Opposition Brief — Merck & Co. v. Teva Pharmaceuticals USA, Inc.

any time expressed disagreement with the panel's claim

RSA RIRM MER s Tors Guesinm), Tome Youn Tadh wiin

the panel's treatment of the district court's fact finding on

the merits (Merck's second question), and three questioned

the panel's analysis of commercial success (Merck's third

question).

REASONS FOR DENYING THE WRIT

I. THE COURT SHOULD NOT CONSIDER

MERCK’S “ABOUT” CLAIM CONSTRUCTION

ISSUE

A. Merck’s First Question is Moot

Merck's proffered construction of claim 23 asserts that

“about 70 mg, on an alendronic acid basis” does not mean

what it says. Instead, according to Merck, it means

“exactly 70 mg, on an alendronic acid basis.” First, correct

or not, the argument about the Federal Circuit's

interpretation is pointless. The court made clear that

although it believed that the district court's construction

was erroneous, even under that construction the claims

would be invalid:

It makes no difference to this conclusion whether the

court begins with the claim construction set forth by the

panel or by the dissent [i.¢., by Merck]. In either case

the district court erred in finding the "329 patent was

not invalid. . . .

(App. 16a n.10).

Merck's only response to the Federal Circuit's

statement is to say that it was made “defensively” (Pet. 23

n.14), yet Merck's petition fails to articulate how adopting

its proposed interpretation could possibly change the result.

Indeed, the Federal Circuit's observation is entirely

u

consistent with Merck's admissions in the case. Merck's

have recognized that the 80 mg dose referred to in

the Lunar News was chosen only because it represents two

tablets of the 40 mg dose that was available in the

claims is specified in the patent, and 80 mg, specified by

the Lunar News, is not a distinction that could make

Merck's invention unobvious.

Thus, Merck's entire effort is an exercise in futility.

This Court should not consider and decide issues that can

have no effect on the outcomes of the cases in which they

arise. St. Pierre v. United States, 319 U.S. 41 (1943)

In construing the claims of the ‘329 patent, the Federal

Circuit followed its own precedent that an interpretation of

a term in a patent claim that is contrary to its ordinary

meaning must be “clearly expressed” in the patent

specification. Interactive Gift Express, Inc. v. Compuserve,

Inc., 256 F.3d 1323, 1331 (Fed. Cir. 2001); Virginia Panel

Corp. v. MAC Panel Co., 133 F.3d 860, 866 (Fed. Cir.

1997). This approach has long been a part of the Federal

Circuit's analytical framework, and Merck does not suggest

that this Court should overrule it. Merck, however, fails to

10

address how following that methodology should have

yielded a different result.

First, Merck does not dispute that the ordinary meaning

of “about 70 mg” is “approximately 70 mg.” Merck thus

recognizes that it must find in the patent text a clear

expression of the construction it proposes, ie, a

construction exactly contrary to that ordinary meaning. As

it did in the district court and in the Federal Circuit, Merck

mischaracterizes the passage of the patent specification 9n

which it relies to provide that interpretation. In particular,

it states that the passage is a “definition” of “about 70 mg.”

kt is not. The key sentence does not say “about 70 mg. . .on

an alendronic acid basis. . means exactly 70 mg, on an

alendronic acid basis.” Instead, it states that “about 70 mg.

. on an alendronic acid basis . . . is calculated based on 70

mg of alendronic acid.” In other words, to normalize the

dosage of various possible salts of differing molecular

weights, the Weight of the compound used is that necessary

to provide the same number of molecules as the stated

amount of alendronic acid. The statement does not provide

a definition of “about 70 mg” of any sort, much less a

definition that eviscerates the ordinary meaning of the term.

Instead, it states the basis on what it must be calculated: an

equivalent amount of the corresponding acid.

This Court's precedents require that a patent claim be

construed in the context of the entire patent document.

