First published in The Columbia Science and Technology Law Review
A bill working its way through Congress seeks to curb so-called abusive patent litigation tactics. But a less sensational provision warrants close attention, particularly from the pharmaceutical industry. The provision, if passed, could threaten issued patents in ways parties don't expect.
The recent "Innovation Act"1 that the House passed in December2 and its Senate companion bill3 both seek to codify the judicial doctrine of obviousness-type double patenting (ODP). At first glance the change seems immaterial, as courts and the USPTO have long-recognized obviousness-type double patenting as a legitimate, if nonstatutory, basis for invalidity or unpatentability.
But the proposed codification of ODP could create a powerful procedural weapon in the arsenal of those seeking to challenge key patents, particularly in view of the impending availability of post-grant review for all post-America Invents Act (AIA) patents. This would make ODP an eligible ground in post-grant reviews, thus giving generic companies another means of challenging newly minted pharmaceutical patents.
- The Current Law
- Double Patenting
Patent law canon counsels: one invention, one patent. Courts have long interpreted 35 U.S.C. § 101's words "may obtain a patent," as precluding an applicant from obtaining more than one patent for the "same invention."4 But this "statutory" § 101 double patenting, or "same invention double patenting," only applies where the claims cover "identical" subject matter.5 But courts long ago established a second type of double patenting—obviousness-type.6 This second form, though non-statutory, serves as a ground for invalidity in the courts and unpatentability before the U.S. Patent and Trademark Office (USPTO).7 Thus ODP may preclude a patentee from obtaining claims in a second patent reciting obvious variants of the claims in a first.
The courts created ODP to prevent the perceived unjust extension of a patent through the claiming of obvious variants. Courts saw this as an abuse of the "right to exclude" conferred by a patent. Thus ODP applies even though the first patent is not prior art to the second under 35 U.S.C. § 102, making it a particularly potent ground of invalidity among patent families.
Patent applicants can overcome ODP with a terminal disclaimer (TD). A TD under 37 C.F.R. § 1.321 permits a patentee to disclaim any excess patent term for a second patent that would extend beyond the term of the first patent used to reject it. However, those who pursue additional patent term for an nonobvious variant or modification by seeking a second patent do so precisely to secure protection and term in addition to what the first provides.
Because the second application often seeks additional patent term, pharmaceutical innovators frequently eschew TDs. Companies protect product lines with portfolios of patents. These portfolios consist, for the branded drug company, of patents on new improvements on chemical entities, whether as a method of manufacture, composition, polymorph, enantiomer, formulation, or method of diagnosis or use.
The inevitable similarity between continuation or divisional applications and the earlier parent patent makes them suggestive of ODP. And the incremental nature of pharmaceutical innovation itself contributes to the potential for ODP issues. Indeed, identifying a target compound, developing varying methods of treatment, and generating preferred formulations normally happen years apart.
ODP is one of the first issues patent prosecutors and litigants alike consider with pharmaceutical patent portfolios, due to significant precedent skilled challengers can bring to bear. For instance, the U.S. Court of Appeals for the Federal Circuit has held that a method claim for using a chemical composition is not patentably distinct from an earlier claim to the identical composition in a patent disclosing the identical use.8 This is so even where the use is one of many disclosed in the earlier patent. The Federal Circuit has also held patentably indistinct a later claim to a pharmaceutical compound over an earlier claim to a pharmaceutical composition containing it.9 Thus, ODP often confronts later patents and applications directed to new formulations of patented compounds.
- The Goodlatte Bill's Proposed Codification of Double Patenting
H.R. 3309 and its companion Senate bill would make ODP a statutory ground of unpatentability and invalidity for post-AIA, first-inventor-to-file patents by creating a new statutory subsection, 35 U.S.C. § 106.10 Notably, § 106 would only apply where both the first patent and the second patent (or applications) are first-inventor-to-file patents. Further, § 106 would supplant the old law of non-statutory double patenting for these patents and applications and streamline its application, making it potentially easier to make ODP rejections, unpatentability arguments, and invalidity arguments.
But why should stakeholders in the pharmaceutical industry care about § 106 if it simply seeks to largely codify pre-existing law? Here's why.
- The Post-Grant Paradigm
The Leahy–Smith America Invents Act of 2011 created three vehicles to challenge patentability of granted patents at the USPTO: inter partes review (IPR), post-grant review (PGR), and covered-business-method post-grant review (CBM—a flavor of PGR). All three procedures—trial-like USPTO reviews—let petitioners test patents post-issuance.
IPR petitioners must file at least nine months after patent grant and no more than a year after being sued by the patent owner, and not after they have challenged the patent in court. They can only challenge a patent under § 102 and § 103 grounds based on prior art patents and printed publications. While the USPTO has not officially said that ODP is unavailable in IPR proceedings, it has for CBM proceedings, calling ODP nonstatutory—and it is difficult to see how it could be a ground of challenge under §§ 102 or 103,11 given the cases we discuss below.
CBM is a limited cousin of PGR, which enables the challenge of patents directed to "a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service," that do not claim "technological inventions."12 Notably, because CBM is only available to a limited subset of patents directed to "covered business methods" it doesn't really apply to pharmaceuticals.
