A recent decision from the Delaware District Court held that the composition of matter patent for the drug Baraclude was invalid as obvious. This opinion has drawn immediate attention because it is the first time that a lead compound obviousness challenge has succeeded in a district court since KSR v. Teleflex issued. What this means for inside counsel depends on which side of the aisle you are on, but regardless this decision may provide the beachhead for obviousness attacks where none existed before. For generic pharmaceutical companies, the ruling may affect pre-filing decisions, such as which patents to attack listed with the Orange Book and concomitant certifications, may take on a sizeable shift, and change the landscape for at-risk launches.  Patent prosecutors should also heed the court’s decision when drafting claims.

With this in mind, this column examines several key questions: What underlying facts and factors were crucial to the Delaware district court’s decision that the patent for Baraclude would have been obvious? What are the potential points of attack for Bristol-Myers Squibb (BMS) to overturn this decision on appeal? Does this ruling suggest that composition of matter patents will be more susceptible to obviousness challenges in the future? We conclude with practice points that can be gleaned from this case. 

Key facts and factors in the Delaware District Court’s decision

The sole asserted claim of the patent-in-issue (’244 patent, claim 8) was directed to the compound entecavir, which BMS has marketed in the U.S. since 2005 under the tradename “Baraclude.” Teva stipulated to infringement, leaving only the issues of validity and inequitable conduct to be tried. 

In Magistrate Judge Christopher Burke’s first full validity opinion , he agreed with Teva’s expert that a person of ordinary skill in the art (POSA) would have identified 2’-CDG as a lead compound for further development to treat chronic hepatitis B virus infection, and, second, that “in light of the prior art, ‘the substitution of a methylene group to [2’-]CDG to arrive at entecavir’ was an ‘obvious modification.’” BMS’s own expert, who was testifying at a trial for the first time, conceded that researchers were treating 2’-CDG as a lead compound in the relevant time period, and that a POSA could well have been led by the prior art to modify the lead compound in order to arrive at entecavir. 

The court also noted that “the PTO was not able to consider certain material prior art references regarding 2’-CDG during prosecution of the patent.”  The decision relied on Microsoft Corp. v. i4i Ltd.for the premise that “if the PTO did not have all material facts before it [during prosecution of the patent], its considered judgment may lose significant force.”

Points of attack for BMS on appeal

On appeal, BMS is likely to focus on:

  1. The unpredictability of drug discovery, and the argument that there could have been no reasonable expectation of success in modifying the lead compound to yield entecavir
  2. The fact that the court focused numerous times in the opinion on what BMS actually did, rather than what a POSA would have done. Obviousness is viewed from a POSA’s perspective. For example, BMS used computer modeling during its drug discovery process, which the court acknowledged was not common in the late1980s
  3. The argument that the court gave short shrift to the requisite secondary considerations of non-obviousness. Indeed, the court found that “some of those considerations redounded to the benefit of BMS’s position as to nonobviousness to a degree, . . . .” Specifically, the court found that BMS presented evidence of unexpected results and commercial success, but that these factors were not sufficient to overcome the strong case of prima facie obviousness that Teva demonstrated.

Since Yamanouchi v. Danbury was decided in 2000, the Federal Circuit has, in each case before it, held that composition of matter patents are nonobvious. Until now, this is the first time that a generic challenger has succeeded in its obviousness challenge, albeit in a district court. Nonetheless, it should be noted that while the Graham factors underlying an obviousness inquiry are factual, the ultimate question of patent validity is one of law. Thus, the Federal Circuit could find the ’244 patent nonobvious as a matter of law based upon, for example, a failure by the district court to give proper weight to BMS’s secondary indicia of nonobviousness.

The strength of composition of matter patents post-BMS

Even if the Federal Circuit affirms, there is little reason to believe that this decision represents a dramatic shift in the strength of composition of matter patents. First, any obviousness analysis is heavily fact-dependent. Thus, future challengers of compound patents must still demonstrate clearly and convincingly that the prior art teaches a lead compound, and that it would have been obvious to modify that lead compound in a particular manner. Second, here, the patentee faced the somewhat unique circumstances of “close” prior art that was not cited to the PTO, and its own expert conceding numerous key points to the patent challenger on cross-examination. Despite that, recent history still favors BMS’s chances on appeal because, third and finally, a patentee is likely to muster at least some secondary evidence in support of its nonobviousness claims. 

Finally, we view BMS v. Teva as providing practice points for both patent prosecution and litigation. First, from a patent prosecution perspective, this case demonstrates that there is little downside (other than the cost of filing information disclosure statements) for a patentee to cite as much prior art as possible to the PTO. This is particularly the case for patent applications covering high-value products such as pharmaceuticals. Second, from a litigation perspective, BMS demonstrates that a testifying expert’s experience in court can be significantly more important than her technical acumen. Although all experts should be well-versed in the technical subject matter of a patent, the ability to think on one’s feet during a deposition and cross-examination is something that can only improve with experience.