Markman v. Westview Instruments, Inc., 517 U.S. 370, 389

(1996) (“standard construction rule. . .[is] that a term can

be defined only in a way that comports with the instrument

as a whole.”); Bates v. Coe, 98 U.S. 31, 38 (1878) (patent

claim construed with reference to entire document). The

Federal Circuit did so, and noted what the district court had

ignored: Merck's proposed construction is at odds with the

entirety of the rest of the patent text, and, most important,

ll

makes nonsense out of the claims. In particular, in 15

different instances after the occurrence of the purported

definition of “about [70] mg,” the patent uses the phrase

“about [70] mg, on ap alendronic acid basis.” (App. i4a-

15a). If “about [70] mg” by itself meant, as Merck insists,

“on an alendronic acid basis,” then the latter part of the

phrase is redundant. Although a single redundancy might

be disregarded as a drafting error, a pattern of 15 raises

more than a suspicion that the interpretation that creates the

redundancy must be wrong. Similarly, under the district

court's interpretation, the claims themselves would contain

the same nonsensical redundancy. For example, recast per

the district court, claim 23 would read:

A method for treating osteoporosis in a human

comprising orally administering 70 mg, on an

alendronic acid basis, of alendronate monosodium salt

trihydrate, on an alendronic acid basis, as a unit dosage

according to a continuous schedule having a dosing

interval of once-weekly.

(Emphasis added). Federal Circuit precedent, whose

correctness Merck does not dispute, requires that an

interpretation that creates a redundancy in a patent claim is

disfavored compared to one that does not. Electa

Instrument S.A. v. O.U.R. Scientific Int'l, Inc., 214 F.3d

1302, 1307 (Fed. Cir. 2000); Gen. Am. Transportation

Corp. v. Cryo-Trans, Inc., 93 F.3d 766, 770 (Fed. Cir.

1996). Thus, the Federal Circuit carried out the claim

construction task exactly as it should have: it noted the

agreed upon “ordinary meaning” of the term, and examined

whether the specification clearly expressed a contrary

meaning. Noting that the proposed contrary meaning was

inconsistent with the patent as a whole, it held that the

specification as a whole therefore supported the ordinary

meaning.

12

Merck’s argument here is that the Federal Circuit,

though charged with interpreting claims “as a matter of

law,” Markman, supra, must defer to the district court's

construction in this case, even where that construction is

inconsistent with the entirety of the remainder of the patent.

According to Merck, the district court's construction

involved “findings of fact,” to which the Federal Circuit

should be required to defer.

Although the issue of the deference that should be

accorded a district court's subsidiary factual findings made

in the context of construing a patent has created inierest in

the field, this case is not a vehicle for resolving it. First, as

discussed above, it is moot. Second, the Federal Circuit

claim construction exercise here did not reverse a finding

of fact. That is, “about” is not a technical term, and its

meaning to those skilled in the art was not the subject of

any expert testimony that the district court credited.

Indeed, as Merck notes, the district court did not accept

Teva's witness's claim construction testimony, and no

Merck witness offered any testimony with respect to the

meaning of “about 70 mg.” Thus, the district court did not

weigh the conflicting testimony of experts; it merely

rejected the only testimony offered. and relied on its own

examination of the patent. The Federal Circuit examined

the same text as the district court, but recognized that the

’ The principal “testimony” on which Merck relies was

Teva's expert's answer, “possibly,” to the question posed

by Merck's counsel:

1 understand, but it is what it says, and perhaps the

person wanted to say if it’s a certain salt one, you might

use 71, and if it's a certain salt 2, you might use 73.

Isn't that what's indicated by this?

13

district court had not done its job — it had ignored aspects

that any document construction requires.

The district court's failure to construe the claims with

the entire document in mind is not a finding of fact; it is an

error of law. Even under a deferential standard, it was

freely reviewable. For that reason, this case does not

present the issue that Merck suggests should be addressed.

ll. THE FEDERAL CIRCUIT GAVE APPROPRIATE

DEFERENCE TO THE DISTRICT COURT'S

FINDINGS OF FACT UNDER FED. R. CIV. P.

52a)

Merck's second question, whether the Federal Circuit

correctly applied Fed. R. Civ. P. 52(a), presents no issue

whose resolution is applicable beyond this case. This Court

has already carefully defined the appellate role in reviewing

a district court's findings of fact, and Merck's petition does

not suggest that any redefinition of that role is necessary.

For that reason, the Court should not consider Merck's

second question.

In any event, the Federal Circuit correctly applied Rule

52(a). In Graham v. John Deere Co., 381 U.S. 1, 17, this

Court defined the three essential factual inquiries in

determining whether a patented invention “would have

been obvious”:

Under § 103, the 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

skill in the pertinent art resolved.

