Court Invalidates Endo's Drug Method Patent

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By Dana A. Elfin

Nov. 20 — In a win for Actavis Inc., now part of Allergan, in an infringement case over Endo Pharmaceuticals's opioid painkiller Opana ER, a federal judge adopted a magistrate judge's report finding Endo's method of use patent on the drug invalid on its face.

Judge Richard G. Andrews of the U.S. District Court for the District of Delaware adopted a magistrate judge's report and recommendation to invalidate an Endo method of use patent because it was directed to patent-ineligible subject matter. The judge granted Actavis's motion to dismiss Endo's infringement claims as to that patent, U.S. Patent No. 8,808,737 (the ‘737 patent).

According to the complaint in the case, Endo is seeking money damages as a result of Actavis's sales of an older, non-crush-resistant version of Opana ER as well as to enjoin Actavis from selling Opana ER CRF, the newer crush-resistant version that is aimed at deterring opioid abuse.

Actavis didn't respond to Bloomberg BNA's requests for comment on the Nov. 17 ruling. Endo said it cannot comment on ongoing litigation.

Should Patent Owners Worry?

Although the case isn't over because another patent remains in the case, a process patent, U.S. Patent No. 8,871,779, experts tell Bloomberg BNA that the Endo court's holding on what is patent-eligible reflects a trend in the case law that should worry patent holders in the pharmaceutical and biotechnology areas and beyond.

“Every case becomes a stepping stone to courts striking down the next patent,” Hans Sauer, Deputy General Counsel for Intellectual Property at the Biotechnology Industry Organization, told Bloomberg BNA Nov. 19. “This is problematic for any personalized method of treatment.”

In the Endo case, Andrews invalidated the ‘737 patent under 35 USC § 101 because it is directed to patent-ineligible subject matter.

The ‘737 patent covers a method of treating pain utilizing controlled release oxymorphone pharmaceutical compositions and instruction on dosing for renal impairment.

Under 35 USC § 101, “any new and useful process, machine, manufacture or composition of matter, or any new and useful improvement thereof” is eligible for patent protection.

Adopting the Sept. 23 recommendations of U.S. Magistrate Judge Mary Pat Thynge in their entirety, and citing the U.S. Supreme Court's 2012 decision in Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 2012 BL 66018 (2012), the district judge found that because the ‘737 patent claimed a natural law as its invention, it wasn't patent eligible.

Andrews said Endo's argument that the ‘737 patent didn't claim a law of a nature but “a new and useful process” was “thoroughly unconvincing.”

Endo Formulation Lacks ‘Inventive Concept.'

In reaching this conclusion, the district court undertook a side-by-side comparison of the language of the claims in Mayo and in Endo and found that neither of the formulation claims included the extra inventive step required for patentability.

The Mayo claim read: “indicates a need to [increase/decrease] the amount of said drug subsequently administered to said subject” and, in Endo, the claim read “orally administering to said patient, in dependence on which creatinine clearance rate is found, a lower dosage of the dosage form to provide pain relief.”

Andrews said the “slight difference in phrasing [of the Mayo and Endo claims] is immaterial, because neither formulation provides any sort of ‘inventive concept.’ ”

In Mayo, the high court held that, to be patentable, processes that focus upon the use of a natural law must also contain other elements or a combination of elements—often referred to as an “inventive concept”—“sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the natural law itself.”

Is Life Science Patent Protection in Danger?

It is this language that courts are struggling with, experts told Bloomberg BNA.

In the Endo case, although Endo's claim included an additional step—administering a lower dose of the drug to the patient for pain relief—that the Mayo case didn't, the district court said that wasn't enough.

The Endo court incorrectly treated “a very specific type of discovery as a natural law,” Chris Holman, a professor of law at the University of Missouri Kansas City School of Law, told Bloomberg BNA Nov. 19.

That discovery was the increased bioavailability of oxymorphone in certain renally impaired patients, said Holman, who also is a scholar-in-residence at the law firm of Hovey Williams LLP in Kansas City. “You should not consider the interaction of a drug with a body as a natural law,” he said.

Indeed, Holman said, in the Endo case, Andrews seemed to seize on Endo's use of the word discovery as an admission that the “discovery” is a natural law. And if any discovery can be treated as a natural law, patent protection for life sciences innovations is at risk, he said.

Post-Mayo, all pharmaceutical method-of-treatment patents using existing, well-known chemical compounds are at risk, Holman said.

If the discovery that a chemical compound has therapeutic effect on a patient is considered a natural phenomenon, “how do you know if your method of use claim is going to be valid?,” Holman asked.

Patent Eligibility Law in Flux

Sauer agreed, calling this area of the law “extremely unstable.”

“We're seeing over the past two or three years, patents being invalidated that no one would have thought would have been vulnerable,” he said.

Post-Mayo and also following the Supreme Court's 2013 decision in Alice Corp. v. CLS Bank International, 134 S. Ct. 2347, 2014 BL 170103, 110 U.S.P.Q.2d 1976 (2014), which applied the Mayo inventive concept test, “there's been a drift or a creep in the case law that points to an expanding universe of subject matter that's becoming vulnerable,” Sauer said.

