Acorda Therapeutics v. Roxane Laboratories – The Federal Circuit’s Split Decision Regarding Secondary Indicia of Non-Obviousness
On September 10th the Federal Circuit issued its ruling, 2-1, in the case of Acorda Therapeutics, Inc. v. Roxane Laboratories, Inc. upholding the judgment of the District Court of Delaware which had invalidated four of Acorda’s patents (“the Acorda Patents”) on the basis of obviousness. One of the issues on appeal was whether the district court erred in ruling that a blocking patent could be used to offset the substantial evidence of secondary indicia of non-obviousness provided by the patentee (Appellant). The majority upheld the district court’s ruling on this issue. Judge Taranto (joined by Judge Dyk) held for the majority and Judge Newman dissented.
The Acorda patents related to Acorda’s drug Ampyra (dalfampiridine) which is used to aid individuals suffering from multiple sclerosis to walk faster. Acorda was also the exclusive licensee of a broader patent owned by Elan Corporation (“the Elan Patent”). The Elan Patent claimed therapeutic formulations of 4-aminoptridine (4-AP). The Acorda Patents were for narrow formulations of 4-AP having specific concentrations, release formulations and dosing regimens. The Acorda Patents’ claims further specifed that such a drug must be administered (1) in a 10 mg dose twice a day; (2) at that stable dose for the entire treatment period of at least two weeks; (3) to achieve 4-AP serum levels of 15–35 ng/ml; and (4) to improve walking.
At trial, the defendants stipulated to infringement but alleged that the Acorda Patents and the Elan Patent were invalid. The defendants submitted numerous pieces of prior art, notably, prior publications of case studies of 4-AP as used and tested in various applications over the course of several decades (albeit with very little, if any, success). Acorda attempted to overcome the contention of obviousness by showing that the secondary considerations of non-obviousness, i.e., commercial success, failure of others, and long-felt but unmet need were sufficient to overcome the prior art.
Both parties presented evidence on these secondary indicia. The defendants presented evidence of blocking by the Elan patent and arguing that it was undisputed that the invention of the Acorda Patents practiced the Elan patent. Acorda showed that it had $1.7 billion in sale in the five year period after the release of Ampyra; that other companies, specifically, Elan and Sanofi-Aventis abandoned testing of the application of 4-AP drug to multiple sclerosis patients because they could not obtain satisfactory results; and that there was unquestionably a long-felt desire to aid MS patients in improving mobility.
The district court held that the Elan Patent was valid but that the Acorda Patents were invalid for obviousness in view of the prior art publications, as well as expert testimony, finding that a person of ordinary skill in the relevant art would have been motivated to administer a stable dose of 10 mg of 4-AP twice a day and had a reasonable expectation of success in the objective of improving the walking ability of multiple sclerosis patients.
The district court further held that even though certain facts weighed in Acorda’s favor regarding objective indicia of non-obviousness, these facts could be disregarded because the Elan Patent was a “blocking patent” for the claimed methods of the Acorda patents. The district court reasoned that because no one other than the Elan patentees and their licensees could have practiced the invention of the Acorda Patents without facing liability for patent infringement, the secondary indicia of non-obviousness could be discounted. The risk of liability for practicing the Elan Patent would have provided a significant incentive for a patentee not to develop the invention of the Acorda patents, even if those inventions were obvious.” For this reason, the district court found that the evidence of commercial success did not support the conclusion that the claims of the Acorda Patents were non-obvious.
Acorda appealed the invalidity ruling regarding the Acorda Patents. The defendants cross-appealed the validity ruling regarding the Elan patent and the resulting injunction.
One of the issues raised on appeal by Acorda was whether the district court improperly applied a categorical rule that a blocking patent negates any findings in favor of Acorda on the objective indicia of commercial success, failure of others, and long felt but unmet need.
A patent has been called a “blocking patent” where the practice of a later invention would infringe the earlier patent. As explained by the Federal Circuit, the existence of such a blocking patent may deter non-owners and non-licensees from investing the resources needed to make, develop, and market such a later (“blocked”) invention, because of the risk of infringement liability and associated monetary or injunctive remedies. If the later invention is eventually patented by an owner or licensee of the blocking patent, that potential deterrent effect is relevant to understanding why others had not made, developed, or marketed that “blocked” invention and, hence, to evaluating objective indicia of the obviousness of the later patent. See Note, Subtests of “Nonobviousness”: A Nontechnical Approach to Patent Validity, 112 U. Pa. L. Rev. 1169, 1177 (1964) (Regarding commercial success, “a court must be assured that the patentee’s market domination is not attributable to monopoly power or other economic coercion, or to other factors unrelated to patent validity.”) (cited in Graham v. John Deere Co. of Kansas City, 383 U.S. 1, 18, 36 (1966)).