Here, the parties did not dispute any of these issues. With

respect to the scope and content of the prior art, they agreed

that persons skilled in the art would have understood that

once weekly dosing of alendronate at seven times the daily

14

dose would be effective, that the Lunar News discloses

dosing at approximately that level, and that the only reason

it refers to “80 mg” instead of “70 mg” was the commercial

availability of a 40 mg tablet. They agreed that the Lunar

News articulates the same motivation for the once-weekly

regiment as the "329 patent. They agreed on the definition

of a person of ordinary skill in the art. Finally, they agreed

that the only difference between the Lunar News and the

claimed invention, even accepting the district court's claim

interpretation, was the precise amount (80 mg vs. 70 mg).

The Federal Circuit noted that this difference is

insignificant in light of the recognition that 70 mg would

have been understood to be the appropriate dose. Thus,

with respect to the only relevant factual issues, “the parties,

the district court and the Federal Circuit agree. There is

nothing for this Court to review; the case presents no issue

under Rule 52(a).

The key finding that Merck sought, which was the

focus of its entire trial presentation, was that persons skilled

in the art would have been skeptical of Dr. Mazess’s Lunar

News suggestion notwithstanding its medical and technical

merit. The district court made that finding. The Federal

Circuit did not reject it; indeed, as Merck is forced to

admit, the Federal Circuit accepted it for the purposes of its

analysis. (Pet. 25; App. 19a). Moreover, nowhere did the

Federal Circuit reject the district court's findings that the

Lunar News disclosures did not “overcome” medical

skepticism, as Merck suggests.

With respect to Dr. Mazess, Merck falsely states that

the Federal Circuit “elevated” his expertise “over all

others.” The court did no such thing. Dr. Mazess never

testified at the trial. The court merely pointed out that Dr.

Mazess had impressive credentials in the field, a fact that

the record overwhelmingly makes clear and that Merck

The Federal Circuit's decision did not tum on the

relative qualifications and credibility of Dr. Mazess and

Merck's expert witness. Instead, it was based on a rejection

of Merck's legal theory, i.¢., that a prior art publication that

is scientifically sound and that subsequent events prove is

correct can be nullified based on the credentials of its

author. The court recognized that the finding cf

skepticism, even if supported, is not relevant to the issue of

obviousness in this case because, as Merck does not

dispute, its patent adds nothing to the Lunar News except

the Merck name and the academic credentials of its

inventors. Under the circumstances, the Federal Circuit

held, appropriately, that a second-comer (here, Merck's

physician-inventors) cannot obtain a patent on a concept

placed in the public domain by someone else solely on the

strength of a more prestigious educational experience. As

the court stated:

Indeed, to the extent the district court finds Merck's

once-weekly dosing idea non-obvious, it still must

explain why Merck and not Dr. Mazess should get credit

for the idea.

(App. 21a).

The absurdity of Merck's argument is made plain by its

implications. If Merck's inventors had written the Lunar

News articles, and if Dr. Mazess had obtained the "329

patent, then under Merck's approach the patent would be

invalid because the authors’ credentials would lend to the

publication a gravitas that Dr. Mazess's background could

not. Similarly, if instead of publishing his idea in the

16

Lunar News, Dr. Mazess had applied for a patent on it

contemporaneously with Merck, then the resulting

“interference” proceeding (see 35 U.S.C. § 135) would not

be decided on the basis of which was the first inventor as

the statute requires, but instead on which went to what

school.* No decision of this or any other court supports

Merck's contention that the validity of a patent depends on

a comparison of the resumes of the inventor and the prior

art author.

The record shows that the Federal Circuit properly

applied Rule 52(a). It did not base its decision om 4

rejection of district court fact findings. Instead, it rejected

Merck's groundless legal theory. Recognizing that the

determination of obviousness is ultimately a question of

law, Graham, supra, Duro-Last, Inc. v. Custom Seal, Inc.,

321 F.3d 1098, 1108 (Fed. Cir. 2003), it held that as a

matter of law Merck's patent is invalid. This Court should

not accept Merck's second question for review.

il. THE FEDERAL CIRCUIT CORRECTLY

ANALYZED “COMMERCIAL SUCCESS”

ine “commercial success” of an invention is a

“see@ndary consideration” that “may have relevancy” to

* Merck's rationale would require that the Wright brothers

be depnved of credit for powered flight, the announcement

of which was widely derided, because of their background

as bicycle builders. Similarly, Albert Einstein should not

be honored for many of his insights, which likewise were at

first skeptically received, because he published them while

employed not as a university professor, but rather as a mere

examiner in the Swiss Patent Office.