“The problem,” Sauer said, “is that when the Supreme Court decided these cases, they laid out general principles and left it to the lower courts to flesh out.”

“No one knows where the outer boundaries are going to be for invalidation under § 101 because the Supreme Court didn't include a lot of limiting principles,” he said.

“There's potentially no end to it,” he said. And absent some limiting principle, “there's nothing in this [Endo] opinion and nothing in the case law that will tell us where this will end.”

Do Some Patents Still Survive Under § 101?

But Steven H. Sklar, a patent attorney at Leydig, Voit & Mayer, Ltd. in Chicago doesn't see things quite the same way.

“I don't see Judge Andrews' decision [adopting Magistrate Thynge's recommendation] as a nail in the coffin in all method of use patents,” he told Bloomberg BNA Nov. 20.

“Method of use patents are certainly open to a §101 challenge as … Mayo previously taught, and this case affirms,” Sklar said. “However, claims directed to methods of treating truly new indications could potentially still survive a § 101 attack, depending on their scope.”

However, in the case of the ‘737 patent at issue in the Endo court's ruling, those claims are directed to a known use—the treatment of pain, he said. And those kinds of claims—claims “that involve taking some action in response to a pharmacological effect of administering a drug for a known use—will continue to be open to challenge for the foreseeable future,” Sklar said.

PTO Is Struggling, Too

Meanwhile, BIO's Sauer said the fallout from what many view as an overbroad interpretation of natural law also is affecting patent examination at the U.S. Patent and Trademark Office.

“The PTO is also struggling with how to implement this shifting and fast-developing area of the law,” he said.

Indeed, the practical effects of this developing area of the law go well beyond pharmaceutical patents and affect industrial patents, too.

Following the Mayo decision, the high court in 2013 ruled in the Myriad case (Association for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107 (2013)) that isolated gene sequences and primers were naturally occurring products that fell into the patent-ineligible realm.

Outside of Life Sciences

“The Patent Office now routinely rejects applications on new antibiotic molecules that were first identified in obscure ground-dwelling bacteria and even rejects industrial enzymes,” Sauer said.

New enzymes are being discovered in environments ranging from arctic ponds to oceanic volcanic vents to termite intestines, Sauer said. Such enzymes work under industrial conditions nobody would have thought possible, like extreme heat or cold, high pressure, extreme acid or salt conditions, he said.

Companies develop these enzymes for industrial processes and products, like grain ethanol production, pulp and paper manufacturing and even laundry detergents.

After the Supreme Court's decision in Myriad, Sauer said, the PTO became convinced that such enzymes no longer deserve patent protection because they are discovered from environmental or biological samples. “In this way, companies that have nothing to do with human genes or diagnostic testing are being hurt,” he said.

Could Issues Go Back to Federal Circuit?

Ultimately, the developing jurisprudence will have to fill in the gaps left by the high court. Sauer said that the Endo case could “be a good vehicle for review by the Federal Circuit,” and other cases—such as Ariosa Diagnostics, Inc. v. Sequenom, Inc., 2015 BL 185953, 788 F.3d 1371, 115 U.S.P.Q.2d 1152, (Fed. Cir. 2015)], which is up for en banc consideration at the U.S. Court of Appeals for the Federal Circuit, or Celsis In Vitro, Inc. v. CellzDirect, Inc., 2015 BL 89888, 83 F. Supp. 3d 774 (N.D. Ill. 2015), currently on appeal to the Federal Circuit—might also be opportunities to provide some clarity or limitations on the contours of patent eligibility under §101.

But, he said, the administrative and legislative branches need to get involved, too. “Policymakers have been completely absent from this debate,” he said. “The PTO needs to have a discussion about this, and Congress needs to be aware this is going on.”

Representing the plaintiffs, Endo, an Irish company with U.S. offices in Malvern, Pa., and St. Louis-based Mallinckrodt LLC, a co-plaintiff and patent assignee, were Joseph Gribbin, Sharon Gagliardi and Julie M. Latsko of Dechert LLP in Philadelphia, Robert D. Rhoad of Dechert LLP in Princeton, N.J., Martin J. Black of Dechert in Philadelphia, Jonathan D.J. Loeb of Dechert LLP in Mountain View, Calif., Blake B. Greene of Dechert LLP in Austin, Tex., and Jack B. Blumenfeld and Stephen J. Kraftschik of Morris, Nichols, Arsht & Tunnell LLP in Wilmington, Del.

Representing Parsippany, N.J.-based Actavis Inc., which is now part of Dublin, Ireland-based Allergan, were Howard S. Suh, Eric Yecies and Nicholas P. Chiara of Holland & Knight LLP in New York, and Adam Wyatt Poff and Robert M. Vrana of Young, Conaway, Stargatt & Taylor LLP in Wilmington, Del.

To contact the reporter on this story: Dana A. Elfin in Washington at delfin@bna.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com

A copy of the judge's order adopting the magistrate judge's report and recommendations is at http://www.bloomberglaw.com/public/document/Endo_Pharmaceuticals_Inc_et_al_v_Actavis_Inc_et_al_Docket_No_114c.