Federal Court validity decisions do not bind the PTAB

Novartis AG v. Noven Pharms., Inc., (Fed. Cir. Apr. 4, 2017) (Before Prost, C.J., Wallach, and Stoll, J.) (Opinion for the court, Wallach, J.)

Appellants Novartis AG and LTS Lohmann Therapie-Systeme AG (“Novartis”) appeal from the final inter partes review (“IPR”) decisions of the U.S. Patent Trial and Appeal Board (“PTAB”).  The Novartis patents belong to the same family and relate to rivastigmine plus antioxidant, to reduce degradation in pharmaceutical compositions for Alzheimer’s disease. In response to petitions by Noven Pharmaceuticals, the PTAB held that the asserted claims of the two patents-in-suit were obvious and unpatentable, despite two prior district court litigations wherein the patents were held valid.

On appeal, Novartis argued that the PTAB unlawfully reached different conclusions than the Federal Circuit and U.S. District Court for the District of Delaware in addressing the “same” arguments and the “same” evidence.

The Court stated that “Novartis’s argument fails on factual and legal grounds.”  First, the record in front of the PTAB differed from that of the prior litigation, meaning that Novartis’ argument rests on a “faulty factual predicate.”  The PTAB record included new prior art, specifically one of the references relied upon to invalidate the patents-in-suit, and five new declarations.

“Nevertheless, even if the record were the same, Novartis’s argument would fail as a matter of law.”  The PTAB reviews patentability under the “preponderance of the evidence” standard.  See 35 U.S.C. § 316(e). District court litigation requires “clear and convincing” evidence.  Therefore, “the PTAB may properly reach a different conclusion based on the same evidence.”  This result comports with recent Supreme Court precedent.  See Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2146 (2016) (“These different evidentiary burdens mean that the possibility of inconsistent results is inherent to Congress’[s] regulatory design.”). Novartis also misconstrued the Court’s aspiration that “ideally” the USPTO should not arrive at a different conclusion.  See In re Baxter, International, Inc., 678 F.3d 1357, 1365 (Fed. Cir. 2012). The PTAB’s contrary decision was consistent with relevant precedent.

The PTAB found the claims unpatentable based on the combined teachings of two prior art references.  The first disclosed the rivastigmine and the second taught the use of antioxidants to reduce composition degradation. The PTAB found that a person of ordinary skill in the art (“POSA”) would have knowledge of organic chemistry including the ability to predict potential degradation based on the chemical structure of a composition. This was viewed as substantial evidence to support the PTAB’s finding that a POSA would assess the compound’s structure in advance, and not wait to add an antioxidant later. The Court affirmed the PTAB’s conclusion that the patents-in-suit were unpatentable as obvious based on the teachings of the prior art references.

Pursuant to Supreme Court precedent (Cuozzo Speed Techs., LLC) and Federal Circuit precedent (In re Baxter International, Inc.), federal court validity decisions do not bind the PTAB as a matter of law, because the burden of proof is different (clear and convincing versus preponderance). They are not binding either, if the facts are different, based on different evidentiary records.




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