17

whether the invention would have been obvious. Graham,

supra. Whether or not a patented invention is

commercially successful, however, the patent is “presumed

valid.” 35 U.S.C. § 282. Thus, a patentee need not rely on

or prove commercial success to prevail against a challenge

to the patent.

The rationale for considering commercial success is

that it may show that a market demand existed for the

patented invention, and that others with an incentive to

meet that demand would have done so had the invention

been obvious. See Note, Subtests of “Nonobviousness”: A

Nontechnical Approach to Patent Validity, 112 U. Pa. L.

Rev. 1169, 1175 (1964) (cited in Graham). See also

Chicago Rawhide Mfg. Co. v. Crane Packing Co., 523 F.2d

452, 459 (7th Cir. 1975), cert. denied, 423 U.S. 1091

(1976). As the Federal Circuit stated in this case:

Commercial success is relevant because the law

presumes an idea would successfully have been brought

to market sooner, in response to market forces, had the

idea been obvious to persons skilled in the art.

(App. 23a). Conversely, if the market is foreclosed to

everyone skilled in the art except the patent owner, then the

fact that the patentee successfully marketed the invention

can say nothing about whether it would have been obvious

to others.

Here, the market was foreclosed to all except Merck.

Because Merck was the first entity to bring alendronate to

market (as a daily dose), it was entitled to a five-year

exclusivity, beginning in 1995, for that compound for any

pharmaceutical use at any dose. 21 USC. §

355(cX 3D ii). In addition, Merck had another patent that

broadly protected alendronate, excluding everyone else

18

from the market until 2008.° Thus, the commercial success

of once-weekly administration of alendronate, even if

associated with its advantages compared to the once-daily

regimen, is not necessarily attributable to its non-

obviousness. Instead, it is just as easily attributable to the

fact that all potential competition was foreclosed, so that no

one could take up the suggestion of the Lunar News for

almost |2 years after it was published.

Merck's petition does not dispute the Federal Circuit's

stated rationale for considering commercial success. Nor

does it dispute the essential fact: that in 1996 no other

entity had the economic incentive to attempt to develop a

once-weekly alendronate dose, since it would know that it

could not market the product for more than a decade.

Instead, Merck merely lifts from their contexts quotations

from decisions of this and other courts. In none of those

cases, however, were the circumstances analogous to those

here. In all of them, those skilled in the art were free to

compete with the patent owner and were free, if they had

the insight, to exploit the patented concept. That they did

not do so before the patentee was evidence that the

invention was not obvious to them, and therefore would not

have been obvious to the hypothetical person of ordinary

skill in the art.

Merck complains that the Federal Circuit's decision

“discriminates” against improvement patents, stating that a

“third party” that patents an improvement can rely on its

* Merck's statement of the issue, which refers only to

“improvement patents,” ignores the “new chemical entity”

exclusivity. kt represented an even higher barrier to

potential competition than Merck's pre-existing patent

because it was not subject to judicial challenge.

19

commercial success to bolster nonobviousness, but that the

owner of the basic patent who likewise patents an

improvement cannot. The situation Merck posits, however,

will never arise. If, like potential third parties here,

Merck's hypothetical third party is foreclosed from

competing by the basic patent, it will have no commercial

success on which to rely because any atiempt to

commercialize the improvement will be illegal and will be

enjoined. On the other hand, if the improvement is not an

infringement of the basic patent, the Federal Circuit's

rationale and holding in this case will not apply because

competition will not be foreclosed, and the success of any

party's improvement invention, including that of the owner

of the basic patent, may indeed be evidence that the

improvement was not obvious.

The Federal Circuit's ruling may require rigorous

analysis of commercial success and the substitution of

rationality for the chanting of the “commercial success”

mantra. This is a step forward, not a retreat. Commercial

success of a patented invention shows that the invention

was a good idea. It does not necessarily show that it was

unobvious. Carrying an umbrella when the forecast calls

for rain is a good idea, but not an unobvious one. Here, the

commercial success of once-weekly dosing of alendronate

shows that it was a good idea. It was, however, an idea of

another, which only Merck could legally exploit. That

Merck successfully did so shows nothing more than the fact

that only Merck was in a position to do so.

