Supreme Court Takes Two More Patent Cases for Term Beginning in October

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Patent law will once again be featured in U.S. Supreme Court deliberations next fall, as the court June 27 added two more certiorari grants to the Mayo v. Prometheusreview decision less than a week earlier.

First, the court agreed to hear a case involving the Hatch-Waxman Act's counterclaim provision and patent use codes (Caraco Pharmaceutical Laboratories Ltd. v. Novo Nordisk A/S, U.S., No. 10-844, review granted 6/27/11). The Solicitor General filed a brief May 26 recommending review.

The SG's request for cert grant was also honored in a petition entered on behalf of the Patent and Trademark Office (Kappos v. Hyatt, U.S., No. 10-1219, review granted 6/27/11).

At issue in the Hyatt case is the ruling by the en banc U.S. Court of Appeals for the Federal Circuit that there is no heightened standard for introducing new evidence when a party litigates, under 35 U.S.C. §145, a rejection of a patent application by the PTO. Hyatt v. Kappos, 625 F.3d 1320, 96 USPQ2d 1841 (Fed. Cir. 2010) (en banc).

Caraco and Hyatt join a third patent case on the high court's 2011-12 docket. On June 21, the court granted certioriari in a case testing diagnostic method patent eligibility under Section 101 of the Patent Act. Mayo Collaborative Services v. Prometheus Laboratories Inc., No. 10-1150 (U.S., review granted June 21, 2011).

In Mayo, the court will review whether a patent claim that covers observed correlations between blood test results and patient health is statutory subject matter, as the Federal Circuit held Dec. 17. Prometheus Laboratories Inc. v. Mayo Collaborative Services, 628 F.3d 1347, 97 USPQ2d 1097 (Fed. Cir. 2010).

Caraco Fights Orange Book Use Description

The issue in Caraco revolves around interpretation of the Hatch-Waxman Act related to the respective roles of the courts and the U.S. Food and Drug Administration.

Novo Nordisk A/S owns patents (RE 37,035 and 6,677,358) underlying the drug repaglinide, which the company markets under the brand name Prandin. The FDA approved three uses of Prandin—by itself, in combination with metformin, and in combination with thiazolidinediones. However, the agency initially limited the Orange Book use code to “Use of repaglinide in combination with metformin to lower blood glucose.”

After Caraco Pharmaceutical Laboratories Ltd. filed an abbreviated new drug application with a Paragraph IV certification—21 U.S.C. §355(j)(2)(A)(iv)—as to the ‘358 patent, it added a Section viii statement declaring that it was not seeking approval for the combination with metformin. Soon thereafter, though, Novo requested and the FDA agreed to a change broadening the use code description: “A method for improving glycemic control in adults with type 2 diabetes mellitus.”

In addition, the FDA required Caraco to label its product without disclaiming use with metformin, leaving it in the position of infringing the patent given that label. Responding to Novo's patent infringement lawsuit, the generic drug maker counterclaimed under Section 355(j)(5)(C)(ii)(I), requesting that the use code and description be changed back to the original.

The U.S. District Court for the Eastern District of Michigan granted Caraco's motion for summary judgment on the counterclaim, which would have forced the use code revision, but the Federal Circuit reversed. Novo Nordisk A/S v. Caraco Pharmaceutical Laboratories Ltd., 601 F.3d 1359, 95 USPQ2d 1031 (Fed. Cir. 2010).

In a 2-1 decision, the court determined that the counterclaim provision is available only when the branded drugmaker lists patents that are not related at all to the listed drug.

The majority and dissent disagreed as to what “the statute on its face” allowed a court to do when a generic drug manufacturer challenged an Orange Book listing for having an overbroad use code and description. A concurring opinion also disagreed with the majority as to whether the courts or the FDA was the proper dispute resolution body for such challenges.

Caraco filed a petition for a writ of certiorari, arguing that the “splintered Federal Circuit decision rais[es] issues of recurring importance under the Hatch-Waxman Act.” Caraco said that the en banc appellate court's ruling “enables name-brand manufacturers to use their patents to block generic manufacturers from marketing drugs that concededly do not infringe.”

