CAFC Panel Splits on Reasonable Expectation of Success Analysis

In a precedential decision authored by Judge Lourie, the U.S. Court of Appeals for the Federal Circuit affirmed a district court’s final judgment that certain claims of several patents owned by Salix Pharmaceuticals for a drug used to treat irritable bowel syndrome (IBS) and other ailments were invalid as obvious. The CAFC also affirmed an order of the district court that instructed the Food and Drug Administration (FDA) that the effective approval date of generic company Norwich’s Abbreviated New Drug Application (ANDA) may not precede the expiration dates of the claims of three other Salix patents that were found to be valid and infringed by Norwich. Norwich cross-appealed from that order and also from the denial of its motion to modify the district court’s final judgment.

The United States District Court for the District of Delaware held claim 2 of Salix’s U.S. Patent 8,309,569, claim 3 of U.S. Patent 10,765,667, claim 4 of U.S. Patent 7,612,199, and claim 36 of U.S. Patent 7,902,206 invalid as obvious. It also concluded that Norwich had failed to prove claim 8 of U.S. Patent 8,624,573, claim 6 of U.S. Patent 9,421,195, and claims 11 and 12 of U.S. Patent 10,335,397 invalid and found that Norwich infringed. The ‘573, ‘195 and ‘397 patents are directed to treating hepatic encephalopathy (HE) while the ‘569 and ‘667 patents are directed to treating IBS with diarrhea (IBS-D) and the ‘199 and ‘206 patents are polymorph patents.

On appeal, Salix argued that the district court reached its decision that the IBS-D and polymorph patents were invalid as obvious in error. With respect to the IBS-D patents, the key limitation on appeal had to do with the dosage amount that appears in the claims: “550 mg, three times per day (‘TID’), for a total of 1,650 mg/day.”

Norwich had asserted as prior art 1) a clinical trial protocol that had been published on the ClinicalTrials.gov website in 2005 (“the Protocol”), which described “a Phase II study evaluating twice-daily doses of 550 mg (1,100 mg/day) and 1,100 mg (2,200 mg/day) for 14 and 28 days for the treatment of IBS-D”; and 2) a 2006 journal article (“Pimentel”) that “teaches administering 400 mg, TID (1,200 mg/day), for the treatment of IBS,3 but further opines that the ‘optimal dosage of rifaximin may, in fact, be higher than that used in our study.’”

Prior Art References Considered Together Show Reasonable Expectation of Success

In its analysis, the district court found that the Protocol and Pimentel “disclose all limitations of the IBS-D claims” and that “a skilled artisan would have been motivated to combine those two references to arrive at what is claimed with a reasonable expectation of success.” Salix argued on appeal that there was insufficient evidence for the latter finding because “the highest prior art dosage amount that could have been supported with a reasonable expectation of success was the 1,200 mg/day dose evaluated by Pimentel.” But the CAFC explained that, while it was “hesitant to conclude as a general matter that the disclosure of a Phase II clinical trial plan, standing alone, provides an expectation of success sufficient to render obvious a dosage that was not included within the planned clinical trial,” the Protocol was not submitted alone but in conjunction with Pimentel, which expressly states that “the optimal dosage of rifaximin may, in fact, be higher than that used in our study.”

The district court did not clearly err, therefore, because “[t]he combined message that the skilled artisan would have discerned from the Protocol and Pimentel is that the optimal dosage for treating patients suffering from IBS disorders may be higher than 400 mg TID, and the next higher dosage unit from the Protocol was 550 mg.” In view of that and additional evidence in the record the CAFC said there was no clear error in the district court’s finding that “a skilled artisan would have had a reasonable expectation of success in administering the claimed 1,650 mg/day regimen for the treatment of IBS-D.” The CAFC also disregarded Salix’s argument that a press release asserted by Norwich as prior art was not properly established as being “by others” under pre-America Invents Act rules because the Protocol and Pimentel alone establish obviousness and the CAFC thus did not need to consider the press release.

