Divided Federal Circuit Panel Strikes Down Galderma’s Patents as Obvious—in Shifting the Burden of Production Regarding Secondary Considerations to the Patentee, Did the Majority in Fact Shift the Burden of Persuasion, Too?


On December 11, 2013, a three-judge Federal Circuit panel struck down the asserted claims of five patents belonging to Galderma Laboratories for being invalid as obvious.  In Judge Sharon Prost’s opinion for the court, joined by Judge William Bryson, she sought to draw a narrow distinction between shifting to the patentee the burden of production rather than the burden of persuasion, once an accused infringer has shown that the claimed invention falls within a range disclosed in the prior art.  Judge Pauline Newman vociferously criticized this burden-shifting in her dissent.

The five patents-in-suit are directed to a topical medication used to treat acne that contains 0.3% adapalene.  Claim 5 of U.S. Patent No. 7,838,558 is representative:

5. A topically applicable pharmaceutical composition comprising 0.3% by weight of [adapalene] relative to the total weight of the composition, effective for the treatment of acne, formulated into a topically applicable, pharmaceutically acceptable medium therefor, said composition being in the form of a topically applicable, pharmaceutically acceptable aqueous gel comprising at least one carbomer gelling agent and wherein the sole anti-acne ingredient is adapalene.

In September 2009, Tolmar filed an ANDA seeking approval to market a generic version of the patented product, Differin Gel, 0.3%.  In response, in January 2010, Galderma sued Tolmar for patent infringement in the United States District Court for the District of Delaware.  After a bench trial, the district court ruled in favor of Galderma on several issues, including validity.  On appeal to the Federal Circuit, the sole issue before the court was invalidity for obviousness under 35 U.S.C. § 103.

The Federal Circuit panel majority held that Tolmar had proven obviousness by clear and convincing evidence, and therefor reversed the district court’s decision.  Tolmar’s obviousness argument relied primarily on three prior art references:  two prior art patents (“Shroot ‘720 patent” and “Shroot ‘440 patent”) and Galderma’s data sheet for its earlier-marketed 0.1% adapalene gel product (“Data Sheet”).  Tolmar further supported its obviousness argument with nine scientific journal articles.

The Shroot ‘720 patent disclosed several compositions containing a broad range of adapalene concentrations:  0.001%, 0.1%, and 1%.  Similarly, claim 4 of the Shroot ‘440 patent listed a preferred range of 0.01 to 1% for cosmetic compounds including the inventive compounds, such as adapalene, as the active ingredient.  The majority pointed out that both Shroot patents were listed in the FDA’s Orange Book for Galderma’s prior art 0.1% adapalene gel product and its 0.3% adapalene gel product.  Although the Data Sheet disclosed simply 0.1% adapalene as an acne treatment and not a range, it also disclosed virtually every inactive ingredient listed in the asserted claims.

In addition to the three primary prior art references, Tolmar supported its obviousness argument with nine scientific journal articles that Tolmar believed showed using 0.3% adapalene for acne treatment would have been obvious to a person of ordinary skill in the art at the time of the invention.  The majority noted that “many skilled artisans believed at the time of the invention that 0.1% was the optimal concentration of adapalene for the treatment of acne,” a statement that Judge Newman seized upon in her dissent.

The most interesting aspect of this case involves a legal standard regarding the burdens of production and persuasion.  The majority stated:

where there is a range disclosed in the prior art, and the claimed invention falls within that range, the burden of production falls upon the patentee to come forward with evidence that (1) the prior art taught away from the claimed invention; (2) there were new and unexpected results relative to the prior art; or (3) there are other pertinent secondary considerations.

To support this burden-shifting standard, the majority cited Novo Nordisk A/S v. Caraco Pharm. Labs. Ltd., 719 F.3d 1346, 1352-54 (Fed. Cir. 2013), a case bearing certain similarities to the present case:  Judge Prost authored the majority opinion and Judge Newman wrote a dissenting opinion.  And even though the issue in Novo Nordisk was not precisely the same—the prior art suggested an allegedly obvious combination of two drugs rather than disclosing a range—the Federal Circuit held that there is a shift to the patentee to bear “the burden of production once the court determined that the challenger has established a prima facie case of obviousness.”  Id. at 1354.  The Novo Nordiskmajority emphasized that it was not shifting the burden of persuasion, “as long is the [district] court reserved its ultimate conclusion on validity until after it considered the evidence from both sides . . . .”  Id.

In applying this standard, the panel majority examined three secondary consideration factors in reaching its conclusion that the claims are invalid as obvious:  (1) teaching away; (2) unexpected results; and (3) commercial success.  First, the majority held that the district court “clearly erred” by finding that the prior art taught away from a 0.3% concentration, because although the prior art understanding was that 0.1% was the optimal concentration, “[a] teaching that a composition may be optimal . . . does not criticize, discredit, or otherwise discourage investigation into other compositions,” and therefore does not qualify as a “teaching away.”  Second, the majority found that there were no unexpected results because although “the expected result was an increase . . . in . . . certain side effects[,] [t]he failure of that . . . increase to materialize, though unexpected, constitutes a only a difference in degree from the prior art results.”  Third, the majority discounted the commercial success of Galderma’s 0.3% gel product because “[t]he now expired Shroot patents blocked the market entry of 0.3% adapalene products until their expiration in 2010,” which meant that “no entity other than Galderma could have successfully brought . . . 0.3% to market prior to 2010.”

In her dissent, Judge Newman accused her colleagues of “distort[ing] the burdens of proof and production, ignor[ing] the applicable standard of proof and rely[ing] on their own factual determinations and creative theories of law . . . .”  In doing so, she stated, the panel majority “places on the patentee the burden of establishing patentability based on ‘secondary considerations.'”  She suggests that the majority’s standard, quoted above, does not shift only the burden of production, but the burden of persuasion, too, because the majority held that Tolmar had met its evidentiary burden simply by demonstrating that “the invention fell within a broad range disclosed in the prior art . . . .”  In addition, Judge Newman was clearly bothered by the majority’s lack of deference to the district court, which “applied the correct law to a vast body of evidence, most of which is not discussed by the panel majority.”

Judge Newman also analyzed the secondary consideration factors of “teaching away” and “unexpected results.”  First, she relied upon the district court’s finding (based on “prior art” and “expert testimony presented by both sides”) that the prior art as a whole taught away from increasing the adapalene concentration above 0.1%.  Second, Judge Newman found no clear error in the district court’s holdings that:  (a) it was “unexpected that the tolerability profile of 0.3% adapalene was not statistically different from that of 0.1% adapalene”; and (b) that the difference was “in kind, not in degree,” because Galderma’s products “violated the trend” of exhibiting “increased adverse side effects with increased concentration.”

It will be interesting to see whether Galderma petitions for en banc review of this opinion in light of the potentially controversial burden-shifting standard adopted by the panel majority.

Originally published on Orange Book Blog. http://www.orangebookblog.com/2013/12/divided-federal-circuit-panel-strikes-down-galdermas-patents-as-obviousin-shifting-the-burden-of-pro.html