The high court will address the question: “Whether th[e] counterclaim provision applies where (1) there is ‘an approved method of using the drug' that ‘the patent does not claim,' and (2) the brand submits ‘patent information' to the FDA that misstates the patent's scope, requiring ‘correct[ion].' ”

Steffen N. Johnson of Winston & Strawn, Washington, D.C., represents Caraco. Novo is represented by Mark A. Perry of Gibson Dunn & Crutcher, Washington, D.C.

Hyatt Seeks More Evidence in Section 145 Proceeding

The Hyatt case involves the relatively rare practice of applicants who are denied patents by the PTO litigating in the U.S. District Court for the District of Columbia, per Section 145, rather than appealing to the Federal Circuit.

When the PTO rejected applicant Gilbert P. Hyatt's claims for an improved computer memory architecture for lack of written description and enablement, Hyatt filed a Section 145 action against the PTO. In response to the PTO's motion for summary judgment, Hyatt filed a declaration supporting his belief that the written description was adequate with new arguments. But Judge Henry H. Kennedy Jr. excluded the declaration, agreeing with the PTO that new evidence should be admissible in a Section 145 action only if it could not reasonably have been provided to the agency in the first instance.

On appeal, a split panel of the Federal Circuit in August 2009 affirmed the exclusion. Hyatt v. Doll, 576 F.3d 1246, 91 USPQ2d 1865 (Fed. Cir. 2009). However, the court agreed to rehear the case en banc.

A 7-2 court reversed the panel's decision. Patent applicants in Section 145 proceedings may introduce evidence limited only by the Federal Rules of Evidence and the Federal Rules of Civil Procedure, the court said.

The court also rejected the PTO's argument based on the deference owed to the agency under the Administrative Procedure Act. The court conceded that “If the parties to a §145 action do not introduce any new evidence before the district court, the court reviews the case on the same record presented to the agency and the reviewing court must apply the APA's substantial evidence standard to Patent Office fact findings.”

However, the court explained, the APA argument does not then extend to a case where new evidence is introduced. “The presence of such new or different evidence makes a fact-finder of the district judge,” the court said, quoting Dickinson v. Zurko, 527 U.S. 150, 164, 50 USPQ2d 1930 (1999).

In a Section 145 action, then, as the court weighs the new evidence, “the district court … must make de novo fact findings with respect to factual issues to which the new evidence relates.”

The government's petition argued that the en banc decision “disregards fundamental principles of administrative law and statutory construction, and encourages applicants to withhold relevant evidence from the expert agency charged by Congress with responsibility for the disposition of patent applications.” Further, according to the brief, “The court's decision allows a plaintiff to challenge the agency's considered determination based on evidence that the plaintiff could have provided to the administrative tribunal, and it rewards that conduct by permitting the district court to engage in de novo review of the relevant issues once new evidence is introduced.”

The petition posed two questions: “(1) Whether the plaintiff in a Section 145 action may introduce new evidence that could have been presented to the agency in the first instance,” and “(2) Whether, when new evidence is introduced under Section 145, the district court may decide de novo the factual questions to which the evidence pertains, without giving deference to the prior decision of the PTO.”

Aaron M. Panner of Kellogg, Huber, Hansen, Todd, Evans & Figel, Washington, D.C., represents Hyatt. The attorney of record listed for the government is Donald B. Verrilli Jr., who was confirmed as the new solicitor general June 6.

Federal Circuit's Caraco opinion at http://pub.bna.com/ptcj/101001Apr14.pdf

Caraco's petition at http://pub.bna.com/ptcj/100844PetitionDec23.pdf

Federal Circuit's en banc Hyatt opinion at http://pub.bna.com/ptcj/071066Nov8.pdf

Hyatt's petition at http://pub.bna.com/ptcj/101219petApr7.pdf

By Tony Dutra