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July 1, 2020

Divided Federal Circuit Affirms Result in Immunex v. Sandoz Etanercept Litigation

We previously reported on the decision by the District of New Jersey (Cecchi, J.) to uphold the validity of U.S. Patent No. 8,063,182, related to “the fusion protein etanercept, the active ingredient in Immunex’s product ENBREL” and U.S. Patent No. 8,163,522, related to ENBREL’s method of manufacture.  As we reported at the time, Sandoz intended to, and did appeal the result.

Today, the Federal Circuit upheld the district court’s result, although it disagreed with portions of the district court’s reasoning.  Sandoz argued that the patents-in-suit were invalid for obviousness-type double patenting (OTDP), based on the interest in those patents acquired by Immunex, which had owned other etanercept patents which have since expired.  The Federal Circuit panel unanimously agreed with Sandoz that the “all substantial rights” test can be informative in determining common ownership in the OTDP context, at least where one of the rights transferred is the right to prosecute the patents (which Immunex had received).  By a divided vote, however, the panel held that the agreement at issue did not transfer all substantial rights from the assignee, Roche, to the exclusive licensee, Immunex.  The court focused on the enforcement rights that were left to Roche, and emphasized that even though Roche did not have the first right to sue, it still retained a second right to sue, and once that right was triggered, only Roche had the ability to determine whether suit was brought.

The Federal Circuit also affirmed the district court’s finding that the priority application for the patents-in-suit disclosed possession of two aspects of the invention: (1) the full-length p75 DNA sequence; and (2) the claimed p75-IgG1 fusion protein.  The Federal Circuit rejected Sandoz’s argument that written description for the p75 DNA sequence could only be found by going outside the specification, finding that a patent specification “need not re-describe known prior art concepts,” and that the POSA reading the specification, in view of the art, would have arrived at that full-length sequence.  Regarding the p75-IgG1 fusion protein, the court rejected Sandoz’s argument that the district court looked to the claims for the required “blaze marks,” finding that those blaze marks were properly present in the specification.

Finally, the Federal Circuit affirmed the district court’s rejection of Sandoz’s obviousness argument.  The court held that it was not error for the district court to focus on therapeutic efficacy when considering whether there was a motivation to combine the prior art, even though the claims are not directed to treatment of any disease or condition, because therapeutic efficacy was set forth in the parties’ briefs and arguments at trial as a reason the POSA would be motivated to combine the prior art, and because there were two claims directed to pharmaceutical compositions.  The court also held that the district court analyzed the objective indicia properly, including finding a presumption of nexus because Immunex had shown that the asserted objective evidence was tied to a specific product (ENBREL) and that product is the invention disclosed and claimed in the patents.

Judge Reyna dissented on the OTDP issue.  He agreed that the “all substantial rights” test was the correct one.  Applying that test, he concluded that the rights Roche retained were illusory.  First, Immunex could at any time nullify Roche’s rights by ordering Roche to assign the patents-in-suit to Immunex upon a “de minimis” payment of $50,000.  Second, Roche’s secondary right to sue was effectively subject to Immunex’s approval, because Immunex could nullify Roche’s right to sue by issuing a royalty-free sublicense to the alleged infringer during the time before Roche was allowed to sue.  Judge Reyna therefore would have treated the patents-in-suit as commonly owned with Immunex’s expired patents, and he concluded that the patents-in-suit were not patentably distinct from the expired ones.  He agreed with Sandoz that the district court had applied the wrong test for patentable distinctness, an issue the majority did not reach.

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