Petition for Writ of Certiorari — TorPharm, Inc. v. Genpharm, Inc.

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No. 00-546 ort 10

In the OFFICE OF THE CLERK

Supreme Court of the Gnited States

TORPHARM, INC.,

Petitioner,

Vv.

GENPHARM, INC., MYLAN LABORATORIES, INC.,

NOVOPHARM LTD., NOVOPHARM USA, INC.,

and GRANUTEC, INC.,

Respondenis.

On Petition for Writ of Certiorari to the United

States Court of Appeals for the Federal Circuit

PETITION FOR WRIT OF CERTIORARI

RICHARD P. BEEM

Counsel of Record

HUGH L. MOORE

KEITH D. PARR

WILLIAM A. RAKOCZY

HUGH S. BALSAM

LORD, BISSELL & BROOK

115 South LaSalle Street

Chicago, Illinois 60603

(312) 443-0700

Attorneys for Petitioner

TorPharm, Inc.

Midwest Law Printing Company/Photex — ‘Chicago — (312) 321-0220

S49 ep

QUESTION PRESENTED

Whether a secret sale between third parties gives rise

to an “on sale” bar as against an independent inventor

who in good faith discloses the invention through a

patent.

CORPORATE DISCLOSURE STATEMENT

TorPharm, Inc. is a privately-held Canadian corpora-

tion.

It has no parent company and there are no publicly

held companies owning 10% or more of its stock.

iil

TABLE OF CONTENTS

PAGE

QUESTION PRESENTED .................00000. i

CORPORATE DISCLOSURE STATEMENT .... ... ii

TABLE OF AUTHORITIES ..................0005 Vv

se ey oe bn auc cis vk cks 1

REE ET ee 1

CONSTITUTIONAL PROVISION

INVOLVED IN THIS CASE .................. 2

STATUTE INVOLVED IN THIS CASE ............ 2

STATEMENT OF THE CASE .................... 3

Basis For Federal Jurisdiction ................ 3

os yk is ve ceca 3

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

THE FEDERAL CIRCUIT’S HOLDING THAT

A SECRET SALE BETWEEN THIRD PAR-

TIES GIVES RISE TO AN ON-SALE BAR

CONFLICTS WITH THE PRINCIPLES AN-

NOUNCED IN PFAFF AND FAILS TO REC-

ONCILE THE FEDERAL CIRCUITS HOLD-

ee Fk PEP e ee eee eee eee 5

The Purpose Of The On-Sale Bar, As This

Court Stated In Pfaff, Is To Protect The

Public’s Right To Retain “Knowledge

Already In The Public Domain” And

The Inventor’s Right To Control “Wheth-

er And When” He May Patent His Inven-

PRP ETET ET Pe CCT Te eer ee ree ree 5

The Court Of Appeals’ Decision Below

Thwarts The Principles Announced In

FO ékdnicienee eee cee tee 8

The Federal Circuit’s Decision Below

Conflicts With The Federal Circuit’s Pre-

vious Decision In Mahurkar ............ 10

(AUS 3.8 04440 donee wee ee 11

Pg 8 I re rr eer re infra

TABLE OF AUTHORITIES

Cases PAGE(S)

Abbott Laboratories v. Geneva Pharmaceuticals,

182 F.3d 1315 (Fed. Cir. 1999) .............. 8,9

Andrews v. Hovey,

123 U.S. 267, 8S. Ct. 101 (1887) .......... oer

Brasseler U.S.A. I., L.P. v. Stryker Sales Corp.,

182 F.3d 888 (Fed. Cir. 1999) ................. 9

Elizabeth v. Pavement Co.,

PT I ase i a) 6

Mahurkar v. Impra,

71 F.3d 1573 (Fed. Cir. 1995) ................ 10

Metallizing Engineering Co. v. Kenyon .

