In a recent precedential decision, a split Federal Circuit (Judges Dyk and Taranto in the majority, Judge Newman, dissenting) issued a lengthy, 53-page decision, regarding the obviousness doctrine.  Judge Taranto, writing for the majority, engaged in a fact-intensive analysis to determine that a ‘blocking patent’ mooted evidence of objective indicia of non-obviousness and found the patents-in-suit invalid on obviousness grounds.

Acorda owned four patents (the “Acorda patents”) listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations (“Orange Book”) for Ampyra®, a multiple sclerosis (“MS”) medication containing the active ingredient 4-aminopyridine (“4-AP”).  Importantly, Acorda listed a fifth patent, U.S. Patent Number 5,540,938 (the “Elan patent”), in the Orange Book for Ampyra.  Acorda is the exclusive licensee for the Elan Patent.  The Elan patent predates the Acorda patents and broadly claims administering a sustained-release formulation of 4-AP to individuals with multiple sclerosis.  The Acorda patents further claimed that such a drug must be administered (1) in a 10 mg dose twice a day (2) at that stable dose for the entire treatment period of at least two weeks (3) to achieve 4-AP serum levels of 15–35 ng/ml and (4) to improve walking.

A number of pharmaceutical companies (the “defendants”) submitted Abbreviated New Drug Applications (“ANDAs”) seeking to market generic versions of Ampyra.  Acorda (together with another plaintiff) sued defendants alleging the ANDAs infringed the Elan and Acorda patents under the Hatch-Waxman Act.  Defendants stipulated to infringement but challenged the validity of the asserted claims of the Elan and Acorda patents.  The district court held the asserted claims of the Acorda patents were invalid for obviousness but upheld the asserted claims of the Elan patents.  Acorda appealed the district court’s finding of invalidity, the Federal Circuit affirmed.

The court first reviewed the history of 4-AP, noting that it was first identified as a pharmacological agent in 1902 and that a study in the 1980s first identified 4-AP efficaciousness in MS patients.  The Court cited numerous studies throughout the 1990s that showed various dosages and delivery routes of 4-AP demonstrated various benefits in MS patients.  All cited studies involved immediate-release, rather than sustained-release, formulations of 4-AP.

Elan, known for its work on sustained-release formulations, began developing a sustained-release formulation of 4-AP and filed for what eventually became the Elan patent.  Elan embarked on a series of studies to show their sustained-release formulation of 4-AP was efficacious for MS patients.  At that same time, Acorda began studying use of 4-AP in patients with spinal cord injuries.  In 1997, Elan granted Acorda an exclusive license to use the sustained-release formulation of 4-AP covered by the Elan patent in patients with spinal cord injuries.  Eventually, Elan indicated it was abandoning its research in using sustained-release 4-AP formulations in MS patients, Acorda requested to take over the research, and Elan agreed, also expanding the license it had granted Acorda in the Elan patent.  In 2004, after further study, Acorda filed a provisional patent application which was the basis for the Acorda patents, which issued between August 2011 and March 2014.

The FDA approved Ampyra in 2010.  Between 2010 and 2015, total sales were $1.7 billion with net income of $998.7 million.  Net sales increased at an average rate of 20% per year while volume sold increased at an average rate of 8% per year, despite increasing prices.  Royalties from licenses to sell Ampyra outside the United States generated an additional $135 million.  Moreover, the market response to Ampyra was restrained as it was approved only to improve walking in MS patients; it is, however, the first and only drug approved for such indications.  Other pharmaceutical companies conducting trials for similar drugs failed to find an efficacious drug.

Defendants challenged the validity of the Acorda patents, claiming they were obvious in light of the Elan patent and the district court found in their favor.  Acorda appealed.

Acorda made a number of arguments alleging the district court erred in invalidating the Acorda patents.  The Federal Circuit rejected each of Acorda’s arguments.  Arguably, the most important revolved around the Elan patent, which was characterized as a ‘blocking patent’.  Acorda argued that its patents were not obvious based on objective indicia of non-obviousness – Ampyra had substantial and increasing sales (commercial success), was the first and only approved drug of its type while other companies had failed to launch similar products (failure of others), and gained immediate success (long-felt but unmet need).

Both the district court and the Federal Circuit rejected those arguments because of the Elan patent.

A patent has been called a “blocking patent” where practice of a later invention would infringe the earlier patent. The existence of such a blocking patent may deter non-owners and non-licensees from investing the resources needed to make, develop, and market such a later, “blocked” invention, because of the risk of infringement liability and associated monetary or injunctive remedies. If the later invention is eventually patented by an owner or licensee of the blocking patent, that potential deterrent effect is relevant to understanding why others had not made, developed, or marketed that “blocked” invention and, hence, to evaluating objective indicia of the obviousness of the later patent.

The court continued to reason that a blocking patent diminishes possible rewards available to others in the field thereby reducing incentives for innovations in the blocked space, meaning a blocking patent can be evidence that can discount “the significance of evidence that nobody but the blocking patent’s owners or licensees arrived at, developed, and marketed the invention covered by the later patent at issue…”  The court further stated that such analysis is a fact-specific inquiry.

The important take-away for practitioners is that even very strong objective indicia of non-obviousness may be overcome if there is a blocking patent (or, arguably, other barrier to market entry) in place and practitioners must be cautious and formulate their arguments to avoid this pitfall.  Because of the fact-intensive nature of the analysis, reversal on appeal may be quite difficult.

Case: Acorda Therapeutics, Inc. v. Roxane Laboratories, Inc., Case No. 17-2078.

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