ‘812E patents, claiming bioequivalence to Miacalcin. Miacalcin has been marketed by Novartis International AG since 1995 as an injectable and later as a nasal spray. Both drugs use salmon calcitonin at the same concentration. However, Miacalcin uses benzalkonium chloride (BZK) as a preservative, absorption enhancer, and surfactant, while Fortical contains—and Claim 19 of the ‘812E patent recites—three separate ingredients serving those purposes, including 20 mM citric acid as the absorption enhancer. The citric acid also serves as a pH stabilizer and buffer.

Apotex Inc. sought paragraph IV certification, 21 U.S.C. §355(j)(2)(A)(vii)(IV), for a generic version of Fortical, challenging the validity of Unigene's patent. Unigene accordingly sued Apotex for patent infringement in the U.S. District Court for the Southern District of New York.

Apotex responded with invalidity defenses and also alleged inequitable conduct by Stern in obtaining the patent.

In an attempt to amend its answer and add more inequitable conduct allegations, Apotex sought to pierce the attorney-client privilege under the crime-fraud exception, contending that Stern intentionally did not include the ‘014 patent in his initial disclosure statement, and that Stern deliberately falsified data in a table in the ‘392 patent specification.

Judge Robert P. Patterson Jr. determined that Apotex's charge as to the omitted reference was an “unsupported allegation” and that the mistake in the table was a typographical error.

Further, without addressing Apotex's request to amend its answer with the additional counterclaims, Patterson granted Unigene's motion for summary judgment of nonobviousness. He found that no prior art taught the use of citric acid to achieve “both shelf stability and enhanced bioavailability” in the nasal formulation.

Apotex appealed.

No Crime-Fraud Exception

Chief Judge Randall R. Rader first disposed of the appeal as to the crime-fraud exception for piercing attorney-client privilege.

Under Walker Process Equipment Inc. v. Food Machinery and Chemical Corp., 382 U.S. 172, 147 USPQ 404 (1965), the court said, fraud is presumed not to exist. To overcome the presumption, the accusing party must show, among five elements, “the intent to deceive or, at least, a state of mind so reckless as to the consequences that it is held to the equivalent of intent (scienter).”

The court deferred to the lower court's views as to the evidence underlying Apotex's accusations, concluding that the allegations rested on a “flimsy foundation. … [T]he record is devoid of sufficient intent evidence.”

The court further deferred to the district court's judgment denying Apotex's attempt to add counterclaims in its second answer and found no abuse of discretion.

Deviations from the ‘Commonsensical Path.'

Turning to the obviousness question, the court set the framework of its analysis by reciting a number of standards defined by the U.S. Supreme Court in KSR International Co. v. Teleflex Inc., 550 U.S. 398, 82 USPQ2d 1385 (2007).

In particular, the court quoted a portion of the KSR opinion in which the high court supplied an implicit “motivation” beyond the Federal Circuit's then restrictive “teaching, suggestion, or motivation” test:

When there is a design need or market pressure to solve a problem and there are a finite number of identified, predictable solutions, a person of ordinary skill in the art has good reason to pursue the known options within his or her technical grasp. If this leads to the anticipated success, it is likely the product not of innovation but of ordinary skill and common sense.

If that is true, the instant court said, then “when design need and market pressure may dictate a commonsensical path using a finite number of identified predictable solutions to one of ordinary skill, deviations from that path are likely products of innovation.”

‘Reference Composition' Is Miacalcin

The court then sought to apply that approach to the chemical arts generally and the differences between Miacalcin and Fortical specifically.

First, the court acknowledged that its precedents since KSR in the chemical arts have used a “lead compound” to serve as the starting point from which a person of ordinary skill in the art would develop a claimed innovation. However, the court distinguished the instant case.

“In the context of a composition or formulation patent where the patented formulation was made to mimic a previously FDA-approved formulation, the functional and pharmaceutical properties of the ‘lead compound' can be more relevant than the actual chemical structure (though not always mutually exclusive),” the court explained. “Thus, the term ‘reference composition' is more appropriate than ‘lead compound' when considering obviousness for a chemical composition that the infringer deliberately imitates.”

In this case, the court acknowledged the design need to achieve a bioequivalent of Miacalcin in nasal liquid dosage form, at the very least so as to take advantage of the FDA's approval of Miacalcin. The court further acknowledged the market demand, “to achieve a composition that treats the same symptoms as the reference formulation,” and that the Hatch-Waxman Act encourages such replication, which it said was “an activity that rarely, but can, lead to innovative products.”

However, after reviewing the prior art in question, the court found “significant differences” that would not lead a researcher, “in the normal course of research and development,” to substitute 20 mM of citric acid for the BZK in Miacalcin. For example, the ‘014 patent mentions citric acid but in much higher concentrations, another patent taught away from citric acid for the absorption and stabilizing purposes, and a publication with separate lists of preservatives and pH buffers listed BZK in the first and citric acid in the second.

The citric acid limitation alone supports the nonobviousness judgment, the court said.

“Thus, even accepting that there was a design need and market pressure to develop a pharmaceutical formulation that is bioequivalent to Miacalcin®, there is no evidence in the record that claim 19 would be an obvious solution to those motivations,” the court said in conclusion.

Judges Kimberly A. Moore and Kathleen M. O'Malley joined the opinion.

Bruce C. Haas of Fitzpatrick, Cella, Harper & Scinto, New York, represented Unigene. Apotex was represented by Manny D. Pokotilow of Caesar, Rivise, Bernstein, Cohen & Pokotilow, Philadelphia.

By Tony Dutra

Opinion at http://pub.bna.com/ptcj/101006Aug25.pdf