This leaves PGR for those seeking to challenge recently issued pharmaceutical patents at the USPTO. Under 35 U.S.C. § 321(b), a PGR petitioner can challenge any post-AIA patent "on any ground that could be raised under paragraph (2) or (3) of section 282 (b)."13 Paragraphs (2) or (3) of 35 U.S.C. § 282 (b) specify the grounds of challenge as "any ground specified in part II as a condition for patentability" along with § 112 and § 251 requirements.
Accordingly, a PGR petitioner has available any and all challenges based on statutory grounds of invalidity (set forth in part II of Title 35 of the United States Code) as well as § 251 (the reissue statute).
Though no party has yet filed the first legitimate PGR petition, many parties have made successful use of Covered Business Review (CBM).14 And in CBM proceedings, the Patent Trial and Appeal Board (PTAB) has interpreted 35 U.S.C. §§ 321 and 282(b). In so doing, it has made clear that it views obviousness-type double patenting—under current law—as nonstatutory and thus not available as a ground of challenge in CBM proceedings.
In Apple, Inc., v. Sightsound Technologies, Inc., petitioner Apple attempted to raise obviousness-type double patenting. Apple argued that because obviousness-type double patenting is "predicated" on 35 U.S.C. § 101, it should be available as a statutory ground in CBM petitions. The PTAB rejected Apple's position, holding that:
[o]bviousness-type double patenting is a judicially created, policy based doctrine, not a statutory "ground specified in part II as a condition of patentability," as required by 35 U.S.C. § 282(b)(2). Therefore, obviousness-type double patenting is not a permissible ground for challenging claims in a covered business method review.
Thus, interpreting the same statutory subsections governing post-grant review proceedings, the USPTO has unequivocally barred obviousness-type double patenting from the post-grant challenge arena on the ground that it is non-statutory.
That would change if Congress enacts proposed § 106.
- Why Pharmaceutical Innovators Should Care
Shifting ODP from non-statutory to statutory grounds will let parties challenging newly granted patents use ODP in PGRs. Such a paradigm shift would likely result in generics using PGR to attack certain pharmaceutical patents that may be potentially vulnerable to ODP challenges. And competitors and generics could at least threaten ANDA litigants who have newly issued, related patents. It would change settlement calculus, giving generics another arrow in their quiver.
As members of closely linked patent families, pharmaceutical patent portfolios may weaken if generic petitioners can use ODP in PGR proceedings. Indeed, PGR proceedings already favor patent challengers for several reasons, including:
- the Board's broadest reasonable construction of the claims;
- the preponderance of the evidence standard to establish unpatentability;
- certain procedural advantages afforded to petitioners (e.g., the inability of patent owners to submit expert evidence with their preliminary responses; and the shifting of the burden of proof to patent owners seeking to amend their claims);
- the lack of a presumption of patent validity;
- the relatively low cost to a petitioner to challenge a patent;
- the limited (particularly vis-à-vis a petitioner) discovery; and
- the one-year statutory completion deadline.
Further, due to the immediate availability of post-grant review on issuance of patents under the first-inventor-to-file system, the availability of ODP in post-grant review proceedings could prevent a patent's timely assertion or otherwise tie up a new patent for years post-issuance if a PGR proceeding is initiated, adjudicated, then followed by an appeal to the Federal Circuit. At the least, the potential for ODP challenges may alter claiming and patent portfolio strategies and affect pharmaceutical product life-cycle management. Newly minted pharma patents, which are already subject to routine challenges under the Hatch-Waxman Act, may face an even tougher road ahead if they can be challenged on ODP grounds before the USPTO.
A final written decision in a PGR or IPR will create an estoppel on any ground that the petitioner raised or reasonably could have raised. Given the broad grounds of unpatentability available in PGRs, unsuccessful PGR petitioners may face broad estoppel rulings in subsequent proceedings. This risk of estoppel may deter some parties from pursuing PGRs. Notably, however, the risk of estoppel appears to have had little dampening effect on post-grant filings, with over a thousand post-grant petitions filed to date.
From a strategic standpoint, companies need to prepare now for PGR attacks that will be made on their patents issuing under the first-inventor-to-file system. These challenges will come quickly, within months after patent issuance, and will move quickly once instituted. Expert testimony will play a key role in PGRs (as in IPRs), so it will be essential to identify technical experts in advance and work with them to develop strong positions on key patents before PGR challenges are filed.
Companies should also closely monitor competitors' newly issued patents since any PGR petition must be filed within nine months of patent issuance. Thus, if ODP becomes a viable ground for challenging patents in PGR proceedings, the window of opportunity for attacking competitors' patents on this ground will close after that nine-month period. But whether using PGRs offensively or defending against them, advance planning and preparation will be essential to success.
In sum, stakeholders in the drug innovator industry should consider the potential impact of proposed § 106. This seemingly uncontroversial codification of ODP could seriously affect the industry—in particular innovator companies developing extensive patent portfolios. And, if ODP is codified, it will become immediately available as a powerful ground for challenging U.S. patents in PGR proceedings. Managers of large patent portfolios should closely monitor and prepare for this potentially significant paradigm shift.