Does PTAB’s Ex Parte Cellect Decision Endanger Biopharmaceutical Patent Terms?

In a warning to patent owners, a patent whose term had been extended through Patent Term Adjustment (“PTA”) was recently found invalid for obviousness-type double patenting (“ODP”) by the US Patent Trial and Appeal Board (“PTAB”). Ex Parte Cellect Patent Owner and Appellant, Appeal No. 2021-00503, 2021 WL 5755329 (PTAB, Dec. 1, 2021). This is particularly concerning for makers of biopharmaceuticals, especially immunotherapeutic proteins and other biologic drugs. The duration of the patents protecting these drugs is critical to their value, and the terms of these patents are often extended by PTA. Moreover, effective lifecycle management strategies for immunotherapeutics typically involve developing broad, independent patent portfolios (often covering new or extended medical indications), increasing the risk of generating potentially invalidating ODP art.

Backdrop: District Courts Split

Previously, several district courts have split on whether a PTA-based extension of patent term is vulnerable to ODP. In 2021, two New Jersey district court decisions found that ODP did not apply when the expiration dates of two patents differed solely due to PTA. Amgen, Inc. v. Sandoz Inc., No. 18-11026, 2021 WL 5366800, slip. op. at *26 (D.N.J. Sept. 20, 2021) (currently on appeal); Mitsubishi Tanabe Pharm. Co., et al. v. Sandoz, Inc. et al., 533 F. Supp. 3d 170, 213-215 (D.N.J. Apr. 7, 2021) (settled prior to appellate decision). The New Jersey district court decisions denied ODP challenges to PTA by relying on the Federal Circuit’s holding in Novartis AG, et al., v. Ezra Ventures LLC, 909 F.3d 1367 (Fed. Cir. 2018) that the statutorily guaranteed right of a patent term extension (“PTE”) should not be nullified by a judge-made doctrine such as ODP or by the lack of gamesmanship by the patentees in extending patent protection. In contrast to these New Jersey decisions, an earlier decision from a district court in Michigan held the opposite. Magna Electron. Inc. v. TRW Auto. Hold. Corp., et al., 2015 WL 11430786 (W.D. Mich. 2015). With this competing backdrop, the PTAB undertook its own analysis of PTA and ODP in Ex Parte Cellect and, in reaching its conclusion, rejected the rationales of the two New Jersey cases.

Interplay Between ODP and PTE

In Ex Parte Cellect, the PTAB considered the appropriateness of an ODP rejection of two related patents that had different expiration dates solely due to PTA. The PTAB framed the question as “how a PTA under § 154 should factor into a double patenting analysis, such as whether double patenting should be based on the expiration date before a PTA or after.” Id. at *5.

Both the challenged patent and the reference patent claimed priority to the same application and so would have expired on the same day, except that each patent was granted a different PTA. The challenged patent received 726 days while the reference patent received 45 days. Both patents expired before the PTAB decision. The patentee notably did not contest that the claims of the patents were obvious over each other.

The PTAB began its analysis by examining the Federal Circuit’s decisions in Merck & Co. v. Hi-Tech Pharmacal Co., 482 F.3d 1317 (Fed. Cir. 2007) (finding that terminal disclaimers should be applied before PTE) and Novartis v. Ezra (finding that double patenting should be applied before PTE). Both decisions found that PTE was not vulnerable to ODP. The PTAB identified within these decisions an analysis of language relating to terminal disclaimers in the PTA statute (35 U.S.C. 154(b)(2)(B)) that was absent from the PTE statute (35 U.S.C. § 156), specifically that the PTA statute contains a cutoff for terminal disclaimers (excluding patents in which a terminal disclaimer was filed from the benefit of PTA beyond the expiration date specified in the disclaimer) while the PTE statute has no such cutoff. The panel considered the Federal Circuit’s emphasis on the relationship between double patenting and terminal disclaimers (a terminal disclaimer is used to overcome ODP) and stated that “[g]iven this relationship between double patenting and terminal disclaimers and given the holding in Merck v. Hi-Tech that a terminal disclaimer applies before PTE, the Federal Circuit not surprisingly held [in Novartis v. Ezra] as a logical extension . . . that double patenting also should be considered before a PTE.” Id. at *6.

Interplay Between ODP and PTA

Having clarified its understanding of the Federal Circuit’s prior holdings on the interplay between ODP and PTE, the PTAB then turned to the question at issue: the interplay between ODP and PTA. The PTAB read the PTA statute (35 U.S.C. § 154) as “stat[ing] that any terminal disclaimer should be applied after any PTA”—unlike the § 156 PTE statute. It also found that “[b]ecause the primary purpose of a terminal disclaimer is to overcome double patenting, the same rule should apply to double patenting.” Id. at *3. The appellant was chided for providing “no plausible reason” for ignoring the contrast between the PTA and PTE statutes that expressly (if only in part) “formed the basis of [the holdings in] Merck v. Hi-Tech and Novartis v. Ezra” and for “applying a post-PTA date for terminal disclaimers yet the pre-PTA date for double patenting.” Id. at 9. Based on this logic, the PTAB found that nothing prevented ODP from applying