Petition for Writ of Certiorari — Vanda Pharmaceuticals Inc., Petitioner v. Teva Pharmaceuticals USA, Inc., et al.
Supreme Court briefJan 12, 2024
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In the Supreme Court of the United States
VANDA PHARMACEUTICALS INC.,
Petitioner,
v.
TEVA PHARMACEUTICALS USA, INC.;
APOTEX INC.; APOTEX CORP.,
Respondents.
On Petition for a Writ of Certiorari to the
United States Court of Appeals for the
Federal Circuit
PETITION FOR A WRIT OF CERTIORARI
PAUL W. HUGHES
Counsel of Record
SARAH P. HOGARTH
CHRISTOPHER M. BRUNO
APRIL E. WEISBRUCH
GRACE WALLACK
McDermott Will & Emery LLP
500 North Capitol Street NW
Washington, DC 20001
(202) 756-8000
phughes@mwe.com
Counsel for Petitioner
i
QUESTION PRESENTED
Section 103 of title 35 of the U.S. Code provides
that an invention is not patentable if it “would have
been obvious” to a person of ordinary skill in the relevant art. In KSR International Co. v. Teleflex, Inc.,
this Court explained that a “combination of familiar
elements according to known methods is likely to be
obvious when it does no more than yield predictable
results.” 550 U.S. 398, 416 (2007).
The Federal Circuit, based on its own longstanding rule, holds that a combination of known elements
is obvious where an ordinarily skilled artisan would
have a “reasonable expectation of success” in reaching
the resulting invention. Applying that rule here, the
Federal Circuit concluded that the mere existence of a
clinical trial and long-existing general FDA guidance
would contribute to a skilled artisan’s reasonable expectation of success, rendering the results of the ensuing experimentation unpatentable, no matter how innovative or unpredictable the results.
The question presented is:
Whether obviousness requires a showing of “predictable” results, as this Court held in KSR, or a mere
“reasonable expectation of success,” as the Federal
Circuit has held both before and after KSR?
ii
CORPORATE DISCLOSURE
Petitioner Vanda Pharmaceuticals Inc. discloses
that it has no parent corporation and that BlackRock
Fund Advisors owns more than 10% of its stock.
iii
RELATED PROCEEDINGS
Vanda Pharms. Inc. v. Teva Pharms. USA, Inc.,
No. 23-1247 (Fed. Cir. May 10, 2023)
Vanda Pharms. Inc. v. Teva Pharms. USA, Inc.,
Nos. 18-cv-651, 18-cv-689, 19-cv-560, 19-cv-685, 1:19cv-2202, 19-cv-2375, 20-cv-83, 20-cv-93, 20-cv-1104,
20-cv-1333, 21-cv-121, 21-cv-282 (D. Del. Dec. 13,
2022)
iv
TABLE OF CONTENTS
Question Presented ..................................................... i
Corporate Disclosure .................................................. ii
Related Proceedings .................................................. iii
Table of Authorities..................................................... v
Petition for a Writ of Certiorari ..................................1
Opinions Below ............................................................1
Jurisdiction ..................................................................1
Statutory Provision Involved ......................................1
Statement ....................................................................1
A. Legal background .............................................4
B. Factual background ..........................................8
C. Proceedings below...........................................10
Reasons for Granting the Petition ............................12
A. The decision below conflicts with this
Court’s obviousness precedents and the
animating purpose of Section 103. .................13
B. No other circuit has adopted the
Federal Circuit’s reasonable-expectation
rule. .................................................................20
C. This is an attractive vehicle to address
this exceptionally important question. ..........26
Conclusion .................................................................35
Appendix A – Court of appeals opinion .................... 1a
Appendix B – District court opinion ....................... 17a
Appendix C – Order denying rehearing ................. 76a
v
TABLE OF AUTHORITIES
Cases
ABS Global, Inc. v. Inguran, LLC,
914 F.3d 1054 (7th Cir. 2019) .............................. 21
Amgen Inc. v. Sanofi,
598 U.S. 594 (2023) ........................................ 29, 30
Application of Clinton,
527 F.2d 1226 (C.C.P.A. 1976)............................... 6
Application of Mehta,
347 F.2d 859 (C.C.P.A. 1965)................................. 6
Bausch Health Ireland Ltd. v.
Padagis Israel Pharms. Ltd.,
2022 WL 17352334 (D.N.J. Dec. 1, 2022) ........... 28
Bayer Schering Pharma AG v.
Barr Lab’ys, Inc.,
575 F.3d 1341 (Fed. Cir. 2009) ............................ 16
Bonito Boats, Inc. v. Thunder Craft Boats, Inc.,
489 U.S. 141 (1989) ................................................ 2
Cathodic Prot. Serv. v. American
Smelting & Ref. Co.,
594 F.2d 499 (5th Cir. 1979) ................................ 24
Chicago Steel Foundry Co. v.
Burnside Steel Foundry Co.,
132 F.2d 812 (7th Cir. 1943) .................... 15, 18, 26
Colortronic Reinhard & Co. v.
Plastic Controls, Inc.,
668 F.2d 1 (1st Cir. 1981) .................................... 25
Commonwealth Eng’g Co. of Ohio v. Watson,
188 F. Supp. 544 (D.D.C. 1960) ....................... 6, 24
Commonwealth Eng’g Co. of Ohio v. Watson,
293 F.2d 157 (D.C. Cir. 1961) .............................. 24
vi
Cases—continued
Consolidated Fruit-Jar Co. v. Wright,
94 U.S. 92 (1876) .................................................... 1
Cuno Eng’g Corp. v. Automatic Devices Corp.,
314 U.S. 84 (1941) ................................................ 18
De Forest Radio Co. v. General Elec. Co.,
283 U.S. 664 (1931) ............................ 2, 4, 6, 14, 34
Diamond Rubber Co. of New York v. Consol.
Rubber Tire Co.,
220 U.S. 428 (1911) .............................................. 31
Digitronics Corp. v. New York Racing Ass’n, Inc.,
553 F.2d 740 (2d Cir. 1977) ................................. 24
Dow Chem. Co. v. Halliburton Oil Well
Cementing Co.,
324 U.S. 320 (1945) ............................ 2, 4, 6, 14, 34
Eibel Process Co. v. Minnesota &
Ontario Paper Co.,
261 U.S. 45 (1923) .................................... 15, 16, 33
Elekta Ltd. v. ZAP Surgical Sys., Inc.,
81 F.4th 1368 (Fed. Cir. 2023)............................... 7
Eli Lilly & Co. v. Generix Drug Sales, Inc.,
460 F.2d 1096 (5th Cir. 1972) .............................. 23
Eli Lilly & Co. v. Premo Pharm. Lab’ys, Inc.,
630 F.2d 120 (3d Cir. 1980) ........................... 22, 23
Expanded Metal Co. v. Bradford,
214 U.S. 366 (1909) .............................................. 14
Formal Fashions, Inc. v. Braiman Bows, Inc.,
369 F.2d 536 (2d Cir. 1966) ................................. 25
Graham v. John Deere Co. of Kansas City,
383 U.S. 1 (1966) ........ 4-7, 14, 18, 21, 24-26, 30, 32
Hayes Spray Gun Co. v. E.C. Brown Co.,
291 F.2d 319 (9th Cir. 1961) ................................ 22
vii
Cases—continued
Hazeltine Corp. v. General Motors Corp.,
131 F.2d 34 (3d Cir. 1942) ................................... 23
Hoffmann-La Roche Inc. v. Apotex Inc.,
748 F.3d 1326 (Fed. Cir. 2014) ...................... 28, 29
Holmes Grp., Inc. v. Vornado Air
Circulation Sys., Inc.,
535 U.S. 826 (2002) .............................................. 25
Janssen Pharms., Inc. v. Mylan Laby’s Ltd.,
2023 WL 3605733 (D.N.J. May 23, 2023) ........... 28
Kabushiki Kaisha Audio-Technica v.
Atlantis Sound, Inc.,
629 F.2d 978 (4th Cir. 1980) ................................ 25
KSR Int’l Co. v. Teleflex, Inc.,
550 U.S. 398 (2007) .......................2, 6-7, 13-14, 17,
21, 30, 32-34
Ling-Temco-Vought, Inc. v. Kollsman
Instrument Corp.,
372 F.2d 263 (2d Cir. 1967) ................................. 23
In re Longi,
759 F.2d 887 (Fed. Cir. 1985) ................................ 7
Merck & Cie v. Gnosis S.P.A.,
808 F.3d 829 (Fed. Cir. 2015) ........................ 16, 17
Nickola v. Peterson,
580 F.2d 898 (6th Cir. 1978) ................................ 25
Norfin, Inc. v. Int’l Bus. Machs. Corp.,
625 F.2d 357 (10th Cir. 1980) .............................. 25
Penn Int’l Indus. v. Pennington Corp.,
583 F.2d 1078 (9th Cir. 1978) .............................. 22
Pfaff v. Wells Elecs., Inc.,
525 U.S. 55 (1998) ................................................ 26
viii
Cases—continued
Pfizer, Inc. v. Apotex, Inc.,
480 F.3d 1348 (Fed. Cir. 2007) ............ 7, 13, 15, 34
Pierce v. Ben-Ko-Matic, Inc.,
310 F.2d 475 (9th Cir. 1962) ................................ 22
Rengo Co. v. Molins Mach. Co.,
657 F.2d 535 (3d Cir. 1981) ................................. 25
Republic Indus., Inc. v. Schlage Lock Co.,
592 F.2d 963 (7th Cir. 1979) ................................ 24
Saf-Gard Prods., Inc. v. Serv. Parts, Inc.,
532 F.2d 1266 (9th Cir. 1976) .............................. 22
Salix Pharms., Ltd. v. Norwich Pharms., Inc.,
2022 WL 3225381 (D. Del. Aug. 10, 2022) .... 28, 29
Sanofi-Aventis Deutschland GMBH v.
Mylan Pharmaceuticals Inc.,
791 F. App’x 916 (Fed. Cir. 2019) ........................ 29
Sanofi-Aventis U.S. LLC v. Sandoz, Inc.,
2023 WL 4175334 (D. Del. June 26, 2023) .......... 28
Sarkisian v. Winn-Proof Corp.,
686 F.2d 671 (9th Cir. 1981) ................................ 25
Scientific Plastic Prods., Inc. v. Biotage AB,
766 F.3d 1355 (Fed. Cir. 2014) ............................ 29
Sinclair & Carroll Co. v. Interchemical Corp.,
325 U.S. 327 (1945) ........................................ 16, 23
Textile Mach. Works v. Louis Hirsch
Textile Machs.,
302 U.S. 490 (1938) ................................ 4, 6, 15, 34
Webster Loom Co. v. Higgins,
105 U.S. 580 (1881) .......................................... 5, 31
Winans v. Denmead,
56 U.S. 330 (1853) ................................................ 14
ix
Cases—continued
Woodstream Corp. v. Herter’s, Inc.,
446 F.2d 1143 (8th Cir. 1971) .............................. 25
Yita LLC v. MacNeil IP LLC,
69 F.4th 1356 (Fed. Cir. 2023)............................... 5
Constitution, Statutes, and Regulations
U.S. Const. art. I, § 8, cl. 8 .......................................... 4
21 U.S.C.
§ 355(j)(2)(A)(vii)(IV) ............................................ 10
§ 355(j)(2)(B) ......................................................... 10
§355(j)(5)(B)(iii) .................................................... 10
28 U.S.C.
§ 1254(1) ................................................................. 1
§ 1295(a)(1) ........................................................... 21
35 U.S.C.
§ 103 ........................ 1-2, 5, 12-14, 17-18, 20, 24-25
§ 103 (1964) .......................................................... 18
§ 112 ..................................................................... 30
§ 271(e)(2) ....................................................... 10, 11
42 U.S.C.
§ 282(i) ...................................................... 19, 27, 28
§ 282(j) .................................................................. 19
§ 282(j)(2)(A) ......................................................... 19
Leahy-Smith America Invents Act, Pub.
L. No. 112-29, 125 Stat. 284 (2011) ....................... 5
42 C.F.R.
§ 11.8 .................................................................... 19
§ 11.28................................................................... 19
Clinical Trials Registration and Results
Information Submission, 81 Fed.
Reg. 64,982 (Sept. 21, 2016) ................................ 19
x
Other Authorities
Benjamin Roin, Unpatentable Drugs
and the Standards of Patentability,
87 Tex. L. Rev. 503 (2009) ................................... 27
Biotechnology Innovation Organization,
Clinical Development Success Rates and
Contributing Factors 2011-2020 (Feb. 2021) ...... 27
Congressional Budget Office, Research and
Development in the Pharmaceutical
Industry (Apr. 2021) ................................ 20, 26, 27
2 Donald S. Chisum,
Chisum on Patents (2023) .............................. 18, 26
H.R. Rep. No. 82-1923 (1952)...................................... 4
Joseph A. DiMasi et al., Innovation in the
Pharmaceutical Industry: New
Estimates of R&D Costs,
47 J. Health Econ. 20 (May 2016) ....................... 27
Kristen C. Buteau, Deuterated Drugs:
Unexpectedly Nonobvious?,
10 J. High Tech. L. 22 (2009)............................... 18
Ryan T. Holte & Ted Sichelman, Cycles of
Obviousness, 105 Iowa L. Rev 107 (2019) ........... 17
S. Rep. No. 82-1979 (1952) .......................................... 4
Thomas Moore et al., Cost of Clinical Trials
For New Drug FDA Approval Are Fraction
of Total Tab, Johns Hopkins Bloomberg
Sch. Pub. Health (Sept. 24, 2018)........................ 26
U.S. Food & Drug Admin., Guidance for
Industry: Food-Effect Bioavailability and
Fed Bioequivalence Studies (2002) ...................... 11
PETITION FOR A WRIT OF CERTIORARI
Petitioner Vanda Pharmaceuticals Inc. respectfully petitions for a writ of certiorari to review the
judgment of the United States Court of Appeals for
the Federal Circuit in this case.
OPINIONS BELOW
The court of appeals’ opinion (App., infra, 1a-16a)
is unreported but available at 2023 WL 3335538. The
district court’s decision (App., infra, 17a-75a) is unreported but available at 2022 WL 17593282.
JURISDICTION
The court of appeals entered judgment on May 10,
2023, and denied a timely filed petition for rehearing
on August 16, 2023. On October 18, 2023, the Chief
Justice extended the time to file a petition for certiorari to January 12, 2024. This Court’s jurisdiction is
invoked under 28 U.S.C. § 1254(1).
STATUTORY PROVISION INVOLVED
35 U.S.C. § 103 states in relevant part:
A patent for a claimed invention may not be
obtained * * * if the differences between the
claimed invention and the prior art are such
that the claimed invention as a whole would
have been obvious before the effective filing
date of the claimed invention to a person having ordinary skill in the art to which the
claimed invention pertains. Patentability
shall not be negated by the manner in which
the invention was made.
STATEMENT
Patents are essential property rights—provided
for in the Constitution and secured by the Patent Act.
Consolidated Fruit-Jar Co. v. Wright, 94 U.S. 92, 96
2
(1876) (“A patent for an invention is as much property
as a patent for land.”). By securing innovators’ returns
on their investments in research and development,
patents are essential to “exploit the full potential of
our inventive resources.” Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 152 (1989).
To be patentable, an invention cannot have been
“obvious” to a person of ordinary skill in the art at the
time it was made. 35 U.S.C. § 103. In KSR International Co. v. Teleflex, Inc., the Court held that a “combination of familiar elements according to known
methods is likely to be obvious when it does no more
than yield predictable results.” 550 U.S. 398, 416
(2007). This standard was long adopted in the regional
circuits prior to the creation of the Federal Circuit,
and it accords with the Court’s longstanding pronouncements about the contours of obviousness—that
claims are invalid as obvious only where the result
would have been “perfectly plain” (Dow Chem. Co. v.
Halliburton Oil Well Cementing Co., 324 U.S. 320, 327
(1945)) or “immediately recogniz[able]” to one skilled
in the art (De Forest Radio Co. v. General Elec. Co.,
283 U.S. 664, 682 (1931)).
The Federal Circuit, however, has charted its own
course. Rather than pegging obviousness to “predictable results,” that court instead holds that a combination of known elements is obvious when an ordinarily
skilled artisan would have a “reasonable expectation
of success” in the results reached. As this case illustrates, a “reasonable expectation of success” is a far
lower standard than that adopted by this Court. In the
case of pharmaceutical innovation (like other chemical arts and scientific pursuits), innovation often relies on incremental experimentation to achieve
3
breakthroughs. While many experiments fail, the
prior art often contains some references that could
lead a skilled artisan to “reasonably expect” the outcome of the next experiment that happens to be successful—indeed, that is why innovators invest millions of dollars into conducting the experiment. A
skilled artisan will often have a “reasonable expectation of success” long before one could ever conclude
that a result is “predictable.”
The Federal Circuit’s incorrect test for obviousness has a significant effect on patent law throughout
the country. Most relevant here, it threatens to render
many advancements in drug development unpatentable. That is an especially pernicious result for rare diseases, where patent-based incentives are crucial for
innovators to invest the billions required to develop
new, successful treatments.
The Federal Circuit’s improper standard led to the
wrong result here. For example, the Federal Circuit
invalidated Vanda’s patent disclosing a method of using the drug tasimelteon to treat Non-24-Hour SleepWake Disorder (Non-24), based in substantial part on
Vanda’s disclosure of clinical trials it was undertaking, and which ultimately supplied the results necessary to secure the patent. Although clinical trials often fail, the court of appeals used this as evidence that
a person of ordinary skill in the art would have a “reasonable expectation of success.” If, however, the court
had applied the correct “predictable results” standard,
it could not have concluded that this evidence supports a finding of obviousness.
In all, the Federal Circuit employs an obviousness
standard that materially departs from this Court’s
longstanding holdings. That different standard mat-
4
ters immensely—and it was dispositive here. Further
review is warranted.
A. Legal background
1. The patent laws “‘promote the Progress of * * *
useful Arts, by securing for limited Times to * * * Inventors the exclusive Right to their * * * Discoveries.’”
Graham v. John Deere Co. of Kansas City, 383 U.S. 1,
5 (1966) (quoting U.S. Const. art. I, § 8, cl. 8). A patent
operates as “a reward, an inducement, to bring forth
new knowledge” by granting the right to exclude others for its term. Id. at 9. It incents “[i]nnovation, advancement, and things which add to the sum of useful
knowledge.” Id. at 6. But limitations are necessary to
“weed[] out those inventions” that are not “new and
useful innovations.” Id. at 9, 11.
One limitation is nonobviousness, which has been
reflected in the Court’s precedent for more than 170
years. See Graham, 383 U.S. at 11. The nonobviousness criterion reflects the principle that “the difference between the new thing and what was known before [must be] considered sufficiently great to warrant
a patent.” Id. at 14 (quoting S. Rep. No. 82-1979
(1952); H.R. Rep. No. 82-1923 (1952)).
Over the ensuing decades, the Court described a
claimed invention as obvious when it would have been
“perfectly plain to an expert” (Dow Chem., 324 U.S. at
327), or “immediately recognized” and “found ready at
hand” by one skilled in the art (De Forest Radio, 283
U.S. at 682, 685), or “plainly indicated,” or “plainly
foreshadowed” (Textile Mach. Works v. Louis Hirsch
Textile Machs., 302 U.S. 490, 497-498 (1938)).
The Court has been careful to distinguish obvious
inventions from those inventions where elements
5
were present in the prior art, but the combination of
them produced a “new and beneficial result.” Webster
Loom Co. v. Higgins, 105 U.S. 580, 591 (1881). This is
essential to prevent hindsight bias: It “is often the
case with inventions of the greatest merit” that, after
“it has succeeded, it may seem very plain to any one
that he could have done it as well.” Ibid. To guard
against improperly denying patent protection, the
Court has long explained that, “if a new combination
and arrangement of known elements produce a new
and beneficial result, never attained before, it is evidence of invention.” Ibid.
In 1952, Congress codified the Court’s nonobviousness doctrine via Section 103 of the Patent Act. It
provides that an invention is not patentable if that invention would have been “obvious” at the time it was
made to a person having ordinary skill in the art. 35
U.S.C. § 103. See also Graham, 383 U.S. at 14-17.1
This Court construed the newly codified standard
in Graham, prescribing three basic factual inquiries:
[T]he scope and content of the prior art are to
be determined; differences between the prior
art and the claims at issue are to be ascertained; and the level of ordinary skill in the
pertinent art resolved.
383 U.S. at 17. “Against this background,” Graham
held, “the obviousness or nonobviousness of the subject matter is determined,” a determination that may
be informed by “secondary considerations [such as]
1
Amendments to Section 103 in the Leahy–Smith America Invents Act (AIA) (Pub. L. No. 112-29 § 3(c), 125 Stat. 284, 287
(2011)) have not altered the Federal Circuit’s approach to the
governing obviousness standard. See, e.g., Yita LLC v. MacNeil
IP LLC, 69 F.4th 1356, 1363 n.3 (Fed. Cir. 2023).
6
commercial success, long felt but unsolved needs, failure of others, etc.” Ibid.
In KSR, the Court reaffirmed that “the[se] factors
define the controlling inquiry.” 550 U.S. at 399. It observed, in line with longstanding precedent, that a
“combination of familiar elements according to known
methods is likely to be obvious when it does no more
than yield predictable results.” Id. at 416. Accord Dow
Chem., 324 U.S. at 327 (“perfectly plain to an expert”);
Textile Mach., 302 U.S. at 498 (“plainly foreshadowed”); De Forest Radio, 283 U.S. at 682 (“immediately recognized”). Stated another way, KSR instructed that a “court must ask whether the improvement is more than the predictable use of prior art elements according to their established functions.” 550
U.S. at 417.
2. Meanwhile, the U.S. Court of Customs and Patent Appeals (CCPA) fashioned its own obviousness
formulation. The CCPA concluded that an invention
is obvious where a skilled artisan would understand
that “there is at least a reasonable expectation of success.” Application of Mehta, 347 F.2d 859, 865
(C.C.P.A. 1965). See also Application of Clinton, 527
F.2d 1226, 1228 (C.C.P.A. 1976) (holding that, for obviousness, “a reasonable expectation of success is necessary”).2
Following its formation, the Federal Circuit incorporated the CCPA’s standard into its own case law,
2
Similarly, the Board of Examiners determined that “merely
appl[ying] an old process to another analogous material with at
least reasonable expectation of success” “does not constitute invention.” Commonwealth Eng’g Co. of Ohio v. Watson, 188 F.
Supp. 544, 545 (D.D.C. 1960).
7
observing that “[o]nly a reasonable expectation of success, not absolute predictability, is necessary for a
conclusion of obviousness.” In re Longi, 759 F.2d 887,
897 (Fed. Cir. 1985).
Before this Court’s decision in KSR, the Federal
Circuit employed the reasonable-expectation-of-success formulation as part of a two-step inquiry. According to that court, “[s]ubsumed within the Graham factors is a subsidiary requirement articulated by this
court that where * * * all claim limitations are found
in a number of prior art references,” a patent challenger needs to show “that a skilled artisan would
have been motivated to combine the teachings of the
prior art references to achieve the claimed invention,
and that the skilled artisan would have had a reasonable expectation of success in doing so.” Pfizer, Inc. v.
Apotex, Inc., 480 F.3d 1348, 1361 (Fed. Cir. 2007).
In KSR, this Court rejected the Federal Circuit’s
“rigid” application of the teaching-suggestion-motivation (or TSM) test and reaffirmed the “functional approach” of Graham. 550 U.S. at 415, 419. It criticized
the Federal Circuit’s “transform[ation]” of a “general
principle into a rigid rule that limits the obviousness
inquiry.” Id. at 419.
Following KSR, the Federal Circuit has continued
to adhere to its “subsidiary requirement” “subsumed
within the Graham factors” (Pfizer, 480 F.3d at
1361)—that obviousness turns on whether a skilled
artisan would have “been motivated to combine the
teachings of the prior art references” and would have
had a “reasonable expectation of success” in achieving
the patented result. See, e.g., App., infra, 15a; Elekta
Ltd. v. ZAP Surgical Sys., Inc., 81 F.4th 1368, 1377
(Fed. Cir. 2023).
8
B. Factual background
This case concerns tasimelteon—the first drug
that FDA approved to treat two different rare conditions: Non-24-Hour Sleep-Wake Disorder (Non-24), a
debilitating circadian-rhythm disorder that disproportionately afflicts individuals who are totally blind
(App., infra, 2a-3a), and nighttime sleep disturbances
in individuals with Smith-Magenis Syndrome, a rare
genetic neurodevelopment disorder (C.A. App. 19173).
Vanda is a pharmaceutical company focused on
the development and commercialization of innovative
therapies to address high-priority unmet medical
needs and improve the lives of patients. As one way of
carrying out its mission, Vanda acquires molecules
that other companies have abandoned and, through
ingenuity and great expense, investigates new uses
for them. See, e.g., C.A. App. 19027-19028.
That is the story of tasimelteon. Bristol-Myers
Squibb (BMS) tried but failed to develop tasimelteon
into an approvable treatment for insomnia in elderly
patients. C.A. App. 19027. After a lack of success,
BMS abandoned development of tasimelteon, and
Vanda licensed the molecule in 2004 for a small token
payment and the promise of future milestone payments. Id. at 19027-19028.
Through painstaking, significant, and costly clinical testing, Vanda developed the drug into a useful
therapeutic. Vanda studied tasimelteon in the treatment of jet-lag-type sleep disorder and shift-work
sleep disorder. C.A. App. 19027-19028. Vanda also
studied tasimelteon for treatment of Non-24, designing the largest-ever study of treatment of Non-24 in
blind people. Id. at 19038-19039. Vanda’s studies
showed that tasimelteon could entrain (meaning
9
synchronize with the 24-hour day) the circadian
rhythms of blind people with Non-24, where no FDA
approved product had worked before. Id. at 1903019031, 19300-19301. Vanda also conducted extensive
research to determine the appropriate dosage and the
appropriate timing of administration needed to entrain a Non-24 sufferer’s circadian rhythm to the 24hour day. Id. at 19031-19033. And Vanda studied the
metabolization of tasimelteon and determined that
tasimelteon interacts poorly with certain other drugs
that inhibit or induce certain key liver enzymes
(called CYP1A2 and CYP3A4). Id. at 19034, 23040. Finally, Vanda determined through clinical experimentation that food significantly decreases the amount of
tasimelteon available in the short, sharp pulse needed
to entrain a person’s circadian rhythm, and therefore
tasimelteon should be administered without food. Id.
at 19034, 23168.
Vanda’s clinical studies—performed at considerable expense and over many years—enabled Vanda to
secure FDA approval in 2014 for Hetlioz® as the firstever therapy to treat Non-24. C.A. App. 19293; App.,
infra, 18a.
The patents at issue in this case reflect Vanda’s
clinical work developing tasimelteon; they cover:
• tasimelteon’s unexpected efficacy in entraining a Non-24 patient’s circadian rhythm when
administering a 20mg dose an hour before
bedtime (U.S. Patent No. RE46,604 (the
RE604 patent) (C.A. App. 77-118)),
• tasimelteon’s previously unknown interaction
with certain classes of drugs and method of
discontinuing treatment with those drugs before administering tasimelteon (U.S. Patent
10
Nos. 9,730,910 and 10,149,829 (the ’910 and
’829 patents) (id. at 119-159, 160-194)), and
• tasimelteon’s unpredicted need to be administered without food (U.S. Patent No.
10,376,487 (the ’487 patent) (id. at 195-198)).
C. Proceedings below
Respondents Teva and Apotex are generic drug
manufacturers. Each filed an abbreviated new drug
application (or ANDA) with the FDA seeking approval
to market generic tasimelteon to treat Non-24 and,
pursuant to the Hatch-Waxman Act, notified the FDA
and Vanda that they intended to challenge the patents’ validity. See 21 U.S.C. § 355(j)(2)(A)(vii)(IV),
(j)(2)(B). Vanda accordingly sued for patent infringement. App., infra, 3a. See also 21 U.S.C.
§355(j)(5)(B)(iii); 35 U.S.C. § 271(e)(2).
After a bench trial, the district court found the asserted claims from each of Vanda’s patents invalid as
obvious. App., infra, 17a-75a. On appeal, the Federal
Circuit affirmed. Id. at 1a-16a.
First, the court concluded that claim 3 of the
RE604 patent—which claims a method of entraining
a Non-24 sufferer to a 24-hour sleep-wake cycle by administering 20mg of tasimelteon once daily before a
target bedtime—was obvious. App., infra, 4a-9a. In so
holding, the Federal Circuit relied on a combination of
prior art that included the disclosure of Vanda’s ongoing phase III clinical trial in Non-24, a summary of
results of an earlier phase II clinical trial that had
found a statistically significant effect only for 100mg
of tasimelteon, and information about a different compound (melatonin). Id. at 4a-9a. The Federal Circuit
credited the district court’s finding that the prior art
showed that “tasimelteon could * * * potentially
11
entrain patients suffering from circadian rhythm
sleep disorders.” Id. at 5a. Further, the court focused
on a prior art reference suggesting that tasimelteon
“may be useful in the treatment of sleep disturbances
related to circadian rhythm sleep disorders.” Id. at 6a.
In evaluating the evidence, including a description of
an “ongoing clinical trial,” the Federal Circuit concluded that “the tasimelteon prior art would have
given a skilled artisan a reasonable expectation of success of entrainment with 20mg.” Id. at 8a.
Second, the court concluded that claim 5 of the
’487 patent—which claimed a method of treating Non24 by administering 20mg of tasimelteon “without
food”—was obvious. App., infra, 9a-11a. The court relied on FDA guidance from 2002 advising that food
can affect the bioavailability of drugs and generally
recommending studying food’s effect on drugs. Ibid.
See also U.S. Food & Drug Admin., Guidance for Industry: Food-Effect Bioavailability and Fed Bioequivalence Studies (2002). Although the guidance makes
clear that there are numerous possible permutations
for food options—with food, without food, food agnostic, ignore certain foods, or within a certain time of
meals (FDA, supra, at 2)—the court of appeals identified no other prior art that would have allowed a
skilled artisan to predict tasimelteon’s interaction
with food. Rather, according to the court of appeals, it
was enough that “food-effect studies were expected to
be performed on new drugs” and “there were only two
permutations for the food variable” to render the result of such an experiment obvious. App., infra, 9a11a.
Third, the court held invalid as obvious Vanda’s
inventions that tasimelteon should not be taken with
12
another drug, rifampicin (a strong inducer of the enzyme CYP3A4, which reduces metabolism of the drug)
or with a strong CYP1A2 inhibitor. App., infra, 11a16a. The Federal Circuit found these method-of-treatment claims obvious based on literature about another compound (ramelteon). According to the court,
because a skilled artisan “could not have ruled out an
interaction between tasimelteon and a CYP3A4 inducer” or it would have been “reasonable to expect”
that a CYP1A2 inhibitor would “negatively impact[]
the efficacy of tasimelteon,” the interaction patents
were obvious. Id. at 14a, 16a.
In invalidating Vanda’s patent claims, the Federal Circuit underscored the importance of its governing standard: “Obviousness does not require certainty—it requires a reasonable expectation of success.” App., infra, 16a. The Federal Circuit thus affirmed the district court’s judgment solely on the
ground that all asserted claims were invalid for obviousness. Ibid.
REASONS FOR GRANTING THE PETITION
This Court’s intervention is warranted to recalibrate the Federal Circuit’s approach to the obviousness inquiry. The Federal Circuit holds that patent
claims are obvious if the prior art merely provides a
“reasonable expectation of success.” That standard is
materially lower than that long established by this
Court and codified into Section 103; properly construed, prior art renders obvious those claimed inventions whose results were “predictable” at the outset.
Indeed, prior to the creation of the Federal Circuit
(and even once after), the regional circuits broadly embraced this correct standard for obviousness.
13
Setting the correct obviousness standard is an issue of utmost practical importance. That is especially
true in the field of pharmaceutical innovation. Here,
using its incorrect standard, the Federal Circuit found
evidence that Vanda was undertaking clinical trials
weighed in favor of obviousness. That conclusion—
which stems from the Federal Circuit’s incorrect obviousness standard—deeply unsettles innovation, as essentially all pharmaceutical advances depend on incremental work achieved via clinical trials.
A. The decision below conflicts with this
Court’s obviousness precedents and the
animating purpose of Section 103.
Review is warranted because the Federal Circuit’s
reasonable-expectation-of-success standard—as well
as its application of it—is inconsistent with the obviousness inquiry as construed by this Court. In fact,
the Federal Circuit has clung to a test that is best understood as having been overturned by KSR.
The Court last addressed obviousness seventeen
years ago, in KSR. The Court admonished the Federal
Circuit for applying an obviousness test that was too
“rigid” and incompatible with the statute and this
Court’s precedents. 550 U.S. at 415, 419. But the Federal Circuit has not retired its “rigid” obviousness
standards. Rather, the Federal Circuit has continued
to use its own reasonable-expectation-of-success
standard and has applied it in a way that “limits the
obviousness inquiry” by producing stark over-invalidation of patents not contemplated by the statute or
this Court’s precedents. Id. at 419.
1. The Federal Circuit’s reasonable-expectation
standard—an admitted “subsidiary requirement” imposed by the Federal Circuit (Pfizer, 480 F.3d at
14
1361)—conflicts with KSR. Rather than rigid rules,
KSR taught that the “controlling inquiry” under Section 103, which has been in place since this Court first
addressed Section 103 in Graham, is a straightforward one: “The scope and content of the prior art
are * * * determined; differences between the prior art
and the claims at issue are * * * ascertained; and the
level of ordinary skill in the pertinent art resolved.
Against this background, the obviousness or nonobviousness of the subject matter is determined.” KSR,
550 U.S. at 399 (quoting Graham, 383 U.S. at 17-18).
Both before and after Graham, this Court has employed a higher obviousness standard than what the
Federal Circuit’s reasonable-expectation standard
has created. The Court has long protected “new and
useful result[s].” Winans v. Denmead, 56 U.S. 330, 341
(1853). See also Expanded Metal Co. v. Bradford, 214
U.S. 366, 381 (1909) (“It is perfectly well settled that
a new combination of elements, old in themselves, but
which produce a new and useful result, entitles the
inventor to the protection of a patent.”). KSR thus explained that a “combination of familiar elements according to known methods is likely to be obvious when
it does no more than yield predictable results.” 550
U.S. at 416 (emphasis added). See also id. at 417 (“A
court must ask whether the improvement is more
than the predictable use of prior art elements according to their established functions.” (emphasis added)).
KSR’s holding reflects decades of consistent law:
An invention is obvious only when it would have been
“perfectly plain to an expert” (Dow Chem., 324 U.S. at
327), or “immediately recognized” and “found ready at
hand” by one skilled in the art (De Forest Radio, 283
U.S. at 682, 685), or “plainly indicated,” or “plainly
15
foreshadowed” by the prior art (Textile Mach. Works,
302 U.S. at 497-498).
Rather than focusing on whether the end result
was “predictable,” the Federal Circuit’s standard focuses on whether a “skilled artisan would have” “reasonab[ly] expect[ed]” to succeed in producing the result. App., infra, 5a-6a, 15a-16a; Pfizer, 480 F.3d at
1364 (“[O]bviousness cannot be avoided simply by a
showing of some degree of unpredictability in the art
so long as there was a reasonable probability of success.”). But a skilled artisan can reasonably expect
success long before that success could be deemed “predictable.” That is especially true in the chemical arts,
where “[l]aboratory work of a decade is behind each
discovery.” Chicago Steel Foundry Co. v. Burnside
Steel Foundry Co., 132 F.2d 812, 817 (7th Cir. 1943).
The very fact of designing an experiment in a pharmaceutical may give a reasonable expectation that the
experiment would succeed; it would, after all, make
little sense to conduct an experiment if it were expected to fail. Yet experimentation is often essential
for invention.
The Court has distinguished hope or expectation
that an experiment will succeed from circumstances
where and when the success of that experiment is reduced to practice. For example, in Eibel Process Co. v.
Minnesota & Ontario Paper Co., the Court upheld a
patent that used known components, each working according to known principles, because “there [was] no
means, short of actual experiment, to enable one to
anticipate results.” 261 U.S. 45, 62 (1923). The result—raising one end of the machine to rely on gravity—had not been predictable, even if success might
have been reasonably expected by knowing that
16
“water will run down hill.” Id. at 52. Yet, because it
was “impossible to apportion each factor [of the new
design] its real influence” without actual experimentation, the invention was deemed non-obvious. Id. at
62.
By contrast, in Sinclair & Carroll Co. v. Interchemical Corp., 325 U.S. 327 (1945), the Court held
invalid a patent on fast-drying printer ink because the
selection of the essential ingredient was “not the product of long and difficult experimentation” but by reading from a list and “selecting a known compound to
meet known requirements.” 325 U.S. at 331, 335
(1945).
The Federal Circuit’s standard conflicts with the
lessons of Eibel and Sinclair because it effectively
treats any “viable” experiment as one that necessarily
gives a skilled artisan a reason to expect a successful
result from the experiment, making that result obvious and unpatentable. In Bayer Schering Pharma AG
v. Barr Laboratories, Inc., for example, the Federal
Circuit held invalid a patent on a micronized form of
birth control because it found that micronization was
a “viable option” and therefore a skilled artisan had a
reasonable expectation of success. 575 F.3d 1341,
1348 (Fed. Cir. 2009). But merely concluding that an
experiment is viable suggests “that the experiment
may or may not succeed.” Id. at 1351 (Newman, J.,
dissenting). Just because an experimental option is
“viable” does not mean the results are predictable. In
effect, this standard requires a skilled artisan to “conduct[] experiments that were expected to fail” for the
result to be non-obvious. Ibid.
Similarly, in Merck & Cie v. Gnosis S.P.A., the
Federal Circuit held invalid a patent on a method of
17
treatment using the folate L-5-MTHF to treat increased homocysteine. 808 F.3d 829, 833 (Fed. Cir.
2015). The court relied on the combination of two
preexisting patents—one which suggested that “elevated levels of homocysteine are often associated with
folate deficiencies” and another that “highlight[ed] L5-MTHF as a ‘natural metabolite’ of folate.” Id. at 833834. But this second patent only stated that there was
“an increasing interest for the application of this natural metabolite as at least one active compound in a
therapeutic agent.” Id. at 842 (Newman, J., dissenting). Nothing in the second patent linked the compound with treating elevated homocysteine levels—
and even if it had, an “increasing interest” in testing
a certain compound falls far short of being able to predict that compound’s success.
The Federal Circuit’s continued reliance on the
reasonable-expectation-of-success standard disregards the lessons of KSR and has, in application, resulted in a materially lower threshold for obviousness
than that found in this Court’s precedents and reaffirmed in KSR. Without the TSM test the KSR Court
rejected, the reasonable-expectation-of-success standard has operated to invalidate an ever-increasing
number of patents in ways out of step with this
Court’s precedents. See Ryan T. Holte & Ted Sichelman, Cycles of Obviousness, 105 Iowa L. Rev 107
(2019) (finding a significant increase in obviousness
findings in the Federal Circuit after KSR).
2. The Federal Circuit’s reasonable-expectationof-success standard also conflicts with Section 103 by
effectively resuscitating the long-obsolete requirement that a patent reflect a “flash of creative
18
genius”—a requirement Congress expressly rejected
when it enacted the Patent Act in 1952.
Before 1952, patentability had been described as
requiring a “flash of creative genius.” Cuno Eng’g
Corp. v. Automatic Devices Corp., 314 U.S. 84, 91
(1941). Through Section 103, Congress expressly rejected this requirement, directing that “[p]atentability
shall not be negatived by the manner in which the invention was made.” 35 U.S.C. § 103 (1964). As this
Court explained in Graham, “Congress intended by
the last sentence of section 103 to abolish the test it
believed this Court announced in the controversial
phrase ‘flash of creative genius,’ used in Cuno.” Graham, 383 U.S. at 15.3 See also 2 Donald S. Chisum,
Chisum on Patents § 5.02 (2023) (noting widespread
agreement on this point). Either “long toil and experimentation” or “a flash of genius” can lead to patentable results. See 35 U.S.C. § 103, Revisor’s Notes.
In practice, however, the Federal Circuit’s standard effectively reimposes the “creative genius” requirement by undercutting patentability in industries
that rely on long toil and experimentation to achieve
results. In pharmaceutical innovation, the “manner”
of invention “necessarily builds upon past discoveries
and requires considerable experimentation through
trial and error.” Kristen C. Buteau, Deuterated Drugs:
Unexpectedly Nonobvious?, 10 J. High Tech. L. 22, 23
(2009). See also Chicago Steel, 132 F.2d at 815-816
(“[I]n the field of science nearly all advance is made in
3
Although the Graham Court interpreted the “inventive genius” language as a mere “rhetorical embellishment” rather than
a heightened standard of patentability, it nevertheless recognized Congress’s intent to dispel any reliance on such a concept.
383 U.S. at 15 n.7.
19
laboratories where many experiments are made and
discoveries result from the trial and error method.”).
The scientific process naturally creates a crowded
field of prior art containing multiple building blocks
for future scientific discoveries. Against this backdrop, a skilled artisan might reasonably expect an experiment to succeed, even when the results of those
experiments are still unpredictable.
As the Federal Circuit has applied its reasonableexpectation-of-success standard, the practicalities of
lengthy experimental procedures effectively negate
the patentability of the results of those experiments.
In drug development, innovators must perform experiments using human subjects, and Congress requires
the lengthy experimentation necessary to develop and
test new drugs to be undertaken in public view. See
42 U.S.C. § 282(i), (j); 42 C.F.R. §§ 11.8, 11.28. An innovator must submit clinical trial protocols to the
FDA, which publishes the ongoing nature of the study
on clinicaltrials.gov. See 42 U.S.C. § 282(j)(2)(A). And
for good reason—publication of clinical trial protocols
can “help patients find trials for which they might be
eligible, enhance the design of clinical trials and prevent duplication of unsuccessful or unsafe trials, improve the evidence base that informs clinical care, increase the efficiency of drug and device development
processes, improve clinical research practice, and
build public trust in clinical research.” Clinical Trials
Registration and Results Information Submission, 81
Fed. Reg. 64,982, 65,124 (Sept. 21, 2016).
The Federal Circuit’s reasonable-expectation-ofsuccess standard sets up a situation in which the fact
of the experiment itself will render a successful result
obvious, regardless of whether a skilled artisan could
20
have “predict[ed]” that success. In the chemical arts,
in particular, the Federal Circuit’s reasonable-expectation standard effectively requires that skilled artisans would need to think an experiment would fail for
the result to be nonobvious. In a world where drug development costs range from $1 billion to $3 billion,4
clinical studies on drugs that have no “reasonable” expectation of success are simply not done, a principal
point made by defendants’ expert witness in arguing
for the patents’ invalidity. C.A. App. 19288 (“I mean,
if someone is going to be spending the time and money
to do a big Phase 3 trial, all that effort, as well as
money, then that would say to me, and to a person of
ordinary skill in the art that clearly there was a reasonable expectation that they are going to succeed.”).
By allowing the fact of an experiment to itself indicate
obviousness, the Federal Circuit’s reasonable-expectation standard cannot be squared with Congress’s express instruction that “[p]atentability shall not be negated by the manner in which the invention was
made.” 35 U.S.C. § 103.
The Federal Circuit’s reasonable-expectation-ofsuccess rule conflicts with this Court’s precedent and
has no basis in the statutory text. The Court’s review
is warranted.
B. No other circuit has adopted the
Federal Circuit’s reasonableexpectation rule.
The standard for obviousness has divided the circuits. Although the Federal Circuit has long and ubiquitously applied a reasonable-expectation-of-success
4
Congressional Budget Office, Research and Development in the
Pharmaceutical Industry 2 (Apr. 2021), perma.cc/CD8K-TWB9.
21
standard that traces to its CCPA lineage, no other circuit ever embraced this analysis. To the contrary, the
regional circuits—principally prior to the creation of
the Federal Circuit, but also even more recently—
have instead applied this Court’s more stringent
standard, sounding in whether the prior art would
yield “predictable results.”
The Seventh Circuit in 2019 resolved an obviousness question implicated by a permissive counterclaim without employing the reasonable-expectationof-success standard. See ABS Global, Inc. v. Inguran,
LLC, 914 F.3d 1054, 1064-1069 (7th Cir. 2019).5 Instead, the court recognized that Graham sets the obviousness standard (id. at 1066) and relied on KSR’s
emphasis that it is “predictable” results that inform
obviousness (id. at 1068 (emphasis added)). Per the
Seventh Circuit, “KSR emphasizes that an invention
may be obvious as a matter of law if it employs a ‘predictable solution’ to a known problem.” Ibid.
The Seventh Circuit appears consistent with the
approach taken uniformly by the regional circuits,
which addressed hundreds of obviousness cases prior
to the transfer of jurisdiction to the Federal Circuit in
October 1982. So far as we are aware, no regional circuit ever adopted the reasonable-expectation-of-success standard—notwithstanding several decisions
that postdate its invention by the CCPA.
The Ninth Circuit, for example, concluded that
“application of known principles to a known problem
5
The Federal Circuit has exclusive jurisdiction over appeals
where the action “aris[es] under” the Patent Act or “in which a
party has asserted a compulsory counterclaim arising under” the
Patent Act. 28 U.S.C. § 1295(a)(1) (emphasis added).
22
by the use of devices already known and understood
to produce a predictable result does not amount to invention.” Pierce v. Ben-Ko-Matic, Inc., 310 F.2d 475,
477 (9th Cir. 1962) (emphasis added). The key to this
test was not whether there was a “reasonable expectation” that the result would be achieved—but rather
whether it was in fact “predictable” to a skilled artisan. See also Penn Int’l Indus. v. Pennington Corp.,
583 F.2d 1078, 1082 (9th Cir. 1978) (“Even minor
changes from the prior art can produce a patentable
invention so long as the result could not have been
predicted beforehand by a person skilled in the art.”);
Saf-Gard Prods., Inc. v. Serv. Parts, Inc., 532 F.2d
1266, 1272 (9th Cir. 1976) (similar); Hayes Spray Gun
Co. v. E.C. Brown Co., 291 F.2d 319, 321-322 (9th Cir.
1961) (“[T]he proportioning result could not be predicted by the application of scientific laws; it could be
discovered and proved only by the painful process of
trial and error.”).
The Third Circuit evaluated the obviousness of
a patent on a new oral antibiotic that “yielded the unexpected property of being almost 100% absorbable
into the bloodstream.” Eli Lilly & Co. v. Premo Pharm.
Lab’ys, Inc., 630 F.2d 120, 122 (3d Cir. 1980). The
Third Circuit held that, “[i]f the new compound, although structurally obvious, exhibits uses or traits
that, at the time of their discovery, were not predictable to chemists or other persons skilled in the prior
art, such differences indicate that the new compound
is nonobvious for purposes of [Section] 103.” Id. at 130
(emphasis added). Notably, the Third Circuit did not
consider whether there was a reasonable expectation
of success in synthesizing the new compound—indeed,
the circuit recognized that the process to create the
23
compound was “fairly simple.” Id. at 130-131. Nevertheless, because the properties of the resulting compound were not predictable, the invention was nonobvious. Earlier, the Third Circuit similarly held that an
“invention was not involved” when “known principles,
[applied] to a known problem, by the use of devices
already known and understood” produced “a predictable result.” Hazeltine Corp. v. General Motors Corp.,
131 F.2d 34, 39-40 (3d Cir. 1942) (emphasis added).
The Fifth Circuit held that, in the case of the
highly unpredictable chemical arts, it is only when an
“inventor’s work * * * [is] no more novel or non-obvious
than the conducting of a biological or physiological
testing program among catalogued compounds or an
easily formulated series of homologues or analogues
that logically or predictably should disclose helpful
uses,” that a patent should be held obvious. Eli Lilly
& Co. v. Generix Drug Sales, Inc., 460 F.2d 1096, 1103
(5th Cir. 1972). This holding is right in line with this
Court’s decision in Sinclair, 325 U.S. 327, which held
that selecting among known compounds with known
properties to perform a predictable function is not patentable invention.
The Second Circuit similarly concluded that
when a patent “merely substituted one material for
another and the substituted material performed in a
readily predictable manner because of its well known
properties,” the patent is invalid for obviousness.
Ling-Temco-Vought, Inc. v. Kollsman Instrument
Corp., 372 F.2d 263, 267 (2d Cir. 1967) (emphasis
added). Like those employed by the other circuits, this
test focuses on whether the results claimed in the patent were predictable, not whether a skilled artisan
would reasonably expect success. Ibid. See also
24
Digitronics Corp. v. New York Racing Ass’n, Inc., 553
F.2d 740, 745 (2d Cir. 1977) (holding patent obvious
because the method employed “was just what could
have been predicted when those means were applied
to perform that function”).
Further, as a broad matter, the regional circuits
routinely applied the obviousness standard this Court
set forth in Graham—none adopted the reasonableexpectation-of-success analysis created by the CCPA
and later adopted by the Federal Circuit.6 As the Fifth
Circuit explained, the Supreme Court outlined the obviousness test in Graham and “emphasized that ‘strict
observance’ of those requirements is necessary.” Cathodic Prot. Serv. v. American Smelting & Ref. Co.,
594 F.2d 499, 506 (5th Cir. 1979). See also Republic
Indus., Inc. v. Schlage Lock Co., 592 F.2d 963, 972 (7th
Cir. 1979) (“[U]ntil Congress shall otherwise legislate
or the Supreme Court shall otherwise specifically
hold, this court will continue to apply the Graham
analysis as the exclusive means by which to measure
nonobviousness under section 103.”). Nearly every regional circuit agreed that “obviousness must always
be considered a factual question within the param-
6
So far as we are aware, the reasonable-expectation-of-success
formulation appeared only once in the regional circuits. In Commonwealth Engineering Co. of Ohio v. Watson, the D.C. Circuit
quoted a district court decision, which in turn quoted a Patent
Office rejection observing that there was “no invention in applying an old process to another and analogous material where there
is at least a reasonable expectation of success.” 293 F.2d 157, 158
(D.C. Cir. 1961) (quoting Commonwealth Eng’g, 188 F. Supp. at
545, quoting in turn the Patent Office Board of Examiners).
25
eters of Graham.” Norfin, Inc. v. Int’l Bus. Machs.
Corp., 625 F.2d 357, 365 (10th Cir. 1980).7
This divergence warrants review. The regional
circuits “with broader jurisdiction” are meant to “provide an antidote to the risk that [the Federal Circuit]
may develop an institutional bias,” and “[a]n occasional conflict in decisions may be useful in identifying questions that merit this Court’s attention.”
Holmes Grp., Inc. v. Vornado Air Circulation Sys.,
Inc., 535 U.S. 826, 838-839 (2002) (Stevens, J., concurring). Further review is appropriate here.
7
See also, e.g., Colortronic Reinhard & Co. v. Plastic Controls,
Inc., 668 F.2d 1, 4 (1st Cir. 1981) (“In reviewing a ruling of obviousness under section 103, we are guided by the Supreme Court’s
decision in Graham.”); Formal Fashions, Inc. v. Braiman Bows,
Inc., 369 F.2d 536, 538 (2d Cir. 1966) (“To satisfy the ultimate
legal test, we are to make the preliminary factual inquiries outlined in Graham.”); Rengo Co. v. Molins Mach. Co., 657 F.2d 535,
544 (3d Cir. 1981) (“Graham definitely states the minimum criteria for satisfaction of Section 103.”); Kabushiki Kaisha AudioTechnica v. Atlantis Sound, Inc., 629 F.2d 978, 980 (4th Cir.
1980) (“[Graham] explains the inquiry a court must undertake to
decide whether a patent is obvious.”); Nickola v. Peterson, 580
F.2d 898, 912 (6th Cir. 1978) (“The standards for determining
obviousness under 35 U.S.C. § 103 were established by the Supreme Court in Graham.”); Woodstream Corp. v. Herter’s, Inc.,
446 F.2d 1143, 1149 (8th Cir. 1971) (noting “the Supreme Court
enunciated the guidelines of inquiry into obviousness under
§ 103” in Graham); Sarkisian v. Winn-Proof Corp., 686 F.2d 671,
674 (9th Cir. 1981) (“the obviousness or non-obviousness of an
invention under § 103, though ultimately a question of law, cannot be determined without strict adherence to those factual inquiries” from Graham).
26
C. This is an attractive vehicle to address
this exceptionally important question.
The standard for obviousness is a tremendously
important issue implicated in virtually every patent
case. Leading commentators call it the “most important (and most frequently litigated) of the standards of patentability.” 2 Chisum, supra, § 5.02. Nowhere is that more true than in the context of pharmaceutical patents, where parties are vigorously contesting the validity of hundreds of patents protecting
novel innovation.
1. To begin, there is no disputing the magnitude
of this issue. Proper calibration of the obviousness
standard is essential to innovation. The patent system
is “a carefully crafted bargain that encourages both
the creation and the public disclosure of new and useful advances in technology, in return for an exclusive
monopoly for a limited period of time.” Pfaff v. Wells
Elecs., Inc., 525 U.S. 55, 63 (1998). Without this “inducement [] to bring forth new knowledge” (Graham,
383 U.S. at 8-9), innovation falters. This is particularly true with respect to the chemical arts, where
“[l]aboratory work of a decade is behind each discovery.” Chicago Steel, 132 F.2d at 817.
Developing innovative new pharmaceutical therapeutics requires enormous investments of money, can
take decades, and is an inherently risk-filled process.
Recent CBO estimates confirm that the average research-and-development cost for a new drug to go
from the laboratory through FDA approval is roughly
$1 billion to $3 billion. CBO, supra, at 2; Thomas
Moore et al., Cost of Clinical Trials For New Drug
FDA Approval Are Fraction of Total Tab, Johns Hopkins Bloomberg Sch. Pub. Health (Sept. 24, 2018),
27
perma.cc/3DPD-WEWG. See generally Joseph A. DiMasi et al., Innovation in the Pharmaceutical Industry: New Estimates of R&D Costs, 47 J. Health Econ.
20, 20-33 (May 2016).
The drug-development process is also extraordinarily time-consuming. Drug innovators must undertake costly laboratory research, nonclinical testing,
and large-scale clinical testing to bring a product to
market. This full process can take a decade or more,
and drug developers do not receive any financial return on their investment throughout this entire development period. See, e.g., CBO, supra, at 14; Biotechnology Innovation Organization, Clinical Development Success Rates and Contributing Factors 20112020 23 (Feb. 2021), perma.cc/6CU6-VX9J.
Even with this massive financial burden and
lengthy clinical trial period, there is no guarantee an
innovator’s investment in research and development
will be recouped, given the low likelihood of FDA approval. See, e.g., BIO, supra, at 3, 14; CBO, supra, at
2. Patent protection is therefore an essential incentive
for drug development; indeed, “pharmaceutical companies are rarely willing to develop drugs without patent protection.” Benjamin Roin, Unpatentable Drugs
and the Standards of Patentability, 87 Tex. L. Rev.
503, 505 (2009).
Left to stand, the Federal Circuit’s standard
threatens to foreclose broad swaths of patent rights,
particularly in the chemical arts, where invention by
definition is achieved through lengthy experimentation. A drug developer, for example, is required to disclose ongoing clinical trials on clinicaltrials.gov. See
42 U.S.C. § 282(i). Those disclosures are increasingly
being invoked in district courts as grounds to
28
invalidate a patent covering the invention resulting
from that trial on the theory that someone who knows
an experiment is ongoing would “reasonabl[y] expect[]” that experiment to succeed.8 The Federal Circuit’s application of its reasonable-expectation-of-success standard thus “has the ironic effect of turning
progress in the pharmaceutical sciences against itself.” Roin, supra, at 506. In other words, it effectively
nullifies patent protection for pharmaceutical inventions based on the very scientific advances that “allowed researchers to identify them as ones that are
likely to be effective.” Ibid.
This case is just one example of the Federal Circuit’s trend of finding weak evidence sufficient to support a “reasonable expectation of success” with respect
to pharmaceutical patents. As the Federal Circuit has
employed its standard, a “reasonable expectation of
success” requires much less, in practice, than the
proof needed to show a result is obvious under this
Court’s precedents.
For example, in Hoffmann-La Roche Inc. v. Apotex
Inc., the Federal Circuit found that an unexpectedly
successful dosing regimen for osteoporosis medication
of 150mg per month was obvious, even though no prior
8
See, e.g., Salix Pharms., Ltd. v. Norwich Pharms., Inc., 2022
WL 3225381, at *13-19 (D. Del. Aug. 10, 2022), appeal filed, Nos.
22-2153, 23-1952 (Fed. Cir. 2023) (release of phase II clinical
trial protocol contributed to a reasonable expectation of success);
Bausch Health Ireland Ltd. v. Padagis Israel Pharms. Ltd., 2022
WL 17352334, at *31-32 (D.N.J. Dec. 1, 2022) (clinical trial evidence introduced to argue obviousness); Janssen Pharms., Inc. v.
Mylan Laby’s Ltd., 2023 WL 3605733, at *18, 20 & n.17 (D.N.J.
May 23, 2023) (same), appeal filed, No. 23-2042 (Fed. Cir. June
20, 2023); Sanofi-Aventis U.S. LLC v. Sandoz, Inc., 2023 WL
4175334, at *14 (D. Del. June 26, 2023) (same).
29
art studied either a 150mg dose or monthly administration. 748 F.3d 1326 (Fed. Cir. 2014). Nevertheless, the Federal Circuit deemed this solution obvious
because 150mg per month is equivalent to a 5mg daily
dose that had been studied, ignoring the fact that the
prior art deemed 2.5mg the “most effective dose.” Id.
at 1338 (Newman, J., dissenting).
In Sanofi-Aventis Deutschland GMBH v. Mylan
Pharmaceuticals Inc., 791 F. App’x 916 (Fed. Cir.
2019), and Scientific Plastic Products, Inc. v. Biotage
AB, 766 F.3d 1355 (Fed. Cir. 2014), the Federal Circuit relied on the patents’ own specifications as evidence of obviousness, even when those specifications
revealed information not disclosed elsewhere in the
prior art. Finally, the District of Delaware, employing
the Federal Circuit’s reasonable-expectation-of-success standard, relied in part on the disclosure of a clinical trial protocol to find a drug breakthrough obvious.
Salix Pharms., 2022 WL 3225381, at *19.
The Federal Circuit’s standard for obviousness
thus erodes the incentives for invention that the patent system was designed to protect, which will in
turn reduce the number of breakthrough treatments
available to the public.
The importance of this Court’s consideration of
this issue is all the more critical in light of its decision
last term in Amgen Inc. v. Sanofi, 598 U.S. 594 (2023).
There, the Court reiterated that a drug innovator cannot patent its novel methods without possessing sufficient detail to explain to another the scope of the invention, which often requires the results of clinical trials. Id. at 613-615. By allowing the existence of an ongoing study or FDA suggestions of possible studies as
indicia of obviousness, the Federal Circuit’s decision
30
below all but forecloses a drug manufacturer’s attempt to reach the very results Amgen requires for patentability under Section 112.
That is, under Amgen, it is generally too early to
patent pharmaceutical method claims prior to obtaining the results of clinical trials. But, under the Federal Circuit’s wayward approach to obviousness, once
clinical trials are announced, it is too late to patent
eventual discoveries, because the announcement of
the trial itself will render obvious the resulting invention. The Federal Circuit’s standard should be reviewed—and corrected.
2. This case is an attractive vehicle for resolving
these important issues. Obviousness was the sole basis for the decision below. App., infra, 1a-16a. And the
Federal Circuit’s application of its reasonable-expectation-of-success standard resulted in that conclusion:
For Vanda’s method of treating Non-24 with 20mg of
tasimelteon (the RE604 patent), the court of appeals
upheld the conclusion that the prior art “would have
given a skilled artisan a reasonable expectation of success of entrainment with 20 mg” (App., infra, 8a), and
for Vanda’s drug-drug interaction patents, an inability “to rule out” an interaction or to “reasonably expect[]” an interaction resulted in an obviousness finding (id. at 14a-16a).
Had the Federal Circuit properly adhered to the
standards in Graham and KSR and focused on
whether the prior art made it predictable that Vanda’s
patented inventions would be achieved, rather than
whether the prior art made it reasonable to expect
them to result, it would have reversed.
First, the panel held that Vanda’s patented
method of administering 20mg of tasimelteon to
31
entrain a Non-24 patient’s circadian rhythm was obvious based on an article suggesting that melatonin
could entrain Non-24 patients, a small trial that
showed 100mg of a tasimelteon (but not 20mg) produced a statistically significant phase shift in a study
of patients with insomnia (not Non-24), and the existence of Vanda’s ongoing clinical trial for tasimelteon
to treat Non-24. App., infra, 5a-8a.
Although Vanda was conducting a phase III clinical trial, it did not yet have the results of that clinical
trial, which demonstrated that 20mg of tasimelteon
can indeed entrain a Non-24 sufferer’s circadian
rhythm, and it was that invention Vanda patented.
From these datapoints, a skilled artisan certainly
could not have predicted that Vanda’s clinical trial
would succeed in showing that 20mg of tasimelteon
could entrain a Non-24 sufferer’s circadian rhythm,
even though one might have “reasonably expected”
that the clinical trial would succeed by the very fact
that Vanda was performing it. Cf. C.A. App. 19288
(defendants’ expert testifying that “spending the time
and money to do a big Phase 3 trial * * * would say to
me, and to a person of ordinary skill in the art, that
clearly there was a reasonable expectation that they
are going to succeed.”). It is the difference between
thinking Vanda’s clinical trial could work versus being able to predict that it would work in achieving this
“new and beneficial result” (Webster Loom, 105 U.S.
at 591). See also Diamond Rubber Co. of New York v.
Consol. Rubber Tire Co., 220 U.S. 428, 443 (1911)
(when “success could only have been achieved by careful study,” the result is non-obvious).
Second, with respect to Vanda’s drug-drug interaction patents, the prior art referenced a drug-drug
32
interaction between a different compound (ramelteon)
and rifampicin, a CYP3A4 inducer. Although the
panel recognized that the prior art did not report an
interaction between rifampicin and tasimelteon, the
panel nonetheless concluded that it was possible there
could be such an interaction and that a skilled artisan
“could not have ruled out” the possibility of an interaction based on what was known about ramelteon.
App., infra, 12a-14a.
While that conclusion may satisfy the Federal Circuit’s standard that a skilled artisan need only be able
to “reasonably expect” a result, it cannot be squared
with KSR’s predictability principle. That a skilled artisan “could not have ruled [an interaction] out” and
might therefore be cautious enough not to coadminister tasimelteon with rifampicin cannot possibly mean
that the interaction is a “predictable result” (KSR, 550
U.S. at 416) based on what was known.
Similarly, for Vanda’s invention that tasimelteon
should not be coadministered with CYP1A2 inhibitors, the panel observed that the prior art indicated
that one should exercise “caution” before coadministering tasimelteon and a CYP1A2 inhibitor. That
word of caution, the court of appeals held, meant that
a skilled artisan would have a “reasonable expectation
of success” in achieving Vanda’s invention. But that
does not mean it is predictable that tasimelteon would
interact with a CYP1A2 inhibitor—which is what
Vanda’s experimentation showed and its patent
claimed. Instead, the Federal Circuit precludes patentability only because something “could” theoretically work. That materially heightens the patentability standard above what this Court’s precedents support. See Graham, 383 U.S. at 36 (patent’s claims
33
were obvious because they were “clearly evident from
the prior art”).
Third, the panel invalidated Vanda’s food-effects
patent based solely on the FDA’s suggestion in guidance that food effects should be studied because it is
generally known that food can change a drug’s bioavailability. App., infra, 9a-11a. In other words, it was
enough that “food-effect studies were expected to be
performed on new drugs” and “there were only two
permutations for the food variable” for the result of
such an experiment to be obvious. This holding misunderstands KSR’s obvious-to-try analysis. A solution
is “obvious to try” only when there is a “known problem” and a person of ordinary skill has “a finite number of identified, predictable solutions * * * within his
or her technical grasp.” KSR, 550 U.S. at 420, 421. But
nothing in the prior art suggested that the patented
method was one of a finite number of “predictable solutions.” Quite the contrary. The options available—
to administer tasimelteon with food, without food,
avoid certain foods, or food agnostic—are not equally
viable predictable solutions. Only one—taking tasimelteon without food—is a successful method of administering tasimelteon. And this result was not predicted by the prior art: as of the priority date, no public knowledge about any potential food interaction
with tasimelteon existed.
Thus, while the general idea that food may affect
a drug’s bioavailability was well known, the specific
effect of food on tasimelteon was not known until
tested. This Court has previously held that, when the
outcome of an inventive process was not predictable,
but only obtained as the result of “actual experiment[ation],” the invention is patentable. Eibel, 261
34
U.S. at 62. That is exactly the case here. The evidence
established that for tasimelteon to be effective, a
“short pulse” of the drug is required to reset the circadian clock. C.A. App. 19031. There was nothing in the
prior art that predicted whether and how ingestion of
food might affect the bioavailability of the drug during
this “short pulse.” Vanda’s invention—directing that
tasimelteon should be taken without food—required
more than merely “implement[ing] a predictable variation” of the prior art. KSR, 550 U.S. at 417. Had the
Federal Circuit applied the correct predictability
standard, it would not have held Vanda’s food effect
patent obvious.
* * *
This Court has consistently held over many decades that patent claims are invalid as obvious only
where the result would have been “perfectly plain”
(Dow Chem., 324 U.S. at 327), “immediately recogniz[able]” and “found ready at hand” (De Forest Radio,
283 U.S. at 682, 685), “plainly indicated” or “plainly
foreshadowed” (Textile Mach., 302 U.S. at 497, 498),
or “predictable” to one skilled in the art (KSR, 550
U.S. at 416). The regional circuits had long applied
this law. But the Federal Circuit continues to adhere
to its own “subsidiary requirement” (Pfizer, 480 F.3d
at 1361) that obviousness turns on whether a skilled
artisan would have had a “reasonable expectation of
success” in achieving the patented result.
As this case illustrates, the difference in these
standards is quite material—here, it led to the wrong
result. And the Federal Circuit’s incorrect standard
has broad implications beyond this case. Continued
application of the reasonable-expectation-of-success
test will mean the existence of a clinical trial or
35
federal guidance generally recommending certain experiments will render the results of those experiments
obvious, no matter how innovative or unpredictable.
This, in turn, threatens to erode the balance of incentives that the patent system was designed to protect,
especially in the chemical arts, where “long toil and
experimentation” is essential to achieving innovation.
CONCLUSION
The Court should grant the petition.
Respectfully submitted.
PAUL W. HUGHES
Counsel of Record
SARAH P. HOGARTH
CHRISTOPHER M. BRUNO
APRIL E. WEISBRUCH
GRACE WALLACK
McDermott Will & Emery LLP
500 North Capitol Street NW
Washington, DC 20001
(202) 756-8000
phughes@mwe.com
Counsel for Petitioner
JANUARY 2024
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.