In Novartis AG v. Torrent Pharmaceuticals Limited, [2016-1352] (April 12, 2017), the Federal Circuit affirmed the PTAB’s determination that the challenged claims of U.S. Patent No. 8,324,283, and Novartis’ proposed substitute claims, were unpatentable as obvious.

On appeal, Novartis claimed that it was denied due process under the APA when the the Board used a reference that it rejected as being anticipatory in the institution decision, as additional evidence of the reason to combine.

The Federal Circuit noted that under the APA, an agency may not change theories in midstream without giving respondents reasonable notice of the change and ‘the opportunity to present argument under the new theory.  The Federal Circuit disagreed that the Board ruled the reference out of the case entirely in the Institution Decision.  The Federal Circuit said that the Board merely used the reference to reinforce its finding of obviousness, and that the Board’s discussion of the reference in the Final Written Decision was not inconsistent with its review of the reference in the Institution Decision.  The Federal Circuit further noted that the parties debated the reference at length throughout the proceeding and in the same context that it was discussed by the Board in the Final Written Decision.  The Federal Circuit concluded that it is quite clear that Novartis had more than sufficient notice and opportunity to be heard the reference’s potential relevance, and in fact actively and repeatedly attempted to distinguish the reference to defeat the very argument relied on by the Board in the Final Written Decision.

Novartis also argued that the Board further erred in its motivation to combine analysis because it failed to read the prior art as a whole and overlooked critical evidence of the combination’s known disadvantages.  Where the prior art contains apparently conflicting teachings (i.e., where some references teach the combination and others teach away from it) each reference must be considered for its power to suggest solutions to an artisan of ordinary skill, considering the degree to which one reference might accurately discredit another.  The Federal Circuit noted that the Board expressly discussed the negative properties in the Final Written Decision, and noted that, despite this potentially discouraging characteristic, it was still commonly used.  In the end, the Federal Circuit was not persuaded that Novartis presented its arguments in such a way that it would be appropriate to find fault in the Board’s arguably limited treatment of those arguments in the Final Written Decision.

Although the prior art must be considered as a whole and the disadvantages of a reference must be considered in addition to the benefits, there is no requirement that the Board expressly discuss each and every negative and positive piece of evidence lurking in the record to evaluate a cursory argument.  Given that the Board cited to the relevant pages of Novartis’ Patent Owner Response, we find no reason to assume the Board failed to consider the cited negatives simply because they were not recited at length in the Board’s Final Written Decision.

With respect of objective indicia of non-obviousness, the Board rejected Novartis argument of unexpected results because it was not commensurate with the scope of the claims.  On appeal Novartis argued that the evidence nonetheless applied to the narrower dependent claims, but the Federal Circuit found that Novartis did not separately argue the dependent claims, and therefore waived the argument.

Novartis further argued that the invention enjoyed commercial success, industry praise, and met a long-felt but previously unsolved need.  For objective indicia evidence to be accorded substantial weight, a nexus must exist between the evidence and the merits of the claimed invention.  Where the objective indicia actually results from something other than what is both claimed and novel in the claim, there is no nexus to the merits of the claimed invention.  The Federal Circuit agreed that Novartis’ proffered evidence is not probative of the nonobviousness inquiry, because other products were known with the same feature, even though had not yet been approved by the FDA.