As an afterthought, and in tacit recognition of the force

of the Federal Circuit's reasoning, Merck argues - that

“incentives” in fact existed, referring to the “safe harbor” of

35 U.S.C. § 271(eX1), which permits otherwise infringing

activity if carried out in order to generate data for

submission to the FDA, and to speculation about Teva's

20

activities with respect to alendronate. At trial, however,

when it should have addressed the issue with evidence,

Merck did not do so. Nothing in the record provides

insight into Teva's plans, incentives or the economics of

Teva's business model.

Merck's real lament is that even though it had the

burden of proof on the issue, it offered no evidence at trial

that incentives still existed for those skilled in the art to

develop the solutions of the "329 patent notwithstanding the

insurmountable barriers to entry created by Merck's patent

and statutory exclusivities. Merck in essence asks this

Court to write a rule of law that would excuse its failure to

prove the necessary facts. This Court should recognize that

the Federal Circuit correctly held that under the

circumstances of this case, the commercial success of once-

weekly alendronate is not probative of the unobviousness

of the invention claimed in the "329 patent. For that

reason, the Court should not accept Merck's third question

for review.

21

CONCLUSION

Merck's 329 patent is invalid because it clairns a

concept completely described in the prior art. Merck's

petition presents no question worthy of this Court's

attention. It should be denied.

September 16, 2005 Respectfully submitted,

James Galbraith

Counsel of record for Respondent

Teva Pharmaceuticals USA, Inc.

KENYON & KENYON

One Broadway

New York, NY 10004

(212) 908-6317

Of Counsel

Maria Luisa Palmese

William G. James, I

KENYON & KENYON

One Broadway

New York, NY 10004

(212) 908-6317

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Supreme Court, U.S.

FILED

yn ‘

e- SEP 22 2005

OFFICE OF THE CLERK

No. 05-236

In the Supreme Court of the United States

MERCK & Co., PETITIONER,

Vv.

TEVA PHARMACEUTICALS USA, INC.

ON PETITION FOR A WRIT OF CERTIORARI

—fOTHE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

AMICUS BRIEF OF THE

PROCTER & GAMBLE COMPANY

SUPPORTING PETITIONER

RODERICK R. MCKELVIE

Counsel of Record

DAVID H. REMES

CHRISTIAN J. PISTILLI*

COVINGTON & BURLING

1201 PENNSYLVANIA AVE., N.W.

WASHINGTON, D.C. 20004

(202) 662-6000

*Admitted in New York only; su-

pervised by principals of the firm

September 22, 2005

QUESTION PRESENTED

Amicus asks the Court to grant review on the third

question presented in the petition, which amicus casts as

follows:

Under 35 U.S.C. § 103(a), a patent may not issue if

the differences between the claimed invention and the

prior art are such that, at the time the invention was >

made, the invention would have been “obvious” to a per-

son having ordinary skill in the art to which the invention

pertains.

The question presented is whether 35 U.S.C. § 103(a)

allows a court to consider the commercial success of an

improvement patent in determining whether, at the time

the invention was made, the invention would have been

“obvious” to a person having ordinary skill in the art.

TABLE OF CONTENTS

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IDOE crctnciorscssccnisecioaniemsmenennnasnenmsniagintan l

REASONS FOR GRANTING THE WRIT................. 5

GI ceresmerenniericensmnsnemeuniceinanantnianntscs 10

TABLE OF AUTHORITIES

FEDERAL CASES

Akzo N.V. v. U.S. International Trade Commis-

sion, 808 F.2d 1471 (Fed. Cir. 1986)..................... 6-7

Arkie Lures, Inc. v. Gene Larew Tackle, Inc., 119

F.3d 953 (Fed. Cir. 1997) sossenvensceees hha i ileal 6

General Electric Co. v. Wabash Appliance Corp.,

a, GI ics seeneniateclnrniieeeethainabcathidiaaanttetanaitts 7,9

Graham v. John Dev. : Co., 383 U.S. 1 (1966)................. 6

Ruiz v. A.B. Chance Co., 234 F.3d 654 (Fed. Cir.

Ti snnsctn edetenaieeeceeiischisesbaaiephiaatiagabanbabiundbaiibanasiiitmieelacedipuiadl 6

Smith v. Goodyear Dental Vulcanite Co., 93 U.S.

