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Intellectual Property | MONDAY, APRIL 4, 2016 | S11

cation letter that the FDA had accepted for Circuit’s holding with respect to the same Federal Circuit afirmed the PTAB decision. such discretion only if a party has “failed

review its Abbreviated New Drug Application two patents in Novartis v. Watson. Opening The district court’s reluctance to address to reasonably cooperate in expediting the
(ANDA) seeking approval for its generic ver- briefs in that appeal have not yet been iled.
the merits of the case before the exhaustion action,” as provided by 21 U.S.C. 355(j)(5)
sion of Novartis’ Exelon patch. The transder- Depomed v. Purdue: Impact of a Stay of IPR-related appeals raises questions about (B)(iii). The court also noted that Alcon
mal patch is used to treat dementia associated Pending IPR and Related Appeals.
how the timeline triggered by institution of would not be prejudiced in the event the
with Alzheimer’s and Parkinson’s diseases. In March 2012, Depomed brought infringe- an IPR would affect ANDA litigation. Although stay of litigation runs out the 30-month
Novartis immediately brought a patent ment suits under 35 U.S.C. §271(e)(2)(A) Depomed v. Purdue is not itself an ANDA case, stay of regulatory approval, because Alcon
infringement action against Noven in the against several generic challengers in the Dis- it suggests that a stay pending IPR and related could then prevent launch by seeking an
District of Delaware, asserting two patents, trict of New Jersey. The generic manufacturers appeals has the potential to easily run out injunction.
Nos. 6,316,023 and 6,335,031, which had been had submitted ANDAs seeking approval to the 30-month stay of FDA approval triggered A second district court likewise declined

successfully asserted against other generic market generic versions of Depomed’s neu- by a 371(e)(2) complaint, allowing an at-risk
to extend the stay of regulatory approval. In
challengers previously.
ropathic pain medication Gralise. While the launch by the generic challenger.
Eli Lilly & Co. v. Accord Healthcare, the court
In April 2014, while the district court litiga- Gralise suits were ongoing, Depomed iled granted Accord’s motion to stay the Hatch-
tion was ongoing, Noven iled two IPRs chal- unrelated suits based on three out of the six Takeaways and Key Issues
Waxman action pending the outcome of two
lenging the ’023 and ’031 patents, arguing that patents asserted previously against the gener- related IPRs. The court found that a stay
they were obvious in light of a combination ic challengers. The asserted patents claimed Benefits of PTAB Review for Generic would conserve judicial resources seeing
of prior art references. Shortly after Noven extended-release oral formulations and relate Challengers.
that success in the IPRs would result in all
iled its IPRs, the same patents were held valid to Depomed’s Acuform drug deliv-

as non-obvious in a separate ANDA litigation ery technology. In its complaints,
between Novartis and Watson Laboratories. Depomed accused sales of Purdue
The judge found that it was not known prior Pharma L.P.’s painkiller OxyContin
to the ’023 and ’031 patents that the active and Endo Pharmaceuticals’ abuse- Post-grant proceedings at the PTO have further
ingredient was susceptible to oxidative degra- resistant painkiller Opana ER.
dation, and therefore there was no motivation complicated the landscape of Hatch-Waxman litigation. In the litigation between Depomed
to add antioxidants to the drug formulation. and Purdue, the parties agreed to dis-
In May 2015, this validity inding was later The different standards of proof and potential for miss with prejudice all but two of the
afirmed by the Federal Circuit. The Federal lengthy stays pending PTAB review have injected patents-in-suit and to enter media-

Circuit ultimately credited the district court’s further uncertainty into an already high-stakes tion. On Jan. 24, 2014, Purdue iled
reliance on Novartis’ expert testimony that process.
petitions for IPR on the two remain-
oxidative degradation of the active ingredient ing ’475 and ’280 patents, which are
was not a well-known problem at the time both listed in the Orange Book. In the
of iling.
petitions, Purdue argued that certain
In the meantime, the PTAB instituted claims of both patents were invalid as
review in Noven’s IPRs on all requested being anticipated or rendered obvi-
grounds in October 2014. Curiously, Noven ous by a combination of prior art
did not request a district court stay pending references. Endo iled its own IPR petition PTAB review presents beneits to ANDA claims of the asserted patents being invali-

completion of the IPRs. Thus, litigation in the seeking review of the ’475 and ’280 patents.
ilers, and corresponding challenges to NDA dated and hence dismissal of all infringement
district court proceeded apace. The parties Meanwhile, after an unfruitful attempt at holders. The most signiicant advantage is claims against the 22 defendants. Eli Lilly
stipulated to dismiss claims based on the mediation, Purdue moved for a stay of the that, due to different standards of claim con- argued that it would be prejudiced if the
’023 patent and stipulated to infringement of district court proceedings pending comple- struction and proof, patents are more easily case were not resolved before expiration of
two claims of the ’031 patent. At the bench tion of the IPRs. On July 9, 2014, the court invalidated at the PTAB than in district court. the 30-month stay of regulatory approval,
trial, Noven argued that the ’031 patent was initially determined that Purdue’s request for For one, patent claims are construed more but the court rejected this argument. Like
obvious in light of the same prior art refer- a stay was premature in light of the fact that broadly at the PTAB, which employs a “broad- the Alcon court, the court here found that
ences relied upon in Watson’s obviousness the PTAB had not yet reached an institution est reasonable interpretation” standard. For it lacked a basis for extending the regula-

