Bayer Pharma AG v. Watson Laboratories, Inc.
874 F.3d 1316 (Fed. Cir. 2017)
Authored by Devin Jacobs
Statement of Facts: On April 25, 2012, Bayer Pharma AG, Bayer Intellectual Property GmbH, and Bayer HealthCare Pharmaceuticals (collectively “Bayer”) sued Watson Laboratories, Inc., Actavis, Inc., and Actavis Pharma, Inc. (collectively “Watson”) alleging infringement of three patents assigned to Bayer. Bayer Pharma AG v. Watson Labs., Inc., 183 F. Supp. 3d 538 (D. Del. 2016). The patents at issue were U.S. Patent No. 6,362,178 (“the ’178 patent), U.S. Patent No. 7,696,206 (“the ’206 patent”), and U.S. Patent No. 8,613,950 (“the ’950 patent”). Id. at 544. These patents protected the formulation of Bayer’s drug STAXYN® (vardenafil hydrochloride orally disintegrating tablets (“ODT”)), which is an orally disintegrating medication for the treatment of erectile dysfunction (“ED”). Id. at 543.
Watson counterclaimed for declaratory judgment of noninfringement of the ’178 and ’206 patent, but later both parties agreed to a Stipulation and Order stipulating to some claims brought by Bayer as long as they were valid and enforceable. Id. at 543-44. Watson raised an obviousness defense for all infringement claims stemming from the ‘950 patent. Id at 544. The United States District Court for the District of Delaware (the “district court”) held a bench trial where it ruled that the asserted claims of patents ’178 and ’206 were not obvious. Id. During post-trial briefing, the parties stipulated to infringement of the ’950 patent and this claim went on to be decided by the district court. Id. Bayer asserted that Watson infringed on claims 9 and 11 of the ’950 patent by using sorbitol and mannitol as the sugars in their formulation and using an immediate-release formula. Watson raised an obviousness defense regarding the infringement of the ’950 patent based on multiple references showing a motivation to: (1) create an ODT formulation of vardenafil; (2) select mannitol and sorbitol as sugar alcohols; and (3) make the ODT formulation immediate-release.
Procedural History: The district court held that Watson had not established by clear and convincing evidence that developing a generic vardenafil orally disintegrating tablet in the manner protected by the patent was obvious to a person of skill in the art and Watson had infringed upon the ’950 patent. Watson appealed to the Federal Circuit.
Question Presented: Whether claims 9 and 11 of the ’950 patent would have been obvious to a person of skill in the art.
Holding: Yes, claims 9 and 11 of the ’950 patent would have been obvious to a person of skill in the art. The Federal Circuit reversed.
Reasoning: Judge Moore, joined by Judges Lourie and O’Malley, authored the Federal Circuit’s opinion. The Federal Circuit applied the four-factor test for obviousness found in Graham v. John Deere Co., 383 U.S. 1, 17–18 (1966). The relevant factual determinations for obviousness are: “(1) the scope and content of the prior art; (2) the differences between the prior art and the claims at issue; (3) the level of ordinary skill in the art at the time the invention was made; and (4) objective evidence of nonobviousness, if any.” In re Kubin, 561 F.3d 1351, 1355 (Fed. Cir. 2009) (citing Graham v. John Deere Co., 383 U.S. 1, 17–18 (1966)). For the first part of the test, the Federal Circuit found that the district court had exhibited clear error when it found that the record did not contain any indications that ED drugs would be good candidates for ODT formulations. The Federal Circuit relied on six references that Watson’s expert witness cited to find that at the time of Bayer’s original patents the prior art contained references that a person of ordinary skill would have sought to formulate an ODT formulation of vardenafil. Exacerbating the district court’s error in this factor was its reliance on the commercial availability of ODT formulations of ED drugs at the time of the ’950 patent’s priority date. The Federal Circuit clarified that the commercial availability is not the proper inquiry, but whether any motivation found in references or supported by the knowledge of a skilled artisan would be sufficient to show the scope of the art. See Outdry Technologies. Corp. v. Geox S.p.A., 859 F.3d 1364, 1370–71 (Fed. Cir. 2017).
In assessing factor two of the Graham test, the Federal Circuit looked at whether the district court erred in finding that a person of ordinary skill in the art would not have been motivated to use sorbitol and mannitol as the sugars in an ODT formulation. The Federal Circuit did not discredit the lower court’s credibility determination but found their reliance only on the commercial availability of products using sorbitol and mannitol in ODT formulations to be clearly erroneous. The Federal Circuit relied on references submitted by Watson which showed that other references used these sugars in ODT formulations in the past and had certain benefits in their texture, taste, and manufacturing ease.
The district court in assessing factor three, the level of skill at the time of the ’950 patent, held that a skilled artisan would have first pursued a delayed-release formulation rather than immediate-release and such a distinction supports a finding of teaching away. The Federal Circuit found that the district court did not commit clear error in their evaluation of a skilled artisan’s considerations in formulations, but did find that the district court’s finding of teaching away was improper. The Federal Circuit stated that teaching away was not relevant because even if “better alternatives exist in the prior art[, this] does not mean that an inferior combination is inapt for obviousness purposes.” In re Mouttet, 686 F.3d 1322, 1334 (Fed. Cir. 2012). The Federal Circuit clarified that an artisan need not select the best option, only a suitable option to achieve the relevant goal.
Finally, the Federal Circuit assessed the fourth Graham factor of objective evidence of obviousness. The Federal Circuit agreed with the district court’s finding that STAXYN®’s unexpected increased duration of action when compared with Levitra® (STAXYN®’s non-ODT predecessor) lent support to Bayer’s claim of nonobviousness.
The Federal Circuit weighed each of the four factors and concluded that claims 9 and 11 of the ’950 patent would have been obvious to a person of skill in the art, reversing the district court’s holding that Watson failed to prove their obviousness defense by clear and convincing evidence.