Celgene Corporation v. Peter

United States Court of Appeals

for the Federal Circuit

______________________

CELGENE CORPORATION,

Appellant

v.

LAURA A. PETER, DEPUTY UNDER SECRETARY

OF COMMERCE FOR INTELLECTUAL PROPERTY

AND DEPUTY DIRECTOR OF THE UNITED

STATES PATENT AND TRADEMARK OFFICE,

Intervenor

______________________

2018-1167, 2018-1168, 2018-1169

______________________

Appeals from the United States Patent and Trademark

Office, Patent Trial and Appeal Board in Nos. IPR2015-

01096, IPR2015-01102, IPR2015-01103.

--------------------------------------------------

CELGENE CORPORATION,

Appellant

v.

LAURA A. PETER, DEPUTY UNDER SECRETARY

OF COMMERCE FOR INTELLECTUAL PROPERTY

AND DEPUTY DIRECTOR OF THE UNITED

STATES PATENT AND TRADEMARK OFFICE,

Intervenor

______________________

2 CELGENE CORPORATION v. PETER

2018-1171

______________________

Appeal from the United States Patent and Trademark

Office, Patent Trial and Appeal Board in No. IPR2015-

01092.

______________________

Decided: July 30, 2019

______________________

GREGORY A. CASTANIAS, Jones Day, Washington, DC,

argued for appellant. Also represented by JIHONG LOU,

JENNIFER LORAINE SWIZE; GASPER LAROSA, New York, NY;

ANTHONY INSOGNA, San Diego, CA; FRANK CHARLES

CALVOSA, F. DOMINIC CERRITO, ANDREW CHALSON, Quinn

Emanuel Urquhart & Sullivan, LLP, New York, NY.

AMY J. NELSON, Office of the Solicitor, United States

Patent and Trademark Office, Alexandria, VA, argued for

intervenor. Also represented by MEREDITH HOPE

SCHOENFELD, THOMAS W. KRAUSE. Also argued by

KATHERINE TWOMEY ALLEN, Appellate Staff, Civil Division,

United States Department of Justice, Washington, DC.

Also represented by MARK R. FREEMAN, SCOTT R.

MCINTOSH, JOSEPH H. HUNT.

______________________

Before PROST, Chief Judge, BRYSON and REYNA,

Circuit Judges.

PROST, Chief Judge.

The Coalition for Affordable Drugs VI LLC (“CFAD”)

filed a petition for inter partes review (“IPR”) challenging

the validity of all of the claims of U.S. Patent No. 6,045,501

(“the ’501 patent”) and three petitions for IPR challenging

the validity of all of the claims of U.S. Patent No. 6,315,720

(“the ’720 patent”). The Patent Trial and Appeal Board

CELGENE CORPORATION v. PETER 3

(“Board”) determined that all of the claims of the ’501

patent and claims 1–9 and 11–32 of the ’720 patent were

obvious. Celgene Corporation (“Celgene”) appeals the

Board’s decisions.

For the reasons explained below, we affirm the Board’s

decisions finding the appealed claims obvious. We also

hold that the retroactive application of IPR proceedings to

pre-AIA patents is not an unconstitutional taking under

the Fifth Amendment.

I

A

A teratogen is an agent known to disturb the

development of an embryo or fetus. Teratogenic drugs can

cause birth defects or other abnormalities following fetal

exposure during pregnancy. One example of a teratogenic

drug is thalidomide. Thalidomide, first synthesized in

1957, was originally marketed for use as a sedative in

many countries, not including the United States. See ’501

patent col. 1 ll. 19–22. Following reports of serious birth

defects, thalidomide was withdrawn from all markets by

1962. Id. at col. 1 ll. 22–24. Despite these teratogenic

effects, thalidomide has proven to be effective in treating

other conditions. See id. at col. 1 ll. 24–35. The ’501 patent

and the ’720 patent are generally directed to methods for

safely distributing teratogenic or other potentially

hazardous drugs while avoiding exposure to a fetus to

avoid adverse side effects of the drug.

B

In order to obtain FDA approval to sell and distribute

thalidomide, Celgene developed a system to safely

distribute thalidomide to patients, which it called the

System for Thalidomide Education and Prescription Safety

(“Original S.T.E.P.S.”). Appeal No. 18-1171, Appellant’s

Br. 8–9. According to Celgene, the ’501 patent is directed

to its Original S.T.E.P.S. program. See id. at 10.

4 CELGENE CORPORATION v. PETER

Celgene’s ’501 patent relates to “methods for delivering

a drug to a patient while preventing the exposure of a

foetus or other contraindicated individual to the drug.”

’501 patent at Abstract. Claim 1 is representative and

states:

1. A method for delivering a teratogenic drug to

patients in need of the drug while avoiding the

delivery of said drug to a foetus comprising:

a. registering in a computer readable storage

medium prescribers who are qualified to

prescribe said drug;

b. registering in said medium pharmacies to fill

prescriptions for said drug;

c. registering said patients in said medium,

including information concerning the ability of

female patients to become pregnant and the

ability of male patients to impregnate females;

d. retrieving from said medium information

identifying a subpopulation of said female

patients who are capable of becoming pregnant

and male patients who are capable of

impregnating females;

e. providing to the subpopulation, counseling

information concerning the risks attendant to

fetal exposure to said drug;

f. determining whether patients comprising

said subpopulation are pregnant; and

g. in response to a determination of non-

pregnancy for said patients, authorizing said

registered pharmacies to fill prescriptions from

said registered prescribers for said non-

pregnant registered patients.

CELGENE CORPORATION v. PETER 5

Id. at claim 1. Claim 2 recites “[t]he method of claim 1

wherein said drug is thalidomide.” The remaining claims

depend from claim 1 and are not limited to thalidomide.

CFAD filed a petition for IPR challenging all ten claims

of the ’501 patent. The Board instituted review of claims

1–10 on a single ground—obviousness based on Powell, 1

Mitchell, 2 and Dishman. 3 Coalition for Affordable Drugs

VI LLC v. Celgene Corp., No. IPR2015-01092, Paper 20

(P.T.A.B. Oct. 27, 2015).

In its final written decision, the Board held that CFAD

had shown by a preponderance of the evidence that claims

1–10 of the ’501 patent are unpatentable as obvious over

the combination of Powell, Mitchell, and Dishman.

Coalition for Affordable Drugs VI LLC v. Celgene Corp., No.

IPR2015-01092, Paper 73, at 33 (P.T.A.B. Oct. 26, 2016)

(“’501 Final Written Decision”). The Board denied

Celgene’s request for rehearing.

C

In the interim, Celgene “overhaul[ed]” its Original

S.T.E.P.S. program to create what it called an “Enhanced

S.T.E.P.S.” program. Appeal No. 18-1167, Appellant’s Br.

1 R.J. Powell & J.M.M. Gardner-Medwin, Guideline

for the Clinical Use and Dispensing of Thalidomide, 70

Postgrad Med. J. 901–904 (1994) (Appeal No. 18-1171, J.A.

324–25).

2 Allen A. Mitchell et al., A Pregnancy-Prevention

Program in Women of Childbearing Age Receiving

Isotretinoin, 333:2 New Eng. J. Med. 101–06 (July 13, 1995)

(Appeal No. 18-1171, J.A. 328–33).

3 Benjamin R. Dishman et al., Pharmacists’ Role in

Clozapine Therapy at a Veterans Affairs Medical Center, 51

Am. J. Hosp. Pharm. 899–901 (Apr. 1, 1994) (Appeal No.

18-1171, J.A. 334–36).

6 CELGENE CORPORATION v. PETER

8–9. According to Celgene, the ’720 patent is directed to its

Enhanced S.T.E.P.S. program. See id. at 10.

Celgene’s ’720 patent relates to “[i]mproved methods

for delivering to a patient in need of the drug, while

avoiding the occurrence of an adverse side effect known or

suspected of being caused by the drug.” ’720 patent at

Abstract. Claim 1, written in Jepson format, states:

1. In a method for delivering a drug to a patient in

need of the drug, while avoiding the occurrence of

an adverse side effect known or suspected of being

caused by said drug, wherein said method is of the

type in which prescriptions for said drug are filled

only after a computer readable storage medium has

been consulted to assure that the prescriber is

registered in said medium and qualified to

prescribe said drug, that the pharmacy is

registered in said medium and qualified to fill the

prescription for said drug, and the patient is

registered in said medium and approved to receive

said drug, the improvement comprising:

a. defining a plurality of patient risk groups

based upon a predefined set of risk parameters

for said drug;

b. defining a set of information to be obtained

from said patient, which information is

probative of the risk that said adverse side

effect is likely to occur if said drug is taken by

said patient;

c. in response to said information set, assigning

said patient to at least one of said risk groups

and entering said risk group assignment in

said medium;

d. based upon said information and said risk

group assignment, determining whether the

CELGENE CORPORATION v. PETER 7

risk that said adverse side effect is likely to

occur is acceptable; and

e. upon a determination that said risk is

acceptable, generating a prescription approval

code to be retrieved by said pharmacy before

said prescription is filled.

CFAD filed three petitions for IPR, each challenging all

32 claims of the ’720 patent. The Board instituted review

of claims 1–32 in all three cases. In the first IPR, the Board

instituted review based on obviousness over the Thalomid

Package Insert, 4 Cunningham, 5 Zeldis, 6 and other prior

art. Coalition for Affordable Drugs VI, LLC v. Celgene

Corp., No. IPR2015-01096, Paper 21 (P.T.A.B. Oct. 27,

2015). In the second IPR, the Board instituted review

based on obviousness over Powell and Dishman, in view of

Cunningham, and further in view of Mann 7 and other prior

art. Coalition for Affordable Drugs VI, LLC v. Celgene

Corp., No. IPR2015-01102, Paper 21 (P.T.A.B. Oct. 27,

2015). In the third IPR, the Board instituted review based

on obviousness over the same references as the second IPR

but using Mitchell instead of Powell as the base reference.

4 ThalomidTM (Thalidomide) Capsules Revised

Package Insert (July 15, 1998) (Appeal No. 18-1167, J.A.

411–32).

5 U.S. Patent No. 5,832,449 (Appeal No. 18-1167,

J.A. 440–62).

6 Jerome B. Zeldis et al., S.T.E.P.S.TM: A

Comprehensive Program for Controlling and Monitoring

Access to Thalidomide, Clinical Therapeutics® 21:2, 319–

30 (1999) (Appeal No. 18-1167, J.A. 491–502).

7 Thaddeus Mann & Cecelia Lutwak-Mann, Passage

of Chemicals into Human and Animal Semen: Mechanisms

and Significance, 11:1 CRC Critical Reviews in Toxicology

1, 1–14 (1982) (Appeal No. 18-1167, J.A. 8237–52).

8 CELGENE CORPORATION v. PETER

Coalition for Affordable Drugs VI, LLC v. Celgene Corp.,

No. IPR2015-01103, Paper 22 (P.T.A.B. Oct. 27, 2015).

In each of its final written decisions, the Board held

that CFAD had shown by a preponderance of the evidence

that claims 1–32 of the ’720 patent were unpatentable as

obvious over the instituted ground. Coalition for

Affordable Drugs VI, LLC v. Celgene Corp., No. IPR2015-

01096, Paper 73 (P.T.A.B. Oct. 26, 2016) (“-01096 Final

Written Decision”); Coalition for Affordable Drugs VI, LLC

v. Celgene Corp., No. IPR2015-01102, Paper 75 (P.T.A.B.

Oct. 26, 2016) (“-01102 Final Written Decision”); Coalition

for Affordable Drugs VI, LLC v. Celgene Corp., No.

IPR2015-01103, Paper 76 (P.T.A.B. Oct. 26, 2016) (“-01103

Final Written Decision”). Following Celgene’s request for

rehearing, the Board modified its final written decisions to

uphold the patentability of claim 10 because CFAD failed

to prove that claim obvious by a preponderance of the

evidence.

D

Celgene timely appealed all four IPRs. We

consolidated the appeals from the three IPRs on the ’720

patent (Appeal Nos. 18-1167, 18-1168, 18-1169) and

designated the appeal from the IPR on the ’501 patent

(Appeal No. 18-1171) as a companion case. CFAD did not

participate in these appeals. The Director of the United

States Patent and Trademark Office (“PTO”) intervened

pursuant to 35 U.S.C. § 143.

We have jurisdiction over these appeals pursuant to

28 U.S.C. § 1295(a)(4)(A).

II

On appeal, Celgene argues that the Board erred in

finding all claims of the ’501 patent and claims 1–9 and 11–

32 of the ’720 patent obvious. Celgene also argues that the

retroactive application of IPRs to patents filed before

September 16, 2012, when the relevant provisions of the

CELGENE CORPORATION v. PETER 9

Leahy-Smith America Invents Act went into effect (“pre-

AIA patents”), is an unconstitutional taking. We begin by

addressing the merits of these appeals. Then, because we

affirm the Board’s obviousness determinations, we turn to

the constitutional challenge.

A

1

Obviousness is a question of law based on underlying

factual determinations. Belden Inc. v. Berk-Tek LLC, 805

F.3d 1064, 1073 (Fed. Cir. 2015). We review the Board’s

ultimate obviousness determination de novo and

underlying factual findings for substantial evidence.

Harmonic Inc. v. Avid Tech., Inc., 815 F.3d 1356, 1363 (Fed.

Cir. 2016). Substantial evidence is “more than a mere

scintilla” and means “‘such relevant evidence as a

reasonable mind might accept as adequate to support a

conclusion.’” Biestek v. Berryhill, 139 S. Ct. 1148, 1154

(2019) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197,

229 (1938)).

We review the Board’s determination of the broadest

reasonable interpretation of the claim language de novo.

Straight Path IP Grp., Inc. v. Sipnet EU S.R.O., 806 F.3d

1356, 1360 (Fed. Cir. 2015). 8

8 We note that the PTO has since changed the claim

construction standard used in IPR proceedings. See 37

C.F.R. § 42.100(b); Changes to the Claim Construction

Standard for Interpreting Claims in Trial Proceedings

Before the Patent Trial and Appeal Board, 83 Fed. Reg.

51,340 (Oct. 11, 2018) (to be codified at 37 C.F.R. pt. 42).

The new standard applies only to petitions filed on or after

November 13, 2018, and therefore does not impact these

cases. In these IPRs, the claims were to be construed using

the broadest reasonable interpretation in light of the

10 CELGENE CORPORATION v. PETER

2

We begin with the ’501 patent. Celgene seeks reversal,

or at least vacatur and remand, of the Board’s

determination that CFAD established by a preponderance

of the evidence that claims 1–10 would have been obvious

over the combination of Powell, Mitchell, and Dishman.

The Board relied on Powell’s teachings of the clinical use

and dispensing of thalidomide; Mitchell’s description of a

pregnancy-prevention program for women users of

Accutane, another teratogenic drug; and Dishman’s

disclosure of a registry for pharmacies, prescribers, and

users of clozapine, an anti-psychotic drug with serious

potential side effects. ’501 Final Written Decision at 13.

The Board determined that a person of ordinary skill in the

art would have been motivated to combine Powell,

Mitchell, and Dishman “to address the problem of limiting

thalidomide access to patients likely to suffer serious

adverse side effects, including birth defects in a developing

fetus.” Id. at 24.

On appeal, Celgene challenges three aspects of the

Board’s obviousness determination: (1) its finding that the

prior art satisfies the “computer readable storage medium,”

limitation, which rises and falls with a claim construction

argument; (2) its finding that it would have been obvious

to counsel male patients about the risks of teratogenic

drugs; and (3) its findings on secondary considerations. We

address each in turn.

a

Before the Board, Celgene argued that the term

“computer readable storage medium” in claim 1 requires a

centralized computer readable storage medium, namely “a

centralized database that includes all registration

specification. Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct.

2131, 2146 (2016).

CELGENE CORPORATION v. PETER 11

information regarding the claimed prescribers,

pharmacies, and patients.” ’501 Final Written Decision at

9–10. The Board considered Celgene’s proffered

construction and rejected its argument that the computer

readable storage medium of claim 1 must be centralized.

Id. at 10–11. First, the Board noted that the term

“centralized” does not appear in claim 1. Id. at 10. In

addition, the Board found that the specification does not

require that all registration information be centralized in

one database. Id. (“‘The computer readable storage

medium in which the pharmacies are registered may be the

same as, or different from the computer readable storage

medium in which the prescribers are registered.’” (quoting

’501 patent col. 4 ll. 54–57)). Finally, the Board considered

and rejected Celgene’s prosecution history and extrinsic

evidence arguments. See id. at 10–11.

On appeal, Celgene again argues that the claims

require a centralized computer readable storage medium.

Appeal No. 18-1171, Appellant’s Br. 31–36. According to

Celgene, the claims’ use of the term “said medium”

referring back to “a computer readable storage medium”

indicates that it must be a single, centralized computer

readable storage medium. Id. at 32. But, as the PTO

points out, the use of “a” or “an” in an open-ended

“comprising” claim connotes “one or more.” Appeal No. 18-

1171, Intervenor’s Br. 26–27; Baldwin Graphic Sys., Inc. v.

Siebert, Inc., 512 F.3d 1338, 1342 (Fed. Cir. 2008). And

“[t]he subsequent use of definite articles ‘the’ or ‘said’ in a

claim to refer back to the same claim term does not change

the general plural rule, but simply reinvokes that non-

singular meaning.” Baldwin, 512 F.3d at 1342. Exceptions

to the general rule that “a” or “an” means more than one

arise only when “the language of the claims themselves, the

specification, or the prosecution history necessitate a

departure from the rule.” See id. at 1342–43.

Neither the claims themselves, the specification, nor

the prosecution history necessitate such a departure.

12 CELGENE CORPORATION v. PETER

See ’501 Final Written Decision at 10–11. The claims recite

“a computer readable storage medium” and do not specify

that it is centralized. The specification does not require

that the computer readable storage medium be centralized.

In fact, the specification envisions that there may be

multiple, distinct computer readable storage media, i.e.,

separate media for prescribers, pharmacies, and patients.

See ’501 patent at col. 4 ll. 54–57, col. 10 ll. 13–17.

Further, we are not persuaded by Celgene’s argument

that the prosecution history disclaimed a non-centralized

computer readable storage medium. See Appeal No. 18-

1171, Appellant’s Br. 33–34. We agree with the PTO that

the better reading of the prosecution history is that

Celgene distinguished the claimed invention from the prior

art on the basis that the invention uses a computer

readable storage medium while the prior art used the

Internet. See Appeal No. 18-1171, Intervenor’s Br. 31–33.

Finally, because the intrinsic evidence does not require

a centralized computer readable storage medium, the

Board was correct to not allow the extrinsic evidence,

including expert testimony, to “trump the persuasive

intrinsic evidence in this case.” ’501 Final Written Decision

at 10. Under the broadest reasonable interpretation, the

Board was therefore correct in determining that claim 1

was not limited to a centralized computer readable storage

medium.

Based on the Board’s finding that the computer

readable storage medium recited in claim 1 need not be

centralized, the Board found that Dishman’s

“computerized lockout system” satisfied the claim

limitation. Id. at 18–20. Celgene concedes that Dishman

teaches a decentralized storage medium and does not

dispute that Dishman satisfies this limitation under the

Board’s construction. See Appeal No. 18-1171, Appellant’s

Br. 37. Because Celgene’s challenge relies entirely on its

CELGENE CORPORATION v. PETER 13

proposed claim construction and we affirm the Board’s

construction, Celgene’s challenge must fail. 9

For these reasons, Celgene’s arguments on the

“computer readable storage medium” limitation are

unpersuasive and are not grounds for reversal or vacatur

and remand.

b

Claim 1 of the ’501 patent requires providing “male

patients who are capable of impregnating females” with

“counseling information concerning the risks attendant to

fetal exposure to said drug.” Celgene argues that

counseling male patients about the risks of fetal exposure

to the drug upon or after fertilization would not have been

obvious. Appeal No. 18-1171, Appellant’s Br. 25–31.

In finding this limitation obvious, the Board relied on

CFAD’s expert Dr. Jeffrey Fudin’s opinion that at the time

of the alleged invention, “the sperm of male patients could

be damaged by teratogenic drugs and consequently result

in birth defects, if the male was to impregnate a female.”

’501 Final Written Decision at 15–16. For support, Dr.

Fudin relied on the Mann study, which showed that

thalidomide had negative effects on the sperm of male

rabbits and the fetuses resulting from mating with female

rabbits. See id. at 15–17.

The Board evaluated Dr. Fudin’s opinion and the

supporting Mann study and credited his testimony that a

person of ordinary skill in the art would have “understood

9 Even under Celgene’s claim construction, the

Board determined that its ultimate determination on

obviousness would not change. ’501 Final Written Decision

at 11, 20. Specifically, the Board held, in the alternative,

that using a centralized database would have been obvious.

See id. at 20.

14 CELGENE CORPORATION v. PETER

the necessity of counseling males, capable of impregnating

females, about the risks that attend fetal exposure to a

teratogenic drug.” Id. at 16–17. The Board acknowledged

that Powell stated that “[n]o effects on male sperm are

recognized,” but found that statement alone insufficient to

defeat Dr. Fudin’s testimony that an ordinarily skilled

artisan would have recognized that sperm of male patients

treated with teratogenic drugs could lead to birth defects

in fetuses. Id. at 17.

On appeal, Celgene primarily disputes the Board’s

reading of Powell, specifically the statement that “[n]o

effects on male sperm are recognized.” See Appeal No. 18-

1171, Appellant’s Br. 26–29. The Board found that, when

read in context, this statement in Powell refers to the

contraceptive effects thalidomide has on male sperm, not

the teratogenic effects thalidomide has on male sperm. See

’501 Final Written Decision at 17. Celgene argues that

“[n]o reasonable fact finder could possibly read” this

sentence in Powell “as referring to the contraceptive effects

of thalidomide.” Appeal No. 18-1171, Appellant’s Br. 27.

But, the Board’s decision on this limitation relied on Dr.

Fudin’s opinion, supported by Mann, as described above.

Celgene’s main challenge to Dr. Fudin’s opinion and his

reliance on Mann was that the Mann study was conducted

on male rabbits rather than human men. Appeal No. 18-

1171, Appellant’s Br. 30–31, Reply Br. 7–8. The Board

considered and rejected this argument. See ’501 Final

Written Decision at 17 (noting that Celgene previously

admitted that studies related to rabbit sperm were

relevant to evaluating the effects of thalidomide on human

sperm). Substantial evidence supports the Board’s

ultimate determination, based on Dr. Fudin’s opinion as

supported by Mann, that it would have been obvious in

light of the prior art to counsel male patients about the

risks of fetal exposure to the drug.

CELGENE CORPORATION v. PETER 15

c

Finally, Celgene challenges the Board’s determination

that Celgene’s evidence of objective indicia of non-

obviousness was unpersuasive. The Board considered and

weighed Celgene’s evidence of long-felt but unmet need,

industry praise, and unexpected results. Substantial

evidence supports the Board’s conclusions on each of these

secondary considerations and its conclusion that they do

not outweigh the showing of obviousness.

The Board found that Celgene failed to establish a

long-felt but unsolved need because it did not show that the

prior art methods of controlling the distribution of

hazardous drugs—including Mitchell and Dishman—were

insufficient to meet any need to control distribution of

thalidomide. ’501 Final Written Decision at 28. The Board

acknowledged Celgene’s evidence of industry praise and

gave it weight. See id. The Board also considered Celgene’s

evidence of unexpected results but ultimately gave it “little

weight” because the Board was not persuaded that the

results obtained by combining the features of the prior art

drug distribution programs to control distribution of

thalidomide would have been truly unexpected. See id. at

28–29. The Board concluded that the evidence of secondary

considerations did not outweigh the strong showing of

obviousness. See id. at 29.

On appeal, Celgene challenges the Board’s findings on

unexpected results and long-felt need. Appeal No. 18-1171,

Appellant’s Br. 38–41, Reply Br. 16–23. On unexpected

results, Celgene faults the Board’s decision to give its

evidence “little weight” and argues that it should have been

given “significant, if not dispositive weight.” Appeal No.

18-1171, Appellant’s Br. 39–40. However, substantial

evidence supports the Board’s assessment and weighing of

this evidence, and we decline to reweigh the evidence on

appeal. See In re NTP, Inc., 654 F.3d 1279, 1292 (Fed. Cir.

2011) (“This court does not reweigh evidence on appeal, but

16 CELGENE CORPORATION v. PETER

rather determines whether substantial evidence supports

the Board’s fact findings.”); Regents of the Univ. of Cal. v.

Broad Inst., Inc., 903 F.3d 1286, 1294 (Fed. Cir. 2018) (“We

do not reweigh the evidence. It is not our role to ask

whether substantial evidence supports fact-findings not

made by the Board, but instead whether such evidence

supports the findings that were in fact made.”).

On long-felt need, Celgene identifies what it contends

is an “inconsisten[cy]” between the Board’s determination

in this IPR on the ’501 patent and the IPRs on the ’720

patent. Appeal No. 18-1171, Reply Br. 22–23. In this case,

the Board found no long-felt but unmet need for a better

system to distribute potentially hazardous drugs like

thalidomide in part because existing systems were

available and adequate. ’501 Final Written Decision at 28.

As explained below, in the IPRs on the ’720 patent, the

Board found that there was a motivation to improve

existing distribution systems for potentially hazardous

drugs because of the severity of the possible adverse effects.

See, e.g., -01096 Final Written Decision at 22–23.

Contrary to Celgene’s assertion, this tension is not

irreconcilable. The fact that there is no long-felt, unmet

need does not necessarily mean that there is no motivation

to improve a system. See Spectrum Pharm., Inc. v. Sandoz

Inc., 802 F.3d 1326, 1336 (Fed. Cir. 2015) (upholding

district court’s finding that “despite the motivation . . .

there was not a long-felt but unmet need”). In fact, Celgene

stated that it was “committed to making the S.T.E.P.S.

program succeed and will make any modifications to the

program that are necessary to ensure its effectiveness.”

See Appeal No. 18-1167, J.A. 501. Especially in this

context involving safety, we see no conflict between finding

a motivation to improve the safety of existing systems even

though the existing systems were mostly successful. We

conclude that substantial evidence supports the Board’s

assessment of Celgene’s evidence of long-felt, unresolved

need.

CELGENE CORPORATION v. PETER 17

Finally, we see no error in the Board’s ultimate

determination of obviousness. Before concluding that the

claims would have been obvious, the Board weighed the

“strong showing of obviousness” against the “appropriate

weight” given to evidence of industry praise and the “little

weight” given to evidence of unexpected results. ’501 Final

Written Decision at 28–29.

We therefore affirm the Board’s holding that claims 1–

10 of the ’501 patent are unpatentable as obvious over the

asserted prior art.

3

Turning to the ’720 patent, Celgene seeks reversal, or

at least vacatur and remand, of the Board’s determinations

that CFAD established by a preponderance of the evidence

that claims 1–9 and 11–32 would have been obvious over

the prior art. The Board’s analysis relevant to this appeal

was nearly identical across all three proceedings. See -

01096 Final Written Decision at 15–26; -01102 Final

Written Decision at 16–27; -01103 Final Written Decision

at 16–27; see also Appeal No. 18-1167, Appellant’s Br. 27,

Intervenor’s Br. 26.

On motivation, the Board determined that a person of

ordinary skill in the art would have been motivated to

improve the existing distribution methods of potentially

hazardous drugs because “where significant safety risks

exist with a drug, one would continuously search for safer

ways to control the distribution of the drug.” -01096 Final

Written Decision at 22–23; -01102 Final Written Decision

at 24–25; -01103 Final Written Decision at 24–25.

The Board construed the claim term “prescription

approval code” and adopted Celgene’s proposed

construction: “[A] code representing that an affirmative

risk assessment has been made based upon risk-group

assignment and the information collected from the patient,

and that is generated only upon a determination that the

18 CELGENE CORPORATION v. PETER

risk of a side effect occurring is acceptable.” -01096 Final

Written Decision at 12–13; -01102 Final Written Decision

at 13; -01103 Final Written Decision at 13.

The Board then considered whether the prior art

taught the following disputed limitation: “upon a

determination that said risk is acceptable, generating a

prescription approval code to be retrieved by said

pharmacy before said prescription is filled.” The Board

determined that it would have been obvious to a person of

ordinary skill in the art because they would have

appreciated that Cunningham’s approval code, used to

track and manage trial pharmaceutical products, could

likewise be used by prescribers and pharmacies to track

and manage prescription pharmaceutical products. -01096

Final Written Decision at 24; -01102 Final Written Decision

at 26; -01103 Final Written Decision at 26. The Board

concluded that:

We further hold that the claimed improvement

recited in the challenged claims represents a

combination of known prior art elements

(identifying patient risk groups, collecting patient

information relating to the risk, determining

whether the risk is acceptable, and controlling

dispensation of the drug using both a prescription

and an approval code) for their known purpose

(control distribution of drug) to achieve a

predictable result (avoid giving patients drugs that

have an unacceptable risk of side effects).

-01096 Final Written Decision at 24–25; -01102 Final

Written Decision at 26; -01103 Final Written Decision at 26.

On appeal, Celgene challenges two aspects of the

Board’s obviousness determination: (1) its finding that

there was a motivation to improve the existing distribution

methods of potentially hazardous drugs; and (2) its finding

that a person of skill in the art would have been motivated

to develop the claimed invention. We address each below.

CELGENE CORPORATION v. PETER 19

a

Celgene first argues that there was no motivation to

improve the existing method for avoiding birth defects from

exposure to thalidomide (the Original S.T.E.P.S. program)

because it was working so well that there had been no

reports of birth defects or even potential fetal exposure to

thalidomide using that system. Appeal No. 18-1167,

Appellant’s Br. 32–33, 35–37. Celgene contends that

because there were no problems with the Original

S.T.E.P.S. program, a person skilled in the art would not

have been motivated to improve it. See id. Celgene

essentially argues that there was no motivation because,

“[i]f it ain’t broke, don’t fix it.” Id. at 33.

The Board considered and rejected this argument,

finding that there was a motivation because there are

serious concerns with distributing a drug, like thalidomide,

that is known to cause severe adverse side effects. -01096

Final Written Decision at 22–23; -01102 Final Written

Decision at 24–25; -01103 Final Written Decision at 24–25

(“[W]here significant safety risks exist with a drug, one

would continuously search for safer ways to control the

distribution of the drug. Put simply, where significant

safety concerns exist[], one of ordinary skill in the art

would not wait until an accident occurred to seek out

improvements.”).

The Board’s motivation determination is supported by

substantial evidence. For example, in Zeldis, Celgene

professed its commitment to making improvements to the

S.T.E.P.S. program. Appeal No. 18-1167, J.A. 501

(“Celgene is committed to making the S.T.E.P.S. program

succeed and will make any modifications to the program

that are necessary to ensure its effectiveness.”).

Finally, Celgene challenges the Board’s motivation as

too “generic.” Appeal No. 18-1167, Appellant’s Br. 35–37.

We disagree. The desire to decrease the risks of

administering a drug with adverse side effects, like

20 CELGENE CORPORATION v. PETER

thalidomide, is a specific motivation to improve the prior

art. See, e.g., Tokai Corp. v. Easton Enters., Inc., 632 F.3d

1358, 1371–72 (Fed. Cir. 2011) (upholding obviousness

determination and motivation finding based on the “need

in the prior art for safer utility lighters”); Hologic, Inc. v.

Minerva Surgical, Inc., 764 F. App’x 873, 880 (Fed. Cir.

2019) (“The lack of any specific safety concerns does not

preclude a motivation to make a device safer.”). We

disagree with Celgene’s assertion that approving of this

motivation “leave[s] no room for patents on improvement.”

Appeal No. 18-1167, Appellant’s Br. 37. In a case like this,

where safety is a concern and where the potential adverse

side effects are so severe, the Board did not err in finding

that the desire to improve a system that is working well

qualifies as a valid motivation.

b

Celgene also argues that, even if there had been a

general motivation to improve the prior art systems,

“substantial evidence does not show that there was

motivation to overhaul that program with the particular,

prospective, doctor-interfering system claimed by the

’720 patent.” Appeal No. 18-1167, Appellant’s Br. 38; see

also id. at 38–43.

First, Celgene faults the Board for allegedly failing to

explain “how the prior art renders obvious the claims’

required affirmative risk assessment.” Id. at 40. Contrary

to Celgene’s assertions, the Board did not “ignore” its

affirmative risk assessment argument. In fact, the Board

incorporated the notion of affirmative risk assessment into

its claim construction and considered it in its obviousness

findings. See -01096 Final Written Decision at 12–15; -

01102 Final Written Decision at 13–16; -01103 Final

Written Decision at 13–16. The Board relied on each of the

primary references—Thalomid Package Insert, Powell,

and Mitchell—for the teaching of an affirmative risk

assessment. See -01096 Final Written Decision at 17–18,

CELGENE CORPORATION v. PETER 21

20 (Thalomid Package Insert); -01102 Final Written

Decision at 17–18, 21–22 (Powell); -01103 Final Written

Decision at 17–18, 21–22 (Mitchell). And the Board found

that it would have been obvious to modify the methods for

limiting distribution of drugs with adverse side effects to

high risk groups, disclosed in Thalomid Package Insert,

Powell, or Mitchell, to require issuance of an approval code

prior to dispensing the drug as disclosed in Cunningham.

See -01096 Final Written Decision at 23–25; -01102 Final

Written Decision at 25–27; -01103 Final Written Decision

at 25–27. Substantial evidence supports those findings.

Next, Celgene faults the Board for not including the

word “prospective” in its final written decisions. Appeal

No. 18-1167, Appellant’s Br. 40. But the term “prospective”

does not appear in claim 1 or in the Board’s construction of

“prescription approval code.” Thus, it is neither erroneous

nor particularly surprising that it does not appear in the

Board’s final written decisions.

Finally, Celgene argues that none of the prior art

references disclose a system to “override” a doctor’s

prescription. See, e.g., Appeal No. 18-1167, Appellant’s Br.

40–42, Reply Br. 3–4, 6–7. However, a physician “override”

is not required by the language of claim 1 or by the Board’s

construction of “prescription approval code.”

We therefore affirm the Board’s determination that

claims 1–9 and 11–32 of the ’720 patent are unpatentable

as obvious over the asserted prior art.

B

We now turn to the constitutional issue of whether the

retroactive application of IPRs to pre-AIA patents is an

unconstitutional taking. 10

10 The parties’ arguments on the constitutional issue

are almost identical in the two appeals. Therefore, in this

22 CELGENE CORPORATION v. PETER

1

We must first decide whether to reach the

constitutional challenge even though Celgene did not raise

it before the Board and makes the argument for the first

time on appeal.

“It is well-established that a party generally may not

challenge an agency decision on a basis that was not

presented to the agency.” In re DBC, 545 F.3d 1373, 1378

(Fed. Cir. 2008). But we have discretion to reach issues

raised for the first time on appeal, and in DBC we

recognized that there are exceptions that may justify

considering constitutional arguments not raised below. Id.

at 1379–80 (“Because we retain discretion to reach issues

raised for the first time on appeal, we must consider

whether this is one of those exceptional cases that

warrants consideration of the [constitutional] issue despite

its tardy presentation.”).

Departing from the general rule of waiver is

appropriate only in limited circumstances. See id. at 1380

(stating that addressing an issue not raised below is “an

exceptional measure” appropriate only in “rare cases”); see

also Golden Bridge Tech., Inc. v. Nokia, Inc., 527 F.3d 1318,

1322–23 (Fed. Cir. 2008) (stating that “deviat[ing] from

this general rule of waiver” and “hearing new arguments

for the first time on appeal” is disfavored “absent limited

circumstances”). One such circumstance that can justify

departing from the general rule of waiver is an intervening

change in the law. See Golden Bridge, 527 F.3d at 1323.

We also consider whether the “interest of justice” guides us

to consider the issue despite the fact that it was not raised

below. See id.

section, we cite only to the briefs in Appeal No. 18-1167

unless otherwise noted.

CELGENE CORPORATION v. PETER 23

The PTO concedes that we have discretion to deviate

from our general rule of waiver and that doing so here to

resolve the constitutional issue presented may be in the

interest of justice. As the PTO recognized, “[g]iven the

growing number of retroactivity challenges apparently

prompted by the reference to retroactivity in Oil States,

however, this Court may nevertheless conclude that the

interests of justice warrant addressing the retroactivity

question quickly to avert further uncertainty regarding the

constitutionality of inter partes review.” Intervenor’s Br.

37 (footnote omitted).

We have indeed seen a growing number of retroactivity

challenges following the Supreme Court’s decision in Oil

States, including several that are currently pending before

this court. The Supreme Court left open this challenge

with the following passage near the end of its decision in

Oil States:

Moreover, we address only the precise

constitutional challenges that Oil States raised

here. Oil States does not challenge the retroactive

application of inter partes review, even though that

procedure was not in place when its patent issued.

Nor has Oil States raised a due process challenge.

Finally, our decision should not be misconstrued as

suggesting that patents are not property for

purposes of the Due Process Clause or the Takings

Clause.

Oil States Energy Servs., LLC v. Greene’s Energy Grp.,

LLC, 138 S. Ct. 1365, 1379 (2018). While Celgene’s

constitutional challenge does not rely on a change in the

law articulated in Oil States, it raises an issue not directly

resolved by Oil States. Oil States was decided on April 24,

2018, well after the Board’s October 26, 2016 final written

decisions in the IPRs involved in this appeal, which at least

partially explains why Celgene did not raise the argument

before the Board.

24 CELGENE CORPORATION v. PETER

Even if Celgene had raised its constitutional challenge

before the Board, it is unclear how the Board could have

corrected the alleged constitutional defect as it could have

in DBC. See DBC, 545 F.3d at 1379 (“If DBC had timely

raised this issue before the Board, the Board could have

evaluated and corrected the alleged constitutional

infirmity by providing DBC with a panel of administrative

patent judges appointed by the Secretary.”). 11

Moreover, the constitutional challenge presented here

is purely a question of law, so addressing it would not

require us “to make factual findings” for the first time on

appeal. See Golden Bridge, 527 F.3d at 1323.

Finally, the briefing on the constitutional issue in this

case is sufficiently thorough for our review. See Appellant’s

Br. 44–52; Intervenor’s Br. 35–44; Reply Br. 20–28. This

case stands in sharp contrast with Trading Technologies

International, Inc. v. IBG LLC, 921 F.3d 1378, 1385 (Fed.

Cir. 2019), where we declined to consider a number of

11 The Supreme Court has “stated that ‘adjudication

of the constitutionality of congressional enactments has

generally been thought beyond the jurisdiction of

administrative agencies.’” Elgin v. Dep’t of Treasury,

567 U.S. 1, 16 (2012) (quoting Thunder Basin Coal Co. v.

Reich, 510 U.S. 200, 215 (1994)). When asked at oral

argument if the Board had authority to adjudicate a

constitutional challenge to the AIA, the PTO responded

that if the Board determined that the retroactive

application of IPRs to pre-AIA patents was an

unconstitutional taking, the Board could exercise its

discretion to decline to institute the IPR. See Oral

Argument at 36:52–37:57, Celgene Corp. v. Peter (No. 2018-

1167), http://www.cafc.uscourts.gov/oral-argument-

recordings. That decision, however, would be unreviewable

but for the possibility of mandamus. See Cuozzo, 136 S. Ct.

at 2142.

CELGENE CORPORATION v. PETER 25

constitutional challenges to IPRs included in “a total of four

sentences” in the appellant’s opening brief. Id. (“Such a

conclusory assertion with no analysis is insufficient to

preserve the issue for appeal.”). Here, a single

constitutional issue received thorough briefing from the

parties and was addressed extensively at oral argument.

See Oral Argument at 5:06–21:50, 50:22–52:56 (Celgene),

36:27–48:47 (Director), Celgene Corp. v. Peter (No. 2018-

1167), http://www.cafc.uscourts.gov/oral-argument-

recordings. 12

We therefore conclude that this is one of those

exceptional circumstances in which our discretion is

appropriately exercised to hear Celgene’s constitutional

challenge even though it was not raised below.

12 As to the suggestion that we wait until a case

reaches us where the retroactivity challenge was raised

below and decided by the Board, the first such case

identified is Agarwal v. TopGolf International, Inc., No. 18-

2270. In TopGolf, the Board allowed additional briefing on

the constitutional issues left open by Oil States. In a single

sentence of analysis, the Board determined that the

retroactive application of IPRs was not unconstitutional,

reasoning that “the patent at issue here was subject to ex

parte reexamination, and, therefore, the United States

Patent and Trademark Office has always had the ability to

look at the patentability of an issued United States

Patent.” TopGolf Int’l, Inc. v. Amit Agarwal, No. IPR2017-

00928, Paper 40, at 80 (P.T.A.B. June 13, 2018). On

appeal, Mr. Agarwal’s constitutional challenge to the

retroactive application of IPRs to pre-AIA patents is one

page of his opening brief. Brief for Appellant at 69–70,

Agarwal v. TopGolf Int’l, Inc. (No. 18-2270). The reply brief

is due on November 12, 2019, and the case will likely not

be argued for at least several months thereafter.

26 CELGENE CORPORATION v. PETER

2

We now turn to the merits of Celgene’s constitutional

challenge that the retroactive application of IPRs to pre-

AIA patents is an unconstitutional taking.

The Takings Clause of the Fifth Amendment states

that private property shall not “be taken for public use,

without just compensation.” U.S. Const. amend. V. The

PTO does not dispute that a valid patent is private

property for the purposes of the Takings Clause. See

Intervenor’s Br. 43 (“A patent holder has a property

interest in a valid patent . . . .”); Oral Argument at 41:06–

41:22, Celgene Corp. v. Peter (No. 2018-1167),

http://www.cafc.uscourts.gov/oral-argument-recordings.

(“We don’t dispute that a valid patent is property for

purposes of the Takings Clause.”).

Celgene argues that the retroactive application of IPRs

to their pre-AIA patents without just compensation is an

unconstitutional taking under the Fifth Amendment.

Appellant’s Br. 44–52. Specifically, Celgene advances a

regulatory takings theory and argues that subjecting its

pre-AIA patents to IPR, a procedure that did not exist at

the time its patents issued, unfairly interferes with its

reasonable investment-backed expectations without just

compensation. Id. at 44–45, 49–51.

The PTO responds on two fronts. First, the PTO argues

that when the Board finds claims unpatentable in an IPR,

it does not effectuate a taking under the Fifth Amendment

because the patent owner “never had a valid property right

because the patent was erroneously issued in the first

instance.” Intervenor’s Br. 38; see also id. at 38–41.

Second, the PTO argues that Celgene’s takings claim fails

“because patents have been subject to reconsideration and

cancellation by the USPTO in administrative proceedings

for nearly four decades, and Celgene’s own patent[s were]

issued subject to this administrative revocation authority.”

Id. at 42; see also id. at 42–44. The PTO does not expressly

CELGENE CORPORATION v. PETER 27

engage Celgene’s reasonable investment-backed

expectations argument. But the PTO does respond that

“the AIA did not alter patent holders’ substantive rights.”

See id. at 43. Rather, the PTO maintains that the AIA

“merely revised the procedures by which [the] USPTO

conducts these administrative proceedings” and that the

procedural differences do not effect a Fifth Amendment

taking. See id.

In determining whether the retroactive application of

IPRs to pre-AIA patents is an unconstitutional taking, we

consider the effect that doing so has on the patent right

granted by the PTO, and specifically whether IPRs differ

from the pre-AIA review mechanisms significantly enough,

substantively or procedurally, to effectuate a taking. We

conclude that they do not. On this basis, we reject

Celgene’s challenge even apart from the rationales of our

prior decisions—which we also think control the outcome

here, but which Celgene asks us to reconsider—that

rejected constitutional challenges to retroactive

application of the pre-AIA ex parte reexamination

mechanism. 13

13 In Patlex Corp. v. Mossinghoff, 758 F.2d 594 (Fed.

Cir. 1985), we faced a challenge to the retroactive

application of ex parte reexaminations and held that it did

not violate the due process clause of the Fifth Amendment,

the jury trial guarantee of the Seventh Amendment, or

Article III. Id. at 603, 605. Our retroactivity analysis in

Patlex relied in part on the “curative” nature of

reexaminations and that “[c]urative statutes have received

relatively favored treatment from the courts even when

applied retroactively.” Id. at 603.

We later considered a challenge to the retroactive

application of ex parte reexaminations based on the

Takings Clause in Joy Technologies, Inc. v. Manbeck, 959

F.2d 226 (Fed. Cir. 1992), superseded by statute on other

28 CELGENE CORPORATION v. PETER

The validity of patents has always been subject to

challenge in district court. And for the last forty years,

patents have also been subject to reconsideration and

possible cancellation by the PTO. As explained below, IPRs

do not differ significantly enough from preexisting PTO

mechanisms for reevaluating the validity of issued patents

to constitute a Fifth Amendment taking.

By the time Celgene filed the application that became

the ’501 patent (1998) and the patent was issued (2000),

and by the time Celgene filed the application that became

the ’720 patent (2000) and the patent was issued (2001), ex

parte reexamination had existed for roughly two decades.

Ex parte reexamination, created by Congress in 1980 and

still available today, allows “[a]ny person at any time” to

“file a request for reexamination.” 35 U.S.C. § 302. The

PTO determines whether the request raises “a substantial

new question of patentability affecting any claim of the

patent.” Id. § 303(a). If it does, the reexamination is

“conducted according to the procedures established for

initial examination,” and the patent owner has the

opportunity to amend claims. Id. § 305. The

reexamination results in the confirmation of claims found

grounds. Applying our reasoning in Patlex, we rejected the

patent owner’s argument that ex parte reexamination and

subsequent cancellation of some claims of its patent

constituted a taking even though no PTO reexamination

mechanisms existed when its patent issued. See id. at 228–

29.

The patent owners in Patlex and Joy Technologies had

a stronger argument than Celgene does here because,

before the creation of ex parte reexaminations, there were

no PTO reexamination procedures. In contrast, pre-AIA

patent owners, including Celgene, have known for almost

forty years that their patents were issued subject to

substantively similar forms of PTO reexamination.

CELGENE CORPORATION v. PETER 29

to be patentable and the cancellation of claims found to be

unpatentable. Id. § 307(a).

Inter partes reexamination, created by Congress in

1999, was also available when Celgene filed the

’720 patent, although not when it filed the ’501 patent. A

third party could request inter partes reexamination, and

the standard to initiate the reexamination was whether the

request raised a “substantial new question of

patentability.” 35 U.S.C. §§ 311–12 (1999) (amended).

Inter partes reexamination “granted third parties greater

opportunities to participate in the Patent Office’s

reexamination proceedings,” and, following amendments

in 2002, also allowed third parties to participate in any

appeal of the PTO’s final reexamination decision.

See Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2137

(2016).

Celgene’s pre-AIA patents were therefore granted

subject to existing judicial and administrative avenues for

reconsidering their validity. Not only were they subject to

challenge in district court, “[f]or several decades, the

Patent Office has also possessed the authority to

reexamine—and perhaps cancel—a patent claim that it

had previously allowed.” Id.

IPRs are the most recent legislative modification to the

PTO’s longstanding reconsideration procedures. 14 In 2011,

as part of the AIA, Congress created IPRs, which replaced

inter partes reexamination. Leahy–Smith America Invents

Act, Pub. L. No. 112-29, § 6, 125 Stat. 284, 299–313 (2011)

(codified as amended at 35 U.S.C. §§ 311–19 (2012)). IPRs

allow a third party to request that the PTO “reexamine the

claims in an already-issued patent and to cancel any claim

14 Celgene’s suggestion that PTO reconsideration “is

a creation of the 2011 AIA legislation” or only available

“[s]ince the AIA” is incorrect. See Appellant’s Br. 46.

30 CELGENE CORPORATION v. PETER

that the agency finds to be unpatentable in light of [the]

prior art” specified in 35 U.S.C. § 311(b). Cuozzo, 136 S. Ct.

at 2136.

In this case it suffices for us to decide that IPRs do not

differ sufficiently from the PTO reconsideration avenues

available when the patents here were issued to constitute

a Fifth Amendment taking. Celgene identifies a number of

differences between reexaminations and IPRs, including

that IPRs are adjudicative and have discovery, briefing,

and an oral hearing, Appellant’s Br. 47, but as explained

below, these differences are not sufficiently substantive or

significant to constitute a taking.

Unsurprisingly, Celgene does not grapple with the far

more significant similarities between IPRs and their

reexamination predecessors. In IPRs, patents are

reviewed on the same substantive grounds—anticipation

and obviousness, based on the same categories of prior

art—as ex parte and inter partes reexaminations. 15 IPRs

and reexaminations use the same preponderance of the

evidence standard of proof. See 35 U.S.C. § 316(e) (“In an

inter partes review instituted under this chapter, the

petitioner shall have the burden of proving a proposition of

unpatentability by a preponderance of the evidence.”); In

re Baxter Int’l, Inc., 678 F.3d 1357, 1364 (Fed. Cir. 2012)

(“In PTO reexaminations ‘the standard of proof [is] a

preponderance of the evidence.’” (quoting In re Swanson,

540 F.3d 1368, 1377 (Fed. Cir. 2008)). And the same

broadest reasonable interpretation standard for claim

construction used in reexaminations also applied in these

15 It is undisputed that the Board’s grounds for

determining unpatentability were available under the

reexamination procedures in place at the time the ’501

patent and ’720 patent issued in 2000 and 2001,

respectively.

CELGENE CORPORATION v. PETER 31

IPRs. 16 See In re CSB-Sys. Int’l, Inc., 832 F.3d 1335, 1340

(Fed. Cir. 2016) (“During reexamination proceedings of

unexpired patents, however, the Board uses the ‘broadest

reasonable interpretation consistent with the specification’

standard, or BRI.” (quoting In re NTP, Inc., 654 F.3d 1268,

1274 (Fed. Cir. 2011)).

IPRs and reexaminations are also similar in that the

Director has discretion to initiate the proceeding. In ex

parte reexamination, the Director determines “whether a

substantial new question of patentability affecting any

claim of the patent concerned is raised by the request.”

35 U.S.C. § 303(a). In IPRs, the Director has discretion to

institute IPR if there is “a reasonable likelihood that the

petitioner would prevail with respect to at least 1 of the

claims challenged in the petition.” Id. § 314(a). In both

proceedings, the Director’s discretionary determination is

final and non-appealable. See id. §§ 303(c), 314(d).

Notably, IPRs serve essentially the same purpose as

their reexamination predecessors. As the Supreme Court

has said:

The [IPR] proceeding involves what used to be

called a reexamination (and, as noted above, a

cousin of inter partes review, ex parte

reexamination, 35 U.S.C. § 302 et seq., still bears

that name). The name and accompanying

procedures suggest that the proceeding offers a

second look at an earlier administrative grant of a

patent. Although Congress changed the name from

“reexamination” to “review,” nothing convinces us

16 As noted above, the PTO has since changed the

claim construction standard used in IPR proceedings to

align with the standard used in district court proceedings,

a change that is favorable to the patent owner. See supra

note 8.

32 CELGENE CORPORATION v. PETER

that, in doing so, Congress wanted to change its

basic purposes, namely, to reexamine an earlier

agency decision.

Cuozzo, 136 S. Ct. at 2144; see also Oil States, 138 S. Ct. at

1374 (“Inter partes review is ‘a second look at an earlier

administrative grant of a patent.’” (quoting Cuozzo, 136 S.

Ct. at 2144)). 17

Moreover, the Supreme Court has described district

court challenges, ex parte reexaminations, and IPRs as

different forms of the same thing—reexamination. See

Return Mail, Inc. v. United States Postal Serv., 139 S. Ct.

1853, 1860 (2019) (“In sum, in the post-AIA world, a patent

can be reexamined either in federal court during a defense

to an infringement action, in an ex parte reexamination by

the Patent Office, or in the suite of three post-issuance

review proceedings before the Patent Trial and Appeal

Board.”). All three serve the purpose of correcting prior

agency error of issuing patents that should not have issued

in the first place:

Sometimes, though, bad patents slip through.

Maybe the invention wasn’t novel, or maybe it was

obvious all along, and the patent owner shouldn’t

enjoy the special privileges it has received. To

remedy these sorts of problems, Congress has long

permitted parties to challenge the validity of

patent claims in federal court. More recently,

17 The legislative history of the AIA confirms that one

of the objectives of IPRs was to “revisit and revise” issued

patents. See Cuozzo, 136 S. Ct. at 2140. In this way, IPRs

serve the broader goal of improving patent quality. See

H.R. Rep. No. 112-98, pt. 1, at 48 (2011), as reprinted in

2011 U.S.C.C.A.N. 67, 78 (explaining objective to “improve

patent quality and restore confidence in the presumption

of validity that comes with issued patents”).

CELGENE CORPORATION v. PETER 33

Congress has supplemented litigation with various

administrative remedies.

SAS Inst., Inc. v. Iancu, 138 S. Ct. 1348, 1353 (2018)

(citation omitted); see also Microsoft Corp. v. i4i Ltd. P’ship,

564 U.S. 91, 96 (2011) (describing district court challenges

as an “attempt to prove that the patent never should have

issued in the first place”); Fresenius USA, Inc. v. Baxter

Int’l, Inc., 721 F.3d 1330, 1338 (Fed. Cir. 2013) (stating that

“ex parte reexamination is a curative proceeding meant to

correct or eliminate erroneously granted patents”).

There are undoubtedly differences between IPRs and

their predecessors. This is not surprising given that

Congress passed the AIA with post grant review

procedures that were intentionally more robust and would

provide a “more efficient system for challenging patents

that should not have issued.” See H.R. Rep. No. 112-98, pt.

1, at 39–40 (2011), as reprinted in 2011 U.S.C.C.A.N. 67,

69. 18 Celgene is correct that IPRs are “adjudicatory in

nature.” Return Mail, 139 S. Ct. at 1860. Among the

“adjudicatory characteristics” of IPRs Celgene notes are

discovery, briefing, and an oral hearing. See Appellant’s

Br. 47. But these procedural differences come with the

longstanding recognition that “‘[n]o one has a vested right

in any given mode of procedure.’” Denver & Rio Grande W.

R.R. Co. v. Bhd. of R.R. Trainmen, 387 U.S. 556, 563 (1967)

(quoting Ex parte Collett, 337 U.S. 55, 71 (1949)). These

differences do not disrupt the expectation that patent

18 Implementing IPRs to create a more robust and

efficient system for challenging the validity of patents is

not unlike the PTO or Congress making the system more

robust by, for example, increasing the budget for or number

of examiners in the reexamination unit. While those

changes might result in significantly more requests for

reexamination and more claims being canceled, we doubt

that anyone would argue that they effectuate a taking.

34 CELGENE CORPORATION v. PETER

owners have had for nearly four decades—that patents are

open to PTO reconsideration and possible cancelation if it

is determined, on the grounds specified in § 311(b), that the

patents should not have issued in the first place.

Celgene also argues that statistics show that IPRs have

caused a permanent reduction in the value of patents

granted before the AIA. See Appellants’ Br. 48–49 (citing

statistics); Reply Br. 26–27 (citing statistics and arguing

that they show that “patents subjected to inter partes

review have been clobbered in ways previously

unimaginable”). 19 But Celgene has made no showing—nor

could it—that claims canceled in IPRs, including its own

claims, would have fared any better in the preexisting

reexamination procedures.

Recognizing that its patents were also always open to

challenge in district court, Celgene attempts to distinguish

IPRs from district court proceedings by arguing that while

IPRs resemble district court proceedings in some

respects, 20 IPRs lack the “same process or rights as civil

19 Celgene notes that almost as many IPRs were filed

and instituted in the first four years after they were

created as were filed in the twelve years inter partes

reexamination were available. Appellant’s Br. 48. This

statistic, which merely compares the frequency that these

procedures are utilized but does not compare ultimate

outcomes, does not sway our analysis.

20 That IPRs resemble district court litigation in some

ways is in line with one of the objectives of the AIA, which

was to provide an alternative to district court litigation.

See H.R. Rep. No. 112-98, pt. 1, at 48 (describing IPR as a

“quick and cost effective alternativ[e] to litigation”); S. Rep.

No. 110-259, at 20 (2008) (describing IPR as “a quick,

inexpensive, and reliable alternative to district court

litigation”). The fact that IPRs may have shifted some

CELGENE CORPORATION v. PETER 35

litigation.” See Appellants’ Br. 47–48; Reply Br. 26–27.

But the differences that Celgene identifies between district

court proceedings and IPRs only serve to demonstrate that

IPRs are similar to reexaminations. For example, IPRs use

a preponderance of the evidence burden of proof rather

than the district court’s clear and convincing evidence

burden of proof. And IPRs, at the time of these

proceedings, used the broadest reasonable interpretation

for claim construction rather than the narrower standard

from Phillips v. AWH Corp., 415 F.3d 1303, 1313 (Fed. Cir.

2005) (en banc) used in district court. While these IPR

standards differ from those used in district court, they were

previously used in ex parte and inter partes reexamination

procedures, as explained above. Celgene also notes that

the presumption of validity that applies in district court

proceedings, overcome only by clear and convincing

evidence, does not apply in IPRs. Reply Br. 26–27.

However, the presumption of validity also did not apply in

the preexisting reexamination proceedings. See In re Etter,

756 F.2d 852, 855–56 (Fed. Cir. 1985). Moreover, we long

ago explained that “[w]e do not consider the section 282

presumption [of validity] . . . to be a property right subject

to the protection of the Constitution.” Patlex Corp. v.

Mossinghoff, 758 F.2d 594, 605 (Fed. Cir. 1985), reh’g

granted on other grounds, 771 F.2d 480 (Fed. Cir. 1985). In

any event, because Celgene’s patents were granted subject

to similar reexamination standards, as discussed above,

the differences between IPRs and district court proceedings

that Celgene identifies do not create a constitutional issue.

In light of the foregoing, we hold that the retroactive

application of IPR proceedings to pre-AIA patents is not an

unconstitutional taking under the Fifth Amendment.

Patent owners have always had the expectation that the

validity challenges from the district court to the PTO does

not effectuate a taking.

36 CELGENE CORPORATION v. PETER

validity of patents could be challenged in district court. For

forty years, patent owners have also had the expectation

that the PTO could reconsider the validity of issued patents

on particular grounds, applying a preponderance of the

evidence standard. Although differences exist between

IPRs and their reexamination predecessors, those

differences do not outweigh the similarities of purpose and

substance and, at least for that reason, do not effectuate a

taking of Celgene’s patents.

III

We have considered Celgene’s remaining arguments

and find them unpersuasive. We affirm the Board’s

determination that all of the claims of the ’501 patent and

claims 1–9 and 11–32 of the ’720 patent are invalid as

obvious.

AFFIRMED