Ger TT cnicencesincninensttnicheneteainniiataienmmmicatenntaiintsaitidbibeniic 6

Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d 1530

EE Capt: SUI cicenictennenddecicnbecntbdcnscczaniadibibethaditiemmnete 7

FEDERAL STATUTES

te UF Ui inticehioenisheveseneabebiinuiieniiecteeabeiinigianninincttl 6

MISCELLANEOUS

0 REE SRE ESA ALOT MIRE ROT ARS TEE EIEIO SET ne HO 1,2

INTEREST OF AMICUS!

Amicus Procter & Gamble is a large, multi-national

company that markets over 300 branded products, includ-

ing numerous pharmaceutical products. Procter & Gam-

ble holds many patents, the majority of which are im-

provement patents. Procter & Gamble is a licensee of

Merck’s U.S. Patent No. 5,994,329. Procter & Gamble has

a strong interest in ensuring that the law with respect to

improvement patents is clear.

STATEMENT

An “improvement” patent is a patent that builds di-

rectly on_the teachings of a prior patent. In this case, for

example, Merck’s U.S. Patent No. 4,621,077 (the “ ’077

patent”) discloses the administration of alendronate as a

treatment for osteoporosis. Merck’s U.S. Patent No.

5,994,329 (the “ '329 patent”) is an “improvement” patent

that Merck obtained on the prior ’'077 patent. The ’329

patent is an improvement over the ’077 patent because it

discloses the administration of a higher dose of alendro-

nate on a weekly basis, which increases compliance but

does not increase adverse gastrointestinal events.

1. Osteoporosis — or porous bone — “is a disease

characterized by low »one mass and structural deteriora-

tion of bone tissue, leading to bone fragility and an in-

creased risk of fractures of the hip, spine, and wrist.” Na-

tional Institutes of Health, Osteoporosis Overview, at 1

(June 2005), available at http://www.osteo.org/

inetdocs/r106pi.pdf. The National Institutes of Health

have labeled the disease “a major public health threat” for

! Letters of consent have been lodged with the Clerk. No coun-

sel for a party authored any part of this brief. Amicus or its

counsel will bear all costs associated with this brief.

more than 44 million Americans and estimate that the

disease directly incurs national expenditures of $14 bil-

lion a year. Id. |

The human body is constantly removing old bone and

replacing it with new bone. Removal of old bone is called

“resorption”; replacement with new bone is calicd “forma-

tion.” Until about age 30, bone formation outpaces bone

resorption. Then, bone resorption slowly begins to exceed

bone formation. Osteoporosis will develop “when bone re-

sorption occurs too quickly or when replacement occurs

too slowly.” Id. at 2.

2. For many years, pharmaceutical manufacturers

have sought to develop medicines to treat osteoporosis.

Petitioner Merck has centered its work on a compound

that inhibits bone resorption. The compound is alendro-

nate, one of a family of drugs known as bisphosphonates.

In 1986, Merck obtained the '077 patent on the use of al-

endronate. Merck markets the compound under the brand

name Fosamax.

Merck’s Fosamax is one of four prescription drug

products available in the United States whose primary

indication is for the treatment of osteoporosis. The others

are Novartis’ Miacalcin, Eli Lily's Evista, and Procter &

Gamble’s Actonel, which is based upon a bisphosphonate

called risedronate. (Together these four drugs are known

in the industry as “FAME,” for the first letters of the

products Fosamax, Actonel, Miacalcin and Evista.) Other

pharmaceutical companies were attempting to develop

bisphosphonate-based osteoporosis treatments or were

marketing other bisphosphonate-based treatments out-

side the United States.

In 2000, Merck introduced its high-dosage once-

weekly Fosamax product, the use of which is claimed in

the ‘329 patent that is the subject of this action. Once-

weekly Fosamax was an immediate success. Within six

3

months of its launch, the once-weekly tablets became the

most prescribed drug in the FAME market.

3. In this litigation Teva has argued Merck’s in-

vention, once-weekly dosage Fosamax, would have been

obvious to one of ordinary skill in the art and that the

claims of the '329 patent are, therefore, invalid. At trial,

Teva offered evidence of two articles from a prior art pub-

lication, Lunar News, both of which were entitled “Up-

date: Bisphosphonate.” One of the two articles suggested

that “[t]he difficulties with oral bisphosphonates may fa-

vor their episodic (once/week) or cyclical (one week each

month) administration.” In addition to mentioning the

possibility of once-weekly administrations of alendronate,

it also specifically suggested the intravenous administra-

tion of another bisphosphonate — ibandronate — as a solu-

tion to the difficulties associated with daily dosing of

bisphosphonates.