Bearing & Automobile Parts Co.,

153 F.2d 516 (2d Cir. 1946) ................... 7

Moleculon Research Corp. v. CBS, Inc.,

793 F.2d 1261 (Fed. Cir. 1986) ................ 8

Northern Telecom, Inc. v. Datapoint Corp.,

908 F.2d 931 (Fed. Cir. 1990) ................. 8

Pennock v. Dialogue,

Bd UG, (2 Pot.) 1.11889)... cnccccccccccccs 5,6

Pfaff v. Wells Electronics, Inc.,

525 U.S. 55, 119 S. Ct. 304 (1998) .... 6, 7, 8, 9, 10

Weatherchem Corp. v. J.L. Clark, Inc.,

163 F.3d 1326 (Fed. Cir. 1998) ................ 9

Zacharin v. United States,

213 F.3d 1966 (Fed. Cir. 2000) ............... 10

Constitutional Provisions

oo Re ee er erry one ree 2,5

Statutes

is Fae og hte: | ee nererererart nn ram erera 1

ee Es SD ok cia oeaecaanee cs 3

tk fee 8 OF 4 ere rere ee 3

- gk tok 2 re Per ee ae re Pee 2,5

Miscellaneous

Hon. A. Gajarsa, How Much Fuel to Add

to the Fire of Genius?, 48 AM. U. L.

REV. 1205, 1207 & nn. 4 & 6 (1999) ............ 5

PETITION FOR WRIT OF CERTIORARI

Petitioner, TorPharm, Inc. (“TorPharm”), respectful-

ly petitions this Court for a Writ of Certiorari to the

United States Court of Appeals for the Federal Circuit.

TorPharm seeks reversal of the decision of the Court

of Appeals that affirmed the judgment of the United

States District Court for the Eastern District of North

Carolina holding invalid claim 1 of TorPharm’s U.S.

Patent 5,523,423.

OPINIONS BELOW

The unpublished order of the United States Court of

Appeals for the Federal Circuit affirming the judgment

of invalidity of claim 1 of TorPharm’s patent is set forth

in the Appendix, at App.1. The Court of Appeals order

denying TorPharm’s Petition for Rehearing and Sugges-

tion for Rehearing En Banc is set forth in the Appendix,

at App. 18.

The unpublished Order and ‘Opinion of the United

States District Court for the Eastern District of North

Carolina is set forth in the Appendix, at App. 3.

JURISDICTION

The Court of Appeals affirmed the holding of invalidity

of claim 1 of TorPharm’s patent on May 17, 2000 (App. 1)

and denied TorPharm’s Petition for Rehearing and Sug-

gestion for Rehearing En Banc on July 11, 2000 (App:

18). This petition is timely filed within 90 days of the

latter order. :

TorPharm invokes this Court’s jurisdiction pursuant to

28 U.S.C. § 1254(1) (1988).

CONSTITUTIONAL PROVISION

INVOLVED IN THIS CASE

United States Constitution Article I, Section 8, Clause 8:

The Congress shall have power * * * to promote

the progress of science and useful arts, by secur-

ing for limited time to authors and inventors the

exclusive right to their respective writings and

discoveries * * *

STATUTE INVOLVED

IN THIS CASE

35 U.S.C. § 102 — Conditions for patentability; novelty

and loss of right to patent.

A person shall be entitled to a patent unless —

* * *

(b) the invention was patented or described in a

printed publication in this or a foreign country or

in public use or on sale in this country, more than

one year prior to the date of the application for

patent in the United States,

* * *

STATEMENT OF THE CASE

BASIS FOR FEDERAL JURISDICTION

The district court had jurisdiction under 28 U.S.C.

§§ 1331, 1338(a) because the civil action arose under an

Act of Congress relating to patents.

The district court’s jurisdiction also was based on 28

U.S.C. §§ 2201 and 2202 because Respondents Gen-

pharm, Inc., Mylan Laboratories, Inc., Novopharm, Ltd.,

and Novopharm U.S.A., Inc., sought a declaration of non-

infringement and invalidity of TorPharm’s patent.