Distinguishing Grunenthal and Pharmacyclics

With respect to the district court’s reasonable expectation of success analysis for the polymorph patent claims, Norwich asserted a prior art reference, Cannata, which discloses “that rifaximin exists in crystalline form with ‘outstanding antibacterial properties.’” The district court ultimately found the expert testimony supported the conclusion that, in view of Cannata, a skilled artisan would have detected the claimed invention and that the claims were therefore obvious. Salix attempted to argue that Grunenthal GMBH v. Alkem Laboratories Ltd., 919 F.3d 1333 (Fed. Cir. 2019) and Pharmacyclics LLC v. Alvogen, Inc., No. 2021-2270, 2022 WL 16943006 (Fed. Cir. Nov. 15, 2022) precluded such a holding, but the CAFC said that Grunenthal “underscored the factual nature of these types of inquiries and expressly held that it did ‘not rule out the possibility that polymorph patents could be found obvious,’” and that the Pharmacyclics case was not binding precedent on the district court. In its ruling the district court said it disagreed with the relevant point in Pharmacyclics, and the CAFC agreed this was the court’s prerogative, even in light of the subsequently-issued CAFC ruling that affirmed the district court’s view in that case, since it wasn’t precedential. Ultimately, said the CAFC:

“In Grunenthal and Pharmacyclics, the issue was whether a skilled artisan would have had a reasonable expectation of success in producing a crystalline form of a compound…. Here, the prior art included a process to produce a crystalline form of rifaximin, and the dispute centered around characterizing the crystalline form resulting from that process…. These distinct factual predicates support the district courts’ factual findings in each of these three cases under the clear error standard of review.”

Cross-Appeal

Turning to Norwich’s cross-appeal, the CAFC noted that the district court order finding Norwich’s ANDA approval could not be effective before the latest of the HE patents expires was appropriate because the ANDA sought approval for the treatment of both IBS-D and HE. Norwich argued that the district court should have specified that the approval date pertains only to the aspect of the ANDA seeking approval for the infringing HE Indication, but the CAFC said the order pertains to the entire ANDA that was submitted. “That the ANDA further recited a non-patent-protected indication does not negate the infringement resulting from the ANDA’s submission,” wrote the CAFC. “The order thus appropriately delayed the effective final approval date of “this infringing ANDA” submission. The order appropriately said nothing that would prevent approval of a new non-infringing ANDA.”

With respect to Norwich’s attempt to amend its ANDA to remove the infringing HE indication and to have the final judgment modified, the CAFC said the district court’s holding that consideration of the amended ANDA would be inequitable and inappropriate was reasonable. “[S]imply asserting that a patented indication has been carved out of an ANDA application does not necessarily satisfy the judgment or entitle the applicant to direct entry to the market,” wrote the CAFC.

Dissent

Judge Tiffany Cunningham dissented from the majority’s opinion as to the invalidity of the IBS-D patents. Cunningham said she would vacate the decision on that point and remand because “[a]fter reviewing the evidence relied on by the district court, applying a clear error standard, I am ‘left with the definite and firm conviction that a mistake has been committed’ regarding these findings.” She said the district court heavily relied on the prior art press release to conclude there was a reasonable expectation of success to arrive at the claimed invention but that “there is no reason that a skilled artisan ‘would have known about the successful RFIB 2001 Protocol results,’…, as to the claimed 1,650 mg/day (550 mg TID) dosage because the RFIB 2001 Press Release only discloses an improvement in the 550 mg twice-a-day group.”

Furthermore, the sentence on which the majority relied to affirm the district court’s finding of invalidity—“Recent data suggest that the optimal dosage of rifaximin may, in fact, be higher than that used in our study”—lacks discussion of any actual dosage and was only relied on by the district court for its motivation to combine analysis, not reasonable expectation of success, said Cunningham. The majority also made findings of fact in the first instance as to other prior art references that were not relied upon by the district court for its reasonable expectation of success analysis, Cunningham added.

Cunningham thus would have vacated this part of the judgment and remanded for consideration in the first instance of the teachings in the additional prior art references.

Bausch Health Companies, Inc., on behalf of Salix, which is its gastroenterology business, said the decision effectively prevents the approval of Norwich’s ANDA for XIFAXAN (rifaximin) 550 mg by the FDA until October 2029.”