One of Merck’s responses to this argument was that

the fact of weekly Fosamax’s success is relevant to show

its claimed invention would not have been obvious. The

parties offered evidence relating to this issue, including

evidence on what was driving the Fosamax sales. Merck

introduced evidence showing that others, including Proc-

ter & Gamble, had an opportunity and incentive to de-

velop an improved dosage form. As Judge Farnan noted in

his post-trial decision, one of the arguments Teva ad-

vanced in response to this evidence was that Merck’s

commercial success was irrelevant because Merck was the

only entity allowed under the ’077 patent to market alen-

dronate tablets. Merck responded to Teva’s argument by

noting that, while it held the '077 patent, its evidence of

commercial success was relevant in light of Procter &

Gamble’s opportunity and incentive to develop a weekly

dosing form of Actonel. Judge Farnan focused his analysis

on once-weekly Fosamax’s “effects on the osteoporosis

4

market in general” (App. 92a), implicitly rejecting Teva's

argument.

4. On appeal, the majority of the court noted:

Although commercial success might generally sup-

port a conclusion that Merck’s claimed invention

was non-obvious in relation to what came before in

the marketplace, the question at bar is narrower. It

is whether the claimed invention is non-obvious in

relation to the ideas set forth in the Lunar News ar-

ticles.

(App. 23a-24a.) The majority then ruled that:

Financial success is not significantly probative of

that question in this case because others were le-

gally barred from commercially testing the Lunar

News ideas.

(App. 24a.)

The Federal Circuit denied Merck’s petition for re-

hearing en banc. In dissent, Judge Lourie, joined by Chief

Judge Michel and Judge Newman, argued that rehearing

was warranted because the panel majority's ruling effec-

tively held commercial success irrelevant in considering

the obviousness of an improvement patent:

The panel’s rule is especially unsound in the context

of an improvement patent, as here, because it holds

in effect that commercial success for an improve-

ment is irrelevant when a prior patent dominates

the basic invention.

(App. 38a-39a (Lourie, J., dissenting).)

The dissenters concluded by noting that the panel's

opinion “creates” a “confusion in the jaw.” (App. 39a

(Lourie, J., dissenting).)

5

REASONS FOR GRANTING THE WRIT

The Court should grant review because the rule an-

nounced by the Federal Circuit threatens to inhibit inno-

vation by making improvement patents more difficult to

defend as nonobvious and therefore more risky to pursue.

Whether the rule is valid has especially large implications

for innovations in medicine in view of the enormous re-

sources devoted by pharmaceutical manufacturers and

biotech companies to improving on previously patented

medicines. Because the Federal Circuit is the only court of

appeals that can decide questions of patent law, and be-

cause that court has denied en banc review of the panel's

decision, only this Court can now resolve the important

question of patent law presented.

The commercial success of an invention is normally

considered an indication that the invention was not “obvi-

ous.” The theory 1s that an invention’s commercial success

reflects a market demand that, had the invention been

obvious, would have led others to try to develop the inven-

tion themselves. Here, the Federal Circuit concluded that

commercial success has no significance in the case of an

improvement patent because no one but the holder of the

basic patent could legally have marketed the protected

invention.

This rule defines the relevant market too narrowly.

In the case of an improvement patent, the relevant mar-

ket is not necessarily the market for that particular in-

vention. Instead, the relevant market may be the market

for inventions of the same general character that would

meet the same need. Where, as here, there is evidence

that others had the opportunity to develop other ways to

skin the same cat, the fact that only the holder of the

prior patent could skin the cat with his particular inven-

tion does not make the success of his invention irrelevant

to its obviousness.

6

This Court has long recognized that commercial suc-

cess is a consideration in determining whether an inven-

tion merits patent protection: “The utility of the change,

as ascertained by its consequences, is the real practical

test of the sufficiency of an invention; and since the one

cannot exist without the other, the existence of the one

may be presumed on proof of the existence of the other.”

Smith v. Goodyear Dental Vulcanite Co., 93 U.S. 486, 495

(1876).

Under 35 U.S.C. § 103(a), a patent may be challenged

on the ground that it was “obvious” in light of prior art.

This Court has held that the commercial success atten-

dant to the introduction of the invention is “relevant” in

determining the obviousness of a patent, at least if the

success results from the utility of the invention and not

some other factor. Graham v. John Deere Co., 383 U.S. 1,

17-18 (1966). As the Federal Circuit explained in this very

case: “Commercial success is relevant [to obviousness} be-

cause che law presumes an idea would successfully have

been brought to market sooner, in response to market

forces, had the idea been obvious to persons skilled in the

art.” (App. 23a.)

