The Federal Circuit affirmed a decision of the Patent Trial and Appeal Board (PTAB) in an inter partes review (IPR) proceeding brought by the Coalition for Affordable Drugs X LLC holding that a patent owned by Anacor Pharmaceuticals was unpatentable due to obviousness. Anacor’s patent is directed to the use of a chemical compound, tavaborole, to treat fungal infections that occur under fingernails and toenails. The Board found that one claim of the patent is obvious in light of two prior art references. See Anacor Pharm., Inc. v. Iancu,No. 2017-1947, 2018 (Fed. Cir. May 14, 2018) (Before Reyna, Bryson, and Stoll, J.) (Opinion for the court, Bryson, J.).
The Court held that the Board did not violate due process and the procedural requirements of the Administrative Procedure Act (APA) that require adequate notice of, and an opportunity to respond to, the grounds of rejection determined by the Board.
Anacor argued that the Board changed its theory of invalidity by ultimately relying on a different combination of prior art references without providing Anacor proper notice or an opportunity to respond. However, the Board’s final written decision explicitly stated that its conclusion of obviousness was founded upon the same combination of two prior art references and same set of inferences as proposed in the petition by the Coalition.
Additionally, the Court determined that it was appropriate for the petitioner to rely on new evidence from references not included in the initial petition, to support its burden of showing a prima facie case of obviousness. There is no blanket prohibition against the introduction of new evidence during an inter partes review proceeding, indeed new evidence should be expected. A petitioner can introduce new evidence following the petition, if it is a legitimate reply to evidence introduced by the patent owner, or if the new evidence is used to show the level of knowledge skilled artisans possess when reading the prior art references identified as grounds for obviousness. Here, the new evidence was properly offered to show the state of the art at the time of the patent application at issue. Furthermore, Anacor was given sufficient notice and an opportunity to respond. Thus, the Board did not violate due process or the procedural requirements of the Administrative Procedure Act.
Regarding obviousness, the Court held that the Board did not disregard the structural differences between the chemical compounds disclosed in the prior art references or improperly combine the references based on the similar functions of the chemical compounds disclosed. Anacor failed to cite any precedent holding that obviousness of a method of using a chemical compound can only be based on structural similarity to prior art compounds. Thus, despite some structural differences, it was proper for the Board to rely on the substantial functional similarities between the compounds in the prior art references, to conclude a person of ordinary skill in the art would have been motivated to combine them.
Finally, the Court determined that the Board did not improperly shift the burden of proof by requiring the patent owner, Anacor, to disprove obviousness. There was no evidence in the Board’s final written decision to suggest that it shifted the burden to Anacor. Rather, the Board explicitly stated that it was the petitioner’s burden to show unpatentability by a preponderance of evidence.
It is permissible for a petitioner in an inter partes review proceeding to introduce new evidence, not in the initial petition, if the new evidence is in response to evidence introduced by the patent owner or documents the knowledge that skilled artisans would bring to bear in reading the prior art identified as grounds for obviousness. The opposing party must be given adequate notice of the new evidence and an opportunity to respond. Although structural similarity between chemical compounds is a strong indicator of a motivation to combine and reasonable expectation of success, other arguments may support obviousness, case by case, such as functionally similar properties.
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