A New Framework For 'Blocking Patents' And Obviousness?

Secondary considerations, or objective indicia of nonobviousness, can be a useful tool for patent owners attempting to overcome an obviousness challenge under 35 U.S.C. § 103. A recent decision by the Federal Circuit, however, leaves the treatment of secondary considerations in question when a so-called “blocking patent” may exist.

In Acorda Therapeutics Inc. v. Roxane Laboratories Inc., the Federal Circuit affirmed the District of Delaware’s decision to discount strong evidence of secondary considerations in the presence of a blocking patent. A “blocking patent” is any patent that might have prevented another from using its covered technology or from making improvements to that technology. The Federal Circuit’s decision is of particular import to the pharmaceutical industry, as many pharmaceutical companies engage in life-cycle management that involves filing an initial patent to protect an overarching invention followed by derivative patents to cover improvements to the original invention. Yet the Federal Circuit’s decision in Acorda is not necessarily limited to life sciences, and its implications extend as well to industries such as software.

This article addresses the Federal Circuit’s decision in Acorda and considers its impact on obviousness disputes going forward, and the ways a litigant might prove or refute secondary considerations when blocking patents are at issue.

Acorda: Discounted Evidence of Secondary Considerations

Evidence of secondary considerations can play a critical role in determining whether an invention was obvious. Evaluation of factors such as commercial success, long-felt but unmet need, and failure of others to create the invention is intended to be a check against hindsight perspective in the obviousness analysis. For example, evidence of commercial success of a patented product weighs against a finding of obviousness. If the invention were truly obvious, economic incentives would have driven others to develop the product.

In Acorda, the Federal Circuit affirmed the District of Delaware’s decision to discount such evidence of secondary considerations, including commercial success, long-felt but unmet need, and failure of others, given the existence of a blocking patent that might have deterred others from making the invention. The Federal Circuit found that the blocking patent at issue — and the accompanying risk of infringement liability — provided an alternative explanation for why others did not develop the claimed inventions.

The case was filed by Acorda Therapeutics Inc. and Alkermes Pharma Ireland Ltd. in 2014 against Roxane Laboratories Inc., Mylan Pharmaceuticals Inc., and Teva Pharmaceuticals USA Inc., among others. Acorda asserted that the defendants infringed four patents owned by Acorda and one patent exclusively licensed to Acorda, the Elan patent. The Elan patent was an earlier, broader patent generally covering the use of a 4-aminopyridine sustained-release formulation to treat multiple sclerosis. The Acorda patents claimed more specific 4-AP dosing and treatment regimens to improve walking in multiple sclerosis patients. The defendants stipulated to infringement but challenged the validity of the asserted claims, asserting the Acorda patents were obvious.

In addressing secondary considerations, the District Court found that (1) Ampyra (Acorda’s commercial embodiment of the Acorda patents) was a commercial success and that this success related to the specific features claimed in the Acorda patents, (2) there had been a long-felt need for a method of treating walking in patients with multiple sclerosis, and (3) others had in fact attempted but failed to develop a solution to this long-felt problem. Yet despite this evidence, the district court found that these secondary considerations did not sufficiently weigh in favor of nonobviousness of the Acorda patents because the earlier Elan patent “provide[d] an independent, alternative reason why [another person of ordinary skill in the art] would not have attempted to develop the invention claimed in the Acorda Patents.”[1]

The Federal Circuit affirmed the district court’s determination on secondary considerations. The Federal Circuit concluded that the district court did not err in finding evidence of commercial success, long-felt need, and other secondary considerations. Yet it also found the district court did not err in discounting these considerations based upon the Elan patent.

Notably, the Federal Circuit did not appear to require actual evidence that the Elan patent had deterred others from developing the claimed technology, suggesting that theoretical deterrence is sufficient. The court acknowledged the difficulty of establishing contrary evidence, explaining that “[i]n a particular case, a court may ultimately be left, for its evaluation, with the solid premise of the diminished incentives, plus some evidence (possibly weak or ambiguous) about the significance of deterrence, together with a background sense of the general realities in the area at issue that can affect the weight to be given to the evidence in the specific case.”[2]

In reaching its decision, the Federal Circuit rejected Acorda’s arguments that the Elan patent (which no one disputed covered the inventions in the Acorda patents) did not sufficiently block other potential innovators. For example, the court rejected Acorda’s arguments that the Elan patent did not block other innovators’ use or sales of the inventions outside the United States, and that potential innovators were still free to practice the inventions under the safe harbor provision of 35 U.S.C. § 271(e)(1). With respect to Acorda’s first argument, the Federal Circuit explained that potential use outside the United States, while relevant, was not supported by concrete evidence. Regarding the safe harbor provision, the Federal Circuit reasoned that it did not eliminate infringement liability for the eventual marketing of the product.

