Federal Circuit: PTAB Can Reach a Different Conclusion than a District Court

On April 4, 2017, the Federal Circuit held that the PTAB can find the claims of a patent obvious even if a district court has previously found the claims to be non-obvious. The Federal Circuit based its holding on the difference in prior art that was considered in each proceeding and the lower burden of proof in an IPR proceeding to invalidate a patent.  Below is an excerpt from the Federal Circuit's opinion.

Novartis AG v. Noven Pharmaceuticals Inc. (Fed. Cir. 2017)

http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/16-1678.Opinion.4-3-2017.1.PDF

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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. Appellants’ Br. 29; see id. at 35–39, 46–47, 52–56, 60–62 (discussing Novartis Pharm. Corp. v. Watson Labs., Inc., 611 F. App’x 988 (Fed. Cir. 2015) and Novartis Pharm. Corp. v. Noven Pharm., Inc. (Noven D. Del.), 125 F. Supp. 3d 474 (D. Del. 2015)). In support of that position, Novartis relies substantially on a single sentence from our decision in In re Baxter International, Inc. See, e.g., id. at 30 (discussing 678 F.3d 1357, 1365 (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 [Pharmaceuticals Inc. (‘Noven’)] has presented additional prior art” like Sasaki “and declaratory evidence that was not before the [c]ourt” in that case.5 Noven II, 2015 WL 5782081, at *2. 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.6 Id.; see id. at *5 (identifying as new evidence two declarations of Dr. Agis Kydonieus, two declarations of Dr. Christian Schöneich, and one declaration of Dr. Alexander M. Klibanov). Novartis tacitly concedes that the record here is different. See Appellants’ Reply 7 n.1 (“The USPTO and Noven argue that the parties submitted expert declarations and deposition testimony that was not before the Noven [D. Del.] Court. But neither disputes that these materials are substantively the same as the experts’ testimony before the Noven [D. Del.] Court.” (emphasis added) (citations omitted)), 11 (“The [PTAB] sought to explain its rejection of this [c]ourt’s Watson decision on grounds that Noven presented art and evidence in the [inter partes review] that was not before the Watson [c]ourt[]. While differences in the record could justify a different outcome overall, under Baxter, they do not support the [PTAB]’s contrary conclusions on the specific rivastigmine art and arguments previously adjudicated in Watson.” (emphasis added) (citation omitted)). 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

[a] district court may find a patent claim to be valid, and the [USPTO] may later cancel that claim in its own review. . . . This possibility, however, has long been present in our patent system, which provides different tracks—one in the [USPTO] and one in the courts—for the review and adjudication of patent claims. As we have explained. . . , inter partes review imposes a different burden of proof on the challenger. These different evidentiary burdens mean that the possibility of inconsistent results is inherent to Congress’[s] regulatory design.

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.