STATEMENT OF FACTS

In 1995, the assignors to Petitioner TorPharm, Inc. ~

filed a U.S. patent application for their invention of an

improved “form of Form 1 ranitidine,” an ulcer medica-

tion, which led to the issuance of U.S. Patent 5,523,423

(the ‘423 patent). (A00094-97).' After the issuance of the

‘423 patent, Respondents Genpharm, Inc., Mylan Labora-

tories, Inc., Novopharm Ltd., Novopharm USA, Inc., and

Granutec, Inc. (collectively “Novopharm”) instituted the

lawsuit below, seeking to invalidate the ‘423 patent.

(A00066-A00145). Three separate actions were consoli-

dated at the district court and on appeal.

In 1998, Novopharm issued a discovery subpoena to a

non-party, Geneva Pharmaceuticals, Inc. (“Geneva”), and

obtained certain confidential documents under protective

' All “A” citations are to the parties’ joint appendix filed in the

Court of Appeals.

order. (A00305-A00307). The confidential “Geneva docu-

ments” (A00198-A00246) suggested that in 1992, three

years prior to the filing of TorPharm’s patent application,

yet another non-party, Interchem Corporation (“Inter-

chem”), had secretly sold to Geneva a bulk shipment of

ranitidine for “developmental” purposes, i.e., for formula-

tion and testing as required for an abbreviated new drug

application to be submitted to the FDA. (Z£.2., A00198,

A00200). On the basis of the Geneva documents, Novo-

pharm moved for summary judgment that claim 1 of

TorPharm’s ‘423 patent was invalid under the on-sale

bar. (A03820 & n.2). Novopharm stipulated for purposes

of its motion that the Interchem-Geneva transaction was

“secret and confidential” and “not made in the public

realm.” (A00366 n.2, A00295-A00298). The district court

granted Novopharm’s motion and entered summary judg-

ment. (A00001-A00012; A05007-A05008).

On appeal, the U.S. Court of Appeals for the Federal

Circuit affirmed without opinion. (App. 1). TorPharm

filed a petition for rehearing and suggestion for rehearing

en banc, on the issue presented here, which was denied.

(App. 18).

REASONS FOR GRANTING THE WRIT

THE FEDERAL CIRCUIT’S HOLDING THAT A SECRET

SALE BETWEEN THIRD PARTIES GIVES RISE TO AN

ON-SALE BAR CONFLICTS WITH THE PRINCIPLES

ANNOUNCED IN PFAFF AND FAILS TO RECONCILE

THE FEDERAL CIRCUIT’S HOLDING IN MAHURKAR

Since 1793, Congress has fulfilled its mandate to pro-

vide for the grant of patents to inventors. See U.S. Const.

art. 1, § 8, cl. 8. Patents add “the fuel of interest to the

fire of genius.” Abraham Lincoln, Lecture on Discoveries

and Inventions (1859), quoted by the Hon. A. Gajarsa,

How Much Fuel to Add to the Fire of Genius?, 48 AM. U.

L. REV. 1205, 1207 & nn. 4 & 6 (1999). Thus, Section 102

of 35 U.S.C. states that an inventor shall be entitled to a

patent uniless one of the specified statutory bars applies,

e.g., the “public use or on sale” bars of 35 U.S.C. § 102(b)

(1984).

The Purpose Of The On-Sale Bar, As This

Court Stated In Pfaff, Is To Protect The

Public’s Right To Retain “Knowledge Already

In The Public Domain” And The Inventor’s

Right To Control “Whether And When”

He May Patent His Invention

In Pennock v. Dialogue, 27 U.S. (2 Pet.) 1 (1829), this

Court observed that the “main object” of the patent laws

“‘was to promote the progress of science and useful arts’

. by giving the public . . . the thing invented, at as

early a period as possible; having a due regard to the

rights of the inventor.” Jd. at 19. The “public use or on

sale bars” effectuate this main object: First, by requiring

a patent applicant to file, and thus to disclose the inven-

tion to the public, promptly upon commercially exploiting

his invention, id. at 19; second, by preventing the grant

of a patent where “the public were already in possession

and common use of an invention,” id. at 22-23.