In a dissenting opinion, Judge Pauline Newman starkly disagreed with the majority’s decision, reasoning that a prior patent would not have categorically precluded others from further developing the technology.

How Acorda Differs From Previous Blocking Patent Cases

Acorda is not the first time the Federal Circuit has addressed the interplay of blocking patents and secondary considerations. In past cases, however, the Federal Circuit’s evaluation of the potential impact of blocking patents was limited to commercial success.[3] Acorda expands the relevance of blocking patents beyond the factor of commercial success to secondary considerations of long-felt need and failure of others. It also provides a framework under which defendants can potentially argue that blocking patents discount evidence of other secondary considerations such as industry praise. And, given facts such as in Acorda, the decision effectively renders a blocking patent’s existence a dispositive factor in the secondary considerations analysis despite actual evidence of such secondary considerations.

The long-term ramifications of the Federal Circuit’s decision in Acorda are unclear, particularly given Judge Newman’s dissenting opinion and Acorda’s recent petition for panel rehearing and rehearing en banc. At least for the immediate future, however, it is important for litigants to consider how the decision may impact the secondary considerations analysis, including the scope of potential discovery, not only in pharmaceutical cases where follow-on patents are common but also in software or other cases where prior blocking patents may exist.

Evaluating Secondary Considerations in View of Blocking Patents Post-Acorda

Although the blocking patent proved a decisive factor in Acorda, the Federal Circuit urged repeatedly that its decision was fact-specific and should not be read as a categorical rule.

Moreover, in stressing that its decision did not impose a per se rule, the Federal Circuit expressly identified a number of factors that could still be used to tip the scales of the secondary considerations analysis. These factors included: whether a license or cross-license to the blocking patent is possible, whether third parties could successfully challenge the blocking patent, whether the blocking patent covers all potential improvements to the invention, the size of the market opportunities, and the costs associated with development of the inventions. Further, in Acorda, the court was not presented with actual evidence of markets for the inventions outside the United States, or any argument that the safe harbor provisions would still have incentivized innovation, given the territorial limits or expiration date of the blocking patent. Finally, the Federal Circuit left the door open for patent holders to argue that a blocking patent did not in fact block development.

With these factors in mind, patent defendants should obviously look for any potential blocking patents that could have had a deterrent effect, even theoretically. And once a blocking patent is asserted, litigants should carefully evaluate and look for the potential ways to establish innovation was not in fact deterred. These include:

whether there are existing licenses to the blocking patent;
whether the blocking patent owner previously extended offers to license or generally engaged in a practice of licensing patents;
whether the defendants have patents with cross-licensing value to the blocking patent owner;
whether others had actually attempted but failed to invent solutions despite the blocking patent;
any potential market for foreign development, use and/or sales;
the expiration date of the blocking patent and the potential for safe-harbored research and development and a lucrative market post-expiration;
arguments that the blocking patent does not cover all improvements to the technology;
arguments that the blocking patent is invalid or not infringed; and/or
that the potential market is so huge and/or development costs so low that the blocking patent would not have stifled innovation.

Finally, litigants must be prepared to seek discovery to find evidence of the factors above. If taken to its extreme, the Acorda case could well expand discovery, and matters for a court to resolve, to all of the factors identified above.

In sum, although the long-term implications of the Federal Circuit’s decision in Acorda are unclear, it has the potential to broadly impact the secondary considerations analysis when blocking patents are at play. Litigants must now be all the more mindful of the existence of blocking patents, whether asserted in the litigation or not, and be prepared to take fulsome discovery on the potentially relevant factors.

This article previously appeared on IP Law360. Reprinted with permission.

[1] Acorda Therapeutics, Inc. v. Roxane Labs. , 2017 U.S. Dist. LEXIS 48479, at *105 (D. Del. Mar. 31, 2017).

[2] Acorda Therapeutics, Inc. v. Roxane Labs. , 2018 U.S. App. LEXIS 25536, at *67 (Fed. Cir. Sept. 10, 2018).

[3] E.g., Merck Sharp & Dohme Corp. v. Hospira , 874 F.3d 724, 730-31 (Fed. Cir. 2017); Galderma Labs. v. Tolmar, Inc. , 737 F.3d 731, 740-41 (Fed. Cir. 2013); Merck & Co. v. Teva Pharms. , 395 F.3d 1364, 1376-77 (Fed. Cir. 2005).