On December 3, 2014, the US Court of Appeals for the Federal Circuit issued an opinion in Par Pharmaceutical, Inc. v. TWi Pharmaceuticals, Inc., vacating the US District Court for the District of Maryland's judgment of patent invalidity against Par Pharmaceutical, Inc., holding that the district court incorrectly applied the law of inherency in the context of obviousness (No. 2014-1391, (Fed. Cir. Dec. 3, 2014)). The court held that the concept of inherency must be limited in the obviousness context and applies only when the prior art limitation at issue is the "natural result" of the combination of prior art elements.

In this Hatch-Waxman case, Par asserted US Patent No. 7,101,576 ('576 patent) against TWi after TWi filed an Abbreviated New Drug Application (ANDA) seeking to market a generic version of Par's Megace ES product. Megace ES is a nanosized megestrol acetate (megestrol) formulation used to promote weight gain. The '576 patent is directed to methods of using megestrol nanoparticles to promote weight gain in patients suffering from anorexia or loss of body mass.

Par developed Megace ES after receiving Food & Drug Administration (FDA) approval in 2001 to market a generic version of Megace OS, a micronized (not nanosized) megestrol drug developed by Bristol-Myers Squibb and used to promote appetite and reduce weight loss in patients suffering from anorexia or AIDS. Par developed Megace ES using known "NanoCrystal" technology to reduce the particle size from the micrometer range to the nanometer range.

After submitting the application that resulted in the '576 patent, Par discovered that the prior art micronized megestrol formulations demonstrated a strong "food effect" such that patients who took the drug with a meal showed a significantly higher rate of absorption compared to those who took it while fasting, which can be disadvantageous to patients with reduced appetites. Par then amended the '576 patent's independent claims to include two "wherein" clauses limiting the claims to formulations that do not have a food effect.

After a bench trial, the district court found the asserted '576 patent claims invalid as obvious under 35 U.S.C. § 103 based on a combination of prior art disclosing:

Significantly, the district court determined that even though the prior art did not explicitly disclose the lack of food effect claimed in the '576 patent, the diminished food effect was an inherent property of the megestrol nanosized formulation. In reaching this conclusion, the district court relied on prior art that implied or merely demonstrated a potential for nanoparticle drug formulations to reduce a food effect. The court also held that there was sufficient motivation to combine the prior art references and that secondary considerations of non-obviousness, including evidence of unexpected results and long-felt need, did not rebut the obviousness determination.

On appeal, the Federal Circuit held that the district court misapplied the inherency doctrine in the obviousness context and vacated for further consideration. In particular, the Federal Circuit determined that, while the inherency doctrine may be used to supply a missing claim limitation in an obviousness analysis, the party relying on the doctrine must meet the high standard of showing that the limitation necessarily flows from, or is the natural result of, the combination of elements explicitly disclosed in the prior art. Because the prior art on which TWi and the district court relied did not expressly disclose the claimed lack of food effect, but demonstrated only a potential for nanoparticle technology to decrease the food effect, vacating and remanding for further consideration of the prior art was necessary.