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Federal Circuit Applies Presumption of Validity to Mistakenly Issued Claims
Practical Law Legal Update 9-520-1961 (Approx. 4 pages)
Federal Circuit Applies Presumption of Validity to Mistakenly Issued Claims
by PLC Intellectual Property & Technology
| Published on 05 Jul 2012 • USA (National/Federal) |
In Sciele Pharma Inc. v. Lupin Ltd., the US Court of Appeals for the Federal Circuit held that all claims issued by the US Patent and Trademark Office (USPTO) are presumed valid, even claims the USPTO mistakenly issued. Despite this holding, the Federal Circuit vacated the district court's preliminary injunction and remanded the case for futher proceedings.
Key Litigated Issue
The key litigated issue was whether the asserted claims' presumption of validity, and the accompanying burden of proof, change due to a USPTO error in issuing the claims.
Background
U.S. Patent No. 6,866,866 ('866 patent) concerns Fortamet, a controlled release metformin formulation, and claims certain dosage forms with a specified range for the mean time to maximum plasma concentration (Tmax). During prosecution of the '866 patent claims, the USPTO examiner rejected a number of the claims as obvious in light of certain prior art. In response to this rejection, the patent applicant:
- Cancelled a number of claims, including claim 1, which claimed that the formulation had an upper Tmax of 7.5 hours.
- Rewrote certain pending claims, which had an upper Tmax of seven hours, into independent form.
The examiner had agreed in an interview that the claims with the upper Tmax of seven hours are patentable over the cited prior art references.
Despite cancelling the rejected claims, including claim 1, the applicant received a notice of allowance from the USPTO for the cancelled claims. The applicant contacted the USPTO explaining that the notice of allowance mistakenly allowed cancelled claims. The USPTO issued a supplemental notice of allowance removing the cancelled claims and allowing the amended claims. Nevertheless, the '866 patent issued with the cancelled claims. After the patent issued, the patentee did not do anything further concerning the USPTO error.
Sciele Pharma Inc. (now known as Shionogi Pharma Inc. (Shionogi)) sued Lupin Ltd. (Lupin) for infringing the '866 patent and asserted, among other claims, claim 1 and a claim limited to dosage forms with an upper Tmax of seven hours. Shionogi moved for a preliminary injunction when Lupin attempted to launch its allegedly infringing formulation without a final judgment on the merits in the litigation.
The district court granted Shionogi's motion for a preliminary injunction, rejecting Lupin's argument that the '866 patent claims were improperly issued and concluding that Shionogi was likely to prevail on its infringement claim. Lupin appealed. The US Court of Appeals for the Federal Circuit vacated the preliminary injunction and remanded the case to the district court because it failed to address Lupin's obviousness arguments.
On remand, the district court considered Lupin's obviousness argument and concluded, among other things, that it must defer to the USPTO despite the odd sequence of events that resulted in the '866 patent. The district court then reinstated the preliminary injunction, which Lupin again appealed to the Federal Circuit.
Outcome
On July 2, 2012, the Federal Circuit issued its opinion vacating the district court's preliminary injunction and remanding the case to the district court. The Federal Circuit held that:
- The presumption of validity attaches to all issued claims so the clear and convincing evidence burden of proof always applies to all issued claims.
- There is no heightened burden of proof when evidence is presented which was previously considered by the USPTO.
- There is no lowered burden of proof when an alleged infringer raises a new prior art reference or argument during litigation that was not considered by the USPTO.
The Federal Circuit explained that, while the ultimate burden of proof does not change, new evidence not considered by the USPTO may carry more weight than evidence the USPTO previously considered, making it easier for the alleged infringer to meet its burden of proof.
Although the presumption of validity applies to all issued claims, the Federal Circuit noted that the court should consider the prosecution history, which in this case includes:
- The fact that the prior art references in the litigation were before the USPTO during the prosecution of the application for the '866 patent.
- The "bizarre" circumstances surrounding the issuance of the asserted claims.
The Federal Circuit conducted an obviousness analysis and ultimately concluded that:
- The district court's obviousness ruling was flawed because it focused on the fact that the prior art references were before the USPTO during prosecution. Importantly, the Federal Circuit reached its conclusion that the alleged infringer raised a substantial question of invalidity for both:
- a claim the USPTO determined was patentable in view of the cited prior art; and
- claims the patentee acknowledged were not patentable.
- The district court abused its discretion in issuing a preliminary injunction.
Practical Implications
This case is noteworthy because of the Federal Circuit's application of the presumption of validity even to mistakenly issued claims. In addition, counsel should note that patentees may not be able to rely on the presumption of validity to withstand a validity attack even where the attack is based on evidence already considered by the USPTO during the prosecution of the issued claims.