In Elizabeth v. Pavement Co., 97 U.S. 126 (1877), the

Court observed that the “public use or on sale” bars were

intended, first, to prevent an inventor from profiting by

“undue advantage over the public by delaying to take out

a patent, inasmuch as he thereby preserves the monopoly

to himself for a longer period than is allowed by the

policy of the law,” id. at 137, and, second, to prevent the

grant of a patent on an invention already in “general

use,” i.e., in the public domain, id. at 135.

In Andrews v. Hovey, 123 U.S. 267, 8S. Ct. 101 (1887),

the Court analyzed the “public use or on sale” bars and

found the same two purposes: First, “to require the in-

ventor to see to it that he filed his application within two

years from the completion of his invention,” and, second,

to fulfill the “evident intention of congress” to prevent the

issuance of a patent “after an invention had for a long

period of time been in public use . . . whether the inven-

tor had or had not consented to or allowed the public

use.” Jd. at 274, 8 S. Ct. at 105.

While these cases were not decided under the present

patent statute, it is beyond dispute that they reflect the

fundamental principles behind the on-sale bar. Thus, in

Pfaff v. Wells Electronics, Inc., 525 U.S. 55, 119 S. Ct. 304

(1998), the Court reaffirmed the dual purposes of the

“public use or on sale” bars: “The patent laws . . . seek

both to protect the public’s right to retain knowledge

already in the public domain and the inventor's right to

control whether and when he may patent his invention.”

Id. at 65, 199 S. Ct. at 310.

Pfaff cited with approval each of the above-cited Su-

preme Court precedents as well as Metallizing Engineer-

ing Co. v. Kenyon Bearing & Auto Parts Co., 153 F.2d 516

(2d Cir. 1946), in which Judge Learned Hand synthesized

the authorities into two lines of “public use or on sale”

cases. The first line involves the “inventor's competitive

exploitation” of the invention; the second involves the

contribution that had previously been made to the “art,”

that is, the prior art already in the public domain. Jd. at

520.

Pfaff, the culmination of the first line of cases, drew a

bright line at an inventor’s commercial exploitation,

holding as follows:

We conclude, therefore, that the on-sale bar ap-

plies when two conditions are satisfied before the

critical date. First, the product must be the sub-

ject of a commercial offer for sale. An inventor

can both understand and control the timing of the

first commercial marketing of his invention. * * *

Second, the invention must be ready for patent-

ing.

525 U.S. at 67, 119 S. Ct. at 311-12.

Here, the courts below found that there had been a

commercial sale of a ready-to-patent product. But the

lower courts erred in invalidating TorPharm’s U.S. Pat-

ent 5,523,423 (the ‘423 patent), because the sale was

between two strangers to the inventor, cf. Pfaff, 525 U.S.

at 67, 119S. Ct. at 311-12 (inventor’s commercialization),

and the strangers’ secrecy kept the invention from the

public, cf. Abbott Laboratories v. Geneva Pharmaceu-

ticals, 182 F.3d 1315, 1317-19 (Fed. Cir. 1999) (third

party’s non-secret sale injected technology into public

domain). The lower courts misapplied Pfaff to a non-

inventor secret sale invoking neither of the two purposes

of the on-sale bar which inform the meaning of that term

of art.

The Court Of Appeals’ Decision Below

Thwarts The Principles Announced In Pfaff

In the lower courts, Respondents relied principally on

two lines of inapposite on-sale cases. One line—exempli-

fied by Abbott Laboratories v. Geneva Pharmaceuticals,

182 F.3d 1315 (Fed. Cir. 1999)—involved a third-party,

non-secret sale; because the public had knowledge of the

invention, the inventor could properly be charged with

notice that the claimed compound was already on the

market. This line follows the rationale of the public-use

and publication cases, where the invention has been

made known to the public. See, e.g., Moleculon Research

Corp. v. CBS, Inc., 793 F.2d 1261, 1266 (Fed. Cir. 1986)

(rejecting public-use bar where inventor’s use was “pri-

vate”); Northern Telecom, Inc. v. Datapoint Corp., 908

F.2d 931, 936-37 (Fed. Cir. 1990) (holding patent chal-

lenger did not prove by clear and convincing evidence

that “anyone could have had access to the documents

disclosing the invention by the exercise of reasonable

diligence”).

