In Bayer Pharma AG v. Watson Labs., Inc., No. 2016-2169 (Fed. Cir. Nov. 1, 2017), the Federal Circuit reversed the district court’s conclusion that certain claims of Bayer’s patent covering Staxyn would not have been obvious because the district court failed to consider all evidence of record, and erred in finding a possible preference sufficient to establish teaching away.

After Watson filed an abbreviated new drug application for a generic version of Bayer’s Staxyn product, Bayer sued Watson for patent infringement. After a bench trial, the district court found claims 9 and 11 of Bayer’s U.S. Patent No. 8,613,950 not invalid as obvious. In particular, the court found the testimony of Bayer’s expert more credible, and found that the prior art taught away from the claimed formulation.

On appeal, the Federal Circuit reversed. The Federal Circuit panel noted that even though “it is well within the district court’s discretion to credit one expert’s competing testimony over another,” the panel held that the district court clearly erred in this case by ignoring key references and the “wealth of evidence” left unchallenged by Bayer’s expert. The Federal Circuit also held that the district court clearly erred in this particular case in focusing on the commercial availability of similar products to Staxyn, while failing to address relevant prior art to the ’950 patent. And the Court found that the district court erred in focusing on whether a skilled artisan might have preferred a delayed release formulation of this particular drug over an immediate release formulation of this drug, and that such a focus could not in this case establish teaching away. The Court concluded Bayer’s objective evidence of nonobviousness in this case could not overcome the competing evidence of obviousness.