The Appeal and the Federal Circuit’s Decision
Acorda’s appeal focused on the district court’s reliance on the Elan Patent as a blocking patent to the Acorda Patents’ claimed inventions, in determining that commercial success, failure of others, and long-felt but unmet need, did not “support” or “militate in favor of” a finding of non-obviousness. Acorda characterized the district court as having applied a categorical rule that a blocking patent defeats the significance of such objective indicia to the obviousness determination. Acorda also noted that potential innovators would not have been blocked from practicing the Elan Patent in the ways covered by the safe harbor provision of 35 U.S.C. § 271(e)(1), which declares specified activities to be noninfringing if undertaken “solely for uses reasonably related to the development and submission of information” to the FDA.
The majority (Judges Taranto and Dyk) affirmed the district court’s invalidity finding and reasoned that by 1997, when Acorda exclusively licensed the Elan Patent to test applications in multiple sclerosis patients, the prior art expressly explained why improvement of multiple sclerosis symptoms with 4-AP was promising (citing to a 1994 Elan study that reported a significant improvement in timed gait, and concluded that “4AP [sustained-release] improved motor function in [multiple sclerosis] patients.”) despite the study being a failure. The majority held that the district court reasonably found that the failure of the Elan study was not particularly probative because the Elan study preceded publications that would render the invention obvious to those of skill in the art as of the Acorda Patents’ 2004 priority date.
In light of the record evidence, Judge Taranto opined that the district court did not clearly err in finding that a person of skill at the time of the invention would have had a motivation to combine, and a reasonable expectation of success in combining, the teachings of the prior art to arrive at the Acorda invention of a stable regimen of 10 mg twice-daily sustained-release 4-AP to improve walking in multiple sclerosis patients.
Secondary Indicia of Non-Obviousness
The majority held that the district court’s opinion was best read not as invoking a categorical rule, but as drawing conclusions on the “limited factual record” created in the case bearing on the effect of a blocking patent. The majority held that the court did not err in concluding that the defendants proved obviousness, considering the evidence on objective indicia.
The majority felt that the district court’s finding was supported by the record holding that the defendants offered unrebutted testimony from an expert in economics and pharmaceuticals that the Elan patent acted as a blocking patent for entities other than Acorda (the exclusive licensee to the Elan patent). The Elan Patent chilled others that wanted to pursue commercial opportunities like Ampyra. (“[O]ther entities that might want to pursue commercial opportunity like Ampyra . . . would not have access to [the sustained-release 4-AP formulation claimed in the Elan patent] because Acorda has that exclusive license.”). Within two years of the issuance of the Elan patent (issued in 1996), Acorda exclusively licensed it for spinal cord injury and subsequently, multiple sclerosis treatment. After that, the exclusive licenses blocked others from domestic marketing without risk of infringement.
Judge Newman’s Dissent
Judge Newman considered the exact same prior art and evidence that convinced the majority, and opined in her dissent that she would have ruled in exactly the opposite way of the majority.
Judge Newman stated that the cited the prior art showed”decades of failure” to achieve the reliable therapeutic uses achieved by Acorda and that many scientists in many institutions studied and eventually abandoned 4-AP as a treatment prospect for multiple sclerosis. Judge Newman reasoned that even though the abandoned published studies constituting the prior art on which the district court and the majority relied for obviousness of the Acorda Patents, in her view, all of that prior experimentation with 4-AP showed exactly the opposite – i.e., that work with 4-AP was abandoned due to the inability to balance the compound’s potential effectiveness with its toxicity.
Moreover, Judge Newman felt that the effect of the finding regarding “blocking patents” on the objective indicia of non-obviousness was harmful to both the patentee and the “the afflicted public,” who would have lost the opportunity for Ampyra® to have been developed if Acorda had foreseen the majority’s outcome.
Fall Out of the Decision
Given that the majority indicated that the decision is “limited” by its very unique and specific set of facts, this decision should be of “limited” import. However, the Federal Circuit’s decision has cleared the way for competing generic versions of Ampyra to be released immediately (pending FDA approval) and putting Acorda’s $500 million in annual sales of Ampyra in jeopardy. It remains to be seen, but given the sheer numbers and what is at stake financially, it appears likely that Acorda will file a petition for a writ of certiorari with the Supreme Court. Given the Federal Circuit’s finding that a blocking patent’s ability to overcome secondary indicia of non-obviousness is a very fact sensitive issue, it would be surprising if the Supreme Court heard the case.