;

Ci odaialt pai ahaa ia ee eet eee

The other line of on-sale cases—Pfaff v. Wells Electron-

ics, Inc., 525 U.S. 55, 119 S. Ct. 304 (1998), Weatherchem

Corp. v. J.L. Clark, Inc., 163 F.3d 1326 (Fed. Cir. 1998),

and Brasseler U.S.A. I., L.P. v. Stryker Sales Corp., 182

F.3d 888 (Fed. Cir. 1999)—is not concerned with public

knowledge, but addresses commercialization by the

inventor or those in privity with him. These cases fall

within the rationale stated in Pfaff that “[a]n inventor

can both understand and control the timing of the first

commercial marketing of his invention.” 525 U.S. at 67,

119 S. Ct. at 311 (emphasis added).

Neither of these two lines of on-sale cases applies here,

where it is undisputed that the alleged sale between non-

parties Geneva and Interchem did not involve the in-

ventors of the ‘423 patent, and those inventors, as

Respondent Novopharm admitted, “did not even know

about the so-called ‘developmental’ work by Geneva.”

(Novopharm Appeal Br. at 14.) Cf. Pfaff, 525 U.S. at 67,

119 S. Ct. at 311 (“(aJn inventor can both understand and

control the timing of the first commercial marketing of

his invention”). Novopharm stipulated for purposes of its

summary judgment motion that the Interchem-Geneva

transaction was “secret and confidential” and “not made

in the public realm.” (A00366 n.2, A00295-A00298). Cf.

Abbott, 182 F.2d at 1317-19 (third party non-secret sale

injected technology into public domain). Indeed, there

was no way that either the inventors or the public could

have known about the Geneva experimental work, which

was undertaken solely for the purpose of filing an ab-

breviated new drug application to be submitted to the

FDA. There was no commercial sale to the public at

large—ever.

The Federal Circuit’s Decision Below

Conflicts With The Federal Circuit’s Previous

Decision In Mahurkar

In Mahurkar v. Impra, 71 F.3d 1573 (Fed. Cir. 1995),

the Federal Circuit held that an inventor’s sale of two

prototype catheters did not invoke the on-sale bar

because the sale “did not place the invention in the public

domain or lead the public to believe that the device was

freely available.” Jd. at 1577. The Federal Circuit’s order

in the case at bar is in direct conflict with Mahurkar,

because the sale here (by third parties, not the inventor)

was just as secret.’ Pfaff, which was a “ready for patent-

ing” inventor-sale case, did not address this issue.

In sum, neither Pfaff nor any other authority can bring

the on-sale bar down on the head of an inventor who

knew nothing of any secret sale between third parties,

particularly where, as here, there was no “knowledge

already in the public domain.” Pfaff, 525 U.S. at 65, 199

S. Ct. at 310.

To resolve the conflict with the principles announced in

Pfaff and the conflict with Mahurkar, the Court should

grant certiorari.

? The Federal Circuit’s recent decision in Zacharin v. United

States, 213 F.3d 1366 (Fed. Cir. 2000), did not involve the

question presented by this Petition as it was not a secret sale.

CONCLUSION

Wherefore, for the foregoing reasons, Petitioner Tor-

Pharm, Inc. respectfully prays that its Petition for a Writ

of Certiorari to the United States Court of Appeals for

the Federal Circuit be granted and that the Federal

Circuit be ordered to reverse the district court’s judgment

and to remand the consolidated cases for adjudication on

their merits.

Respectfully submitted,