challenge, plus a subset of the references decision. However, because the PTAB’s deci- another, those same broadly-construed tory stay, since neither party had failed
raised in its IPRs.
sion was expected within 27 days, the court claims need only be proven unpatentable to reasonably cooperate in expediting the
In August 2015, the district court rejected also maintained the stay on discovery and by a preponderance of the evidence, instead litigation.
both of Noven’s arguments, again upholding signaled that it would reconsider Purdue’s of by “clear and convincing” evidence as
the ’031 patent as non-obvious. The following request after institution. The following day, required in district court. Further, the PTAB Conclusion
month, however, the PTAB reached the oppo- the PTAB instituted review of every claim allows generic challengers a “second bite
site conclusion. This decision was directly asserted by Depomed against Purdue other at the apple” by providing an independent Post-grant proceedings at the PTO have
contrary to two district court decisions, than two dependent claims in each of the ’475 review of the prior art, with no deference further complicated the landscape of Hatch-
one of which had already been upheld by and ’280 patents. Shortly thereafter, the court owed to previous district court or Federal Waxman litigation. The different standards of

the Federal Circuit. The PTAB’s written deci- stayed the litigation pending completion of Circuit adjudications regarding the same proof and potential for lengthy stays pending
sion acknowledged this conlict, but explained the IPRs, inding, inter alia, that the IPRs were patent.
PTAB review have injected further uncertainty
that the previous Article III court decisions likely to “substantially simplify” the issues at Due to these different standards and the into an already high-stakes process. Generic
were not preclusive for a number of reasons. a relatively early stage of the proceedings.
potential for opposing determinations from challengers clearly see distinct advantages
First, Noven had presented additional prior Between July and September 2015, the the PTAB and Article III courts, it can be easy to PTAB review of Orange Book patents, and
art and declaratory evidence. Second, the PTAB held that all reviewed claims in both for litigation strategy to devolve into a “race have responded by iling petitions at an accel-
PTAB had accorded persuasive weight to the Purdue’s and Endo’s IPRs were patentable. to the Federal Circuit.” As Fresenius v. Bax- erating pace of 100-150 per year. Due to the
testimony of Noven’s declarants. Third, the With this victory in hand, Depomed sought ter made clear, a inal, non-appealable PTO lower standard of proof, patents are more
PTAB explained that the standard of proof in to lift the stay in district court, pointing out cancellation can trump a non-inal judgment likely to be found unpatentable through an

IPR is by a preponderance of the evidence, that the PTAB had just conirmed the validity entered in district court, even if the underly- IPR than in district court litigation. Branded
lower than the district court standard of proof of the patents-in-suit in proceedings initiated ing district court judgment was afirmed by companies must take any IPRs iled on their
by clear and convincing evidence. In light of by two separate challengers. Depomed also the Federal Circuit.
Orange Book patents very seriously, as IPRs
the reviewed prior art, the PTAB held that all argued that lifting the stay was necessary to Stay Pending IPR Does Not Extend the can disrupt their Hatch-Waxman litigation
challenged claims of the ’023 and ’031 patent avoid undue prejudice, since Depomed was 30-Month Stay of FDA Approval.
strategies and put their patents at serious
were unpatentable as obvious.
entitled to have its dispute heard three years As of this writing, at least two district risk. Due to concern that IPR proceedings
The ultimate outcome is unclear. Noven after iling and at a point when the patents courts have stayed proceedings pending the of Orange Book-listed patents may disrupt
appealed the district court’s judgment of were nearing expiration. Despite the PTAB outcome of an IPR while denying an exten- the policies undergirding the Hatch-Waxman

validity to the Federal Circuit, but then vol- decision, the magistrate judge declined to lift sion for the 30-month stay of FDA approval regime, there has been proposed legislation
untarily dismissed the appeal in November the stay, a decision which the district court triggered by a 371(e)(2) action. In Alcon Labs. to exempt such patents from post-grant
2015. Novartis has iled a notice to the PTO judge afirmed. The court stressed that the v. Akorn, the court stayed the litigation sua proceedings. In the coming years it will
that it is appealing the IPR determinations, outcome of the Federal Circuit appeal would sponte, but denied the extension request be very important for all players in this
stressing that the PTAB’s determination of streamline the issues while the case remained on the ground that it lacked the authority ield to keep abreast of this ever-changing
unpatentability was at odds with the Federal
in its early stages. On March 24, 2016, the
to do so. The court explained that it has
landscape.