Novartis AG v. Noven Pharm. Inc. United States Court of Appeals of the Federal Circuit,2017 853 F.3d 1289

A. The Patents-in-Suit

The Patents-in-Suit generally disclose a pharmaceutical composition comprising a compound commonly known as rivastigmine in free base or acid addition salt form and an antioxidant. Rivastigmine is useful for the treatment of Alzheimer's disease.”

B. Prior judicial opinions did not bind the PTAB

Novartis alleges that a fundamental legal error pervades the PTAB's Final Written Decisions: the PTAB unlawfully reached different conclusions than our court and the U.S. District Court for the District of Delaware (“Delaware District Court”), which addressed the “same” arguments and the “same” evidence and found the Asserted Claims nonobvious in two prior opinions, i.e., Novartis Pharm. Corp. v. Watson Labs., Inc., 611 Fed. Appx. 988 (Fed. Cir. 2015) and Novartis Pharm. Corp. v. Noven Pharm., Inc., 125 F.Supp.3d 474 (D. Del. 2015) (Noven D. Del.). In support of that position, Novartis relies substantially on a single sentence from our decision in In re Baxter International, Inc., 678 F.3d 1357 (Fed. Cir. 2012).

Novartis's argument fails on factual and legal grounds. As an initial matter, the record here differed from that in the prior litigation, meaning that Novartis's argument rests on a faulty factual predicate. With respect to Watson, the PTAB found that it “does not control here because [Appellee] Noven has presented additional prior art” like Sasaki “and declaratory evidence that was not before the [c]ourt” in that case. Similarly, as to Noven D. Del., the PTAB found that it did not control because the parties provided additional evidence that was not before the Delaware District Court. It is unsurprising that different records may lead to different findings and conclusions.

Nevertheless, even if the record were the same, Novartis's argument would fail as a matter of law. The PTAB determined that a “petitioner in an inter partes review proves unpatentability by a preponderance of the evidence (see 35 U.S.C. § 316(e)) rather than by clear and convincing evidence[ ] as required in district court litigation,” meaning that the PTAB properly may reach a different conclusion based on the same evidence. That position comports with recent Supreme Court precedent, which held that

Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2146 (2016) (citation omitted). Thus, the prior decisions in Watson and Noven D. Del. did not bind the PTAB.

Finally, Baxter does not necessitate a different conclusion. There, we stated that the USPTO “ideally should not arrive at a different conclusion” if it faces the same evidence and argument as a district court. Novartis treats “ideally” in that passage as a mandate. However, the context in which that passage appears demonstrates that we used “ideally” to connote aspiration and, in fact, recognized that Congress has provided a separate review mechanism before the USPTO with its own standards. We will not imbue Baxter with a meaning that the decision itself does not support.

C. Substantial evidence supports the PTAB's underlying factual findings

As part of the obviousness inquiry, we consider whether a PHOSITA would have been motivated to combine the prior art to achieve the claimed invention. Novartis contends that substantial evidence does not support several of the PTAB's factual findings regarding the motivation to combine Enz and Sasaki. We disagree.

Before we address Novartis's motivation to combine concerns, we first must understand what Enz and Sasaki disclose. The PTAB found that Enz discloses a transdermal patch containing rivastigmine and an acrylic polymer. The PTAB also found Sasaki teaches that (1) the therapeutic effect of a compound combined with acrylic polymer tends to be greatly reduced due to the breakdown and dissipation of the drug when stored for a long time; and (2) if an antioxidant is added to the combination, the drug will be stably present without breaking down. Novartis does not challenge these findings.

Turning to its motivation to combine arguments, Novartis argues that the record contains no evidence that a PHOSITA “would have been motivated to add an antioxidant” to rivastigmine “absent evidence of oxidative degradation.” First, Novartis avers that the record shows a PHOSITA “would only have added an antioxidant when required to address a known oxidative degradation problem” detected during testing. Novartis ignores the PTAB's findings as to the PHOSITA's skill in the art. The PTAB found that a PHOSITA would have, inter alia, “had knowledge of organic chemistry and been able to analyze and recognize certain characteristics of a compound based on its chemical structure.” The PTAB further found that “the ability to predict reactivity based on functional group properties is a foundation of organic chemistry, and a [PHOSITA] would have understood that the presence of particular functional groups in a molecule has consequences,” such as degradation. Ample record evidence from scholarly sources supports the PTAB's findings. The expert testimony of Dr. Schöneich corroborates the content of these sources. Thus, substantial evidence supports the PTAB's finding that a PHOSITA would not have waited to add an antioxidant until discovering degradation during testing, but would have assessed a compound's structure in advance of testing to determine whether an antioxidant should be added.

Second, Novartis alleges that Sasaki “does not mention rivastigmine” or otherwise disclose that rivastigmine is susceptible to oxidative degradation and that the PTAB reached the opposite conclusion by failing to read that reference as a whole. To support its position, Novartis cites the testimony of its expert, Dr. Klibanov, and contends that the PTAB “wrongly dismissed this evidence of the art. … ” Novartis's argument fails for two reasons. First, Novartis predicates its argument on the belief that the prior art must expressly disclose a motivation to combine; however, a motivation to combine the relevant prior art teachings does not have to be found explicitly in the prior art. Second, the PTAB addressed Dr. Klibanov's testimony and found that it was not relevant because it did not address transdermal devices with acrylic polymer. Novartis's argument asks us to reweigh the evidence and give greater weight to Dr. Klibanov's testimony than did the PTAB, which we may not do.

Finally, Novartis contends that substantial evidence does not support the PTAB's finding that a PHOSITA would have predicted that “rivastigmine has the potential to oxidatively degrade based on its [chemical] structure.” In support of its position, Novartis again cites the testimony of Dr. Klibanov, who purportedly testified that the chemical structure of a compound cannot alone inform whether that compound is susceptible to oxidative degradation. Novartis's final argument fails for the same reasons as its first two arguments: it ignores the PTAB's findings as to the skill in the art possessed by a PHOSITA, and substantial evidence supports the PTAB's finding that a PHOSITA would have predicted that rivastigmine has the potential to oxidatively degrade based on its chemical structure. Novartis asks us to give greater weight to the testimony of Dr. Klibanov than did the PTAB, which we may not do.