The Federal Circuit affirmed the PTAB’s final written decision holding that claims directed to Novartis’s multiple sclerosis drug Gilenya were obvious in Novartis AG v. Torrent Pharmaceuticals. Ltd., No. 2016-1352 (Fed. Cir. Apr. 12, 2017). Significantly, the Federal Circuit found that the PTAB’s use of a non-instituted reference in its final written decision was not improper.

The PTAB instituted IPR based on the combination of two references but declined to institute over a third reference. However, in the final written decision, the Board used the third reference as a background reference showing motivation to combine the first two references.

On appeal, Novartis argued that the PTAB’s use of the third reference violated the Administrative Procedure Act because the PTAB did not institute the IPR on grounds based on this reference, denying Novartis notice and a hearing. The Federal Circuit rejected this argument, finding that the use of the third reference as a background reference was not inconsistent with its institution decision. Moreover, Novartis’s claim of “surprise” was unfounded in view of the significant discussion of the third reference and its applicability to motivation to combine by both the petitioners and Novartis. Finally, the third reference was not the linchpin of the PTAB’s analysis, and the Federal Circuit found that there was independent support for the PTAB’s conclusion.

Novartis also argued the PTAB erred as a matter of law by finding numerous prior art references precluded a nexus between the patented features and objective indicia of obviousness. Novartis asserted that the PTAB cannot rely on prior art references to dispute nexus when what was discussed in the references was not actually commercially available. The Federal Circuit rejected this argument, finding that no cases supported Novartis’s “sweeping proposition.”