Federal circuit addresses impact of the Uruguay Rounds Agreement Act and patent term extension on obviousness-type double patenting

Abstract

US Legal and Regulatory

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Introduction

Patentability requires that an invention be new, useful, and non-obvious. Should an invention satisfy these requirements, the inventor is entitled one patent.¹ Courts have enforced this restriction by invalidating attempts by inventors to obtain multiple patents for the exact same claimed invention—referred to as statutory double patenting—and by rejecting claims to obvious variants of a claimed invention, referred to as obviousness-type double patenting (“OTDP”).

OTDP is designed, in part, to prevent inventors from obtaining an unjust extension of their time-limited monopoly. At an earlier time, when patent expiration dates were tied to their issuance dates (pre-Uruguay Round Agreements Act (URAA)), patentees could, in theory, manipulate the issue dates of patentably indistinct claims to obtain the longest possible term of protection. OTDP was designed by courts to prevent this sort of gamesmanship by patentees. Under a traditional OTDP scenario, a later-issued, later-expiring patent would have its term truncated to match the term of an earlier-issued, earlier-expiring patent if the later patent was an obvious variant of the earlier one. This procedure, called Terminal Disclaimer, also tied enforceability of the later patent to common ownership of the two patents.

However, the interaction of OTDP with several intervening Congressional acts that explicitly granted patentees longer terms has not been completely resolved, and in the following cases, the Federal Circuit attempts to clarify the interaction of OTDP with two of these patent term-modifying laws: (i) the Uruguay Round Agreements Act (URAA)² and (2) the patent term extension (“PTE”) provision of the Hatch-Waxman Act.³

Background decision

In the background of the above issues is Gilead Sciences, Inc. v. Natco Pharma Ltd.,⁴ where the Federal Circuit held that a patent that issues after—but expires before—another patent may serve as an OTDP invalidating reference, even for post-URAA patents.

Gilead owns U.S. Patent Nos. 5,763,483 (“the ’483 patent”) and 5,952,375 (“the ’375 patent”), directed, respectively, to antiviral compounds and methods for their use. The ’483 and ’375 patents list the same inventors, but do not claim priority to a common patent application and have different expiration dates as governed by the provisions of the URAA. The ’375 patent, which claims priority to an application filed on 27 February 1995, issued on 14 September 1999 and expired on 27 February 2015. The ’483 patent, which was filed on 27 December 1996 and claims priority to a provisional application filed on 29 December 1995, issued on 9 June 1998 (before the ’375 patent), but expired on 27 December 2016 (after the ’375 patent). A terminal disclaimer was filed for the ’375 patent based on the ’483 patent, but no terminal disclaimer was filed for the ’483 patent.

Gilead sued Natco for infringement of the ’483 patent, and as its only invalidity defense, Natco asserted that the ’483 patent was invalid for OTDP over the ’375 patent. The district court granted summary judgment (SJ) in favor of Gilead, concluding that a later-issued but earlier-expiring patent cannot serve as a double patenting reference against an earlier-issued but later-expiring patent.

On appeal, the Federal Circuit held that the district court erred in excluding the ’375 patent as a potential double patenting reference against the ’483 patent. The Court explained that the scope of the bar against double patenting has been well established, with federal courts applying the doctrine’s principles for over a century to preserve the public’s right to use not only the exact invention claimed by an inventor but also obvious modifications of that invention that are not patentably distinct.

The Federal Circuit then held that the principle protected by the OTDP doctrine is violated when a patent expires and the public is nevertheless barred from practicing obvious modifications of the invention claimed in that patent because the inventor holds another later-expiring patent with claims for obvious modifications of the invention. Assuming for the appeal that the ’483 patent covers obvious modifications of the invention claimed in the ’375 patent, the Court explained that once the ’375 patent expires on 27 February 2015, the public will not be free to use the invention claimed in that patent and all obvious variants of that invention for another 22 months, because the ’483 patent will not expire until 27 December 2016. Rejecting Gilead’s argument that the ’375 patent in no way extends the term of the ’483 patent, which issued first, the Court saw “little import here in the fact that the ’483 patent issued first.”⁵

The Court held that reliance only on issuance dates for post-URAA patents would allow the terms of such patents to be subject to gamesmanship during prosecution. Specifically, the Court contemplated that

inventors could routinely orchestrate patent term extensions by (1) filing serial applications on obvious modifications of an invention, (2) claiming priority to different applications in each, and then (3) arranging for the application claiming the latest filing date to issue first⁶

thus allowing inventors to obtain additional patent term while also exploring the value of an earlier priority date. The Court also noted the possibility for significant yet arbitrary differences in patent term based on mere days’ difference in patent issuance. Using Gilead’s patents as an example, the Court observed that if the ’375 patent issued the day before the ’483 patent, going strictly by issuance date would make the last 22 months of the ’483 patent’s term an improper PTE, but not if the ’375 patent issued the day after the ’483 patent. In contrast, the Court concluded,

[p]ermitting any earlier expiring patent to serve as a double patenting reference for a patent subject to the URAA guarantees a stable benchmark that preserves the public’s right to use the invention (and its obvious variants) that are claimed in a patent when that patent expires and preserves the ability of inventors to use a terminal disclaimer of later-expiring patents to create one expiration date for their term of exclusivity.⁷

Finally, the Court noted that looking to the expiration date was consistent with the U.S. Patent Office’s guidance in MPEP §804(I)(B)(1), which instructs that a terminal disclaimer is required for the later-filed (and thus later-expiring) of two pending applications.

The Court therefore held that Gilead’s earlier-expiring ’375 patent could qualify as an OTDP reference for Gilead’s later-expiring ’483 patent. Accordingly, the Court vacated the district court’s SJ decision and remanded for further proceedings consistent with their opinion.

OTDP and URAA

The URAA alters the expiration date of patents from 17 years post-issuance to 20 years post-effective filing date, and ensures patents in force or filed within six months of URAA implementation the longer of the two terms.

Novartis Pharmaceutical Corp. v. Breckenridge Pharmaceutical, Inc.8 deals with two patents owned by Novartis—U.S. Patent Nos. 5,665,772 (“the ’772 patent”) and 6,440,990 (“the ’990 patent”). The ’772 patent claims the compound everolimus, whereas the '990 patent claims methods of administering everolimus. The ’772 patent was filed before the ’990 patent, though both patents claim the same priority date of 24 September 1993. Because the ’772 patent was filed before the URAA, it was entitled to the longer of 17 years post-issuance or 20 years post-effective filing date. The ’990 patent was filed after the URAA and therefore only entitled to a term of 20 years post-effective filing date. As a result, the ’772 expired after the ’990, despite being filed earlier.

The district court in Breckenridge applied Gilead and found the ’990 patent to be a proper invalidating reference against the ’772 patent. However, on appeal, the Federal Circuit noted that both patents in Gilead were filed post-URAA with different priority dates, unlike the pre-/post-URAA split and common priority date in Breckenridge. The Breckenridge appellate panel, in a unanimous opinion by Judge Chen, acknowledged this distinction and reversed the district court as discussed below.

The Breckenridge court observed that the terms of the two patents were different exclusively due to the URAA, which is an intervening act of Congress. Congress’s directive in ensuring patents filed pre-URAA the greater of the two possible expiration dates was evidence that patentees should enjoy the “maximum possible term available.”⁹ The Federal Circuit further found that the fact that both the ’990 patent and the ’772 patent claimed priority to the same pre-URAA date evidenced a lack of gamesmanship on the part of Novartis. Moreover, the traditional OTDP scenario of a later-issuing, later-expiring patent was absent here.

The Federal Circuit concluded that the post-URAA patent was not a proper OTDP invalidating reference against the pre-URAA patent because the URAA had not extended the term of the earlier-filed ’772 patent, but actually truncated the term of the later-filed ’990 patent. As such, the Federal Circuit reversed the district court.

OTDP and the PTE provision of the Hatch-Waxman Act

PTE under 35 U.S.C. §156 compensates for marketing delays caused by obtaining regulatory approval. While several categories of products are eligible for PTEs, they are most often sought for pharmaceuticals.

In the second case, Novartis AG v. Ezra Ventures LLC,¹⁰ Novartis owned two patents, U.S. 5,604,229 (“the ’229 patent,” pre-URAA) and U.S. 6,004,565 (“the ’565 patent,” post-URAA). The ’229 patent claims the compound fingolimod, whereas the ’565 claims a method of administering fingolimod. The ’229 patent was filed and issued before the ’565 patent was even filed. The ’229 patent was filed pre-URAA, and its 17-year post-issuance term would have ended on 18 February 2014 prior to expiration of the ’565 patent on 23 September 2017. However, Novartis chose to apply the statutory maximum five (5) years of PTE to the ’229 patent, such that the ’229 patent expired on 18 February 2019, or after expiration of the ’565 patent.

Ezra filed an Abbreviated New Drug Application for fingolimod and was sued by Novartis for infringement. In response, Ezra argued that the ’229 patent should be held invalid because Novartis’s application of PTE to the ’229 patent effectively extended the life of the ’565 patent and, therefore, the ’565 patent was a proper OTDP reference against the ’229 patent. Central to Ezra’s argument was the text of the relevant statutory provision governing PTE that states “in no event shall more than one patent be extended under [PTE] for the same regulatory review period for any product.”¹¹ In effect, the statute requires that only “one patent be extended.”¹² Further, Ezra argued that the ’229 patent is invalid for statutory-type double patenting and OTDP because Novartis’s ’229 patent claims are not patentably distinct from the ’565 patent.

The district court denied Ezra’s motion, concluding that Ezra’s argument required reading “effectively” as a modifier of “extended” into 35 U.S.C. §156(c)(4) which states, “in no event shall more than one patent be extended … for the same regulatory review period for any product.”

On appeal to the Federal Circuit, the Ezra panel, in a unanimous opinion also by Judge Chen, began its analysis de novo by noting that “nothing in the statute restricts the patent owner’s choice for PTE among those patents whose terms have been partially consumed by the regulatory review process.”¹³ Thus, the panel affirmed the district court’s rejection of Ezra’s attempts to read the word “effectively” before the word “extended” into the PTE provision.¹⁴ Instead, as the Ezra court asserted, the relevant language limiting PTE to one patent selected by the patentee was intended to do so by right (de jure), not de facto.¹⁵ This holding was supported by a prior ruling in Merck & Co., Inc. v. Hi-Tec Pharmacal Co., Inc.¹⁶ Accordingly, the Federal Circuit affirmed the district court’s decision.

In Merck v. Hi-Tec, the Federal Circuit had held that Congress explicitly gave patentees the choice of which patent’s term to extend without any practical limitation.¹⁷ By contrasting the language in the patent term adjustment (“PTA”) provision that expressly limits PTA for patents subject to terminal disclaimers (a remedy to overcome OTDP rejections and invalidations) with the absence of such qualifying language in the PTE provision, the Merck court concluded that Congress intended that patentees should get their full term under PTE, even in the face of OTDP rejections.¹⁸

The outcome in Ezra was a consequence of Merck’s holding because the Federal Circuit held that there can be no gamesmanship penalized by the courts when Congress has concretely dictated the outcome.

Conclusion

The Court of Appeals for the Federal Circuit acknowledged that different fact patterns could arise with pre- and post-URAA patents, and expressly limited its opinions to the specific facts (Breckenridge and Ezra) before it.

The impact of the URAA on OTDP will eventually disappear over time as patents granted pre-URAA expire and the expiration date of all extant patents are tied to their effective filing date. However, for the time being, the Federal Circuit continues to attempt to clarify the impact of Congressional actions like the URAA and PTE on its judge-made doctrine.