For this reason, the Federal Circuit has long recog-

nized that “the public and commercial response to an in-

vention is a factor to be considered in determining obvi-

ousness, and is entitled to fair weight.” Arkie Lures, Inc.

v. Gene Larew Tackle, Inc., 119 F.3d 953, 957 (Fed. Cir.

1997). As far as amicus is aware, that court — until now —

had consistently required district courts to consider evi-

dence of the commercial success of an allegedly obvious

innovation. See, e.g., Ruiz v. A.B. Chance Co., 234 F.3d

654, 667 (Fed. Cir. 2000). The court recognized not only

that “[clommercial success is * * * a strong factor favoring

nonobviousness,” Akzo N.V. v. U.S. Intl Trade Comm'n,

808 F.2d 1471, 1481 (Fed. Cir. 1986), but also that such

7

objective indicia of nonobviousness as commercial success

“may often be the most probative and cogent evidence in

the record,” Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d

1530, 1538 (Fed. Cir. 1983).

The decision of the panel majority — in effect holding

that commercial success has no relevance in considering

the obviousness vel non of an improvement patent — is a

sharp break with such precedent, sowing “confusion in the

law.” (App. 39a (Lourie, J., dissenting).). Because “most

inventions represent improvements on some existing arti-

cle, process, or machine,” Gen. Elec. Co. v. Wabash Appli-

ance Corp., 304 U.S. 364, 368 (1938), the confusion sowed

by the panel majority's decision is bound to inhibit inno-

vation. Intervention by this Court is warranted to clarify

the law.

The court of appeals held that “[flinancial success is

not significantly probative of [obviousness] in this case

because others were legally barred from commercially

testing the Lunar News ideas.” (App. 24a.) However, the

Lunar News articles spoke of episodic or cyclical admini-

stration of bisphosphonates, specifically mentioning not

only Merck’s alendronate but also Boehringer Manheim’s

ibandronate-based treatment. It simply does not follow

from the existence of Merck’s patent on its original alen-

dronate formulation that no one else could legally have

developed a safe and effective weekly dosing regimen of a

bisphosphonate as a treatment for osteoporosis. The

commercial incentive to do so was there; the fact that only

Merck did so is an indication that a once-weekly bisphos-

phonate dosing regimen was not “obvious” at the time

Merck obtained the ’329 patent.

Indeed, as Merck sought to show at trial, Procter &

Gamble itself had incentive and opportunity to develop a

once-weekly dosing form of Actonel, a daily bisphospho-

nate-based osteoporosis treatment. (App. 82a.) Further-

8

more, the record also indicates that numerous other

bisphosphonate-based osteoporosis treatments were being

developed and/or marketed outside the United States by

other pharmaceutical companies, each of which: had the

opportunity and incentive to bring to the U.S. market a

weekly-dosing treatment.

The point is not that the panel majority failed to give

this evidence due weight, but that the panel majority

ruled such evidence irrelevant when an improvement pat-

ent is involved. The Federal Circuit considered it beside

the point whether Lunar News taught other ways to skin

the cat — 1.e., other ways to meet the need for a once-

weekly bisphosphonate dosing regimen.

But the commercial success achieved by once-weekly

Fosamax did not retlect a market need for once-weekly

Fosamax; it reflected a market need for osteoporosis

treatments. Merck’s alendronate-based treatment repre-

sented but one approach to a problem that many pharma-

ceutical companies were simultaneously attempting to

address in different ways, as the district court recognized

in focusing its analysis on once-weekly Fosamax’s success

in “the osteoporosis market in general,” and in finding

evidence of commercial success in the fact that Fosamax

quickly “became the most prescribed drug in the FAME

market.” (App. 92a.)

The court of appeals, on the other hand, inappropri-

ately narrowed its field of inquiry by focusing only on

Merck’s ability, based upon the '077 patent, to preclude

others from producing an alendronate-based osteoporosis

treatment. This ability, however, did not confer upon

Merck a monopoly in the osteoporosis treatment market.

Just as Merck was attempting to improve on once-daily

Fosamax, its FAME competitors — including Procter &

Gamble — were engaged in efforts to improve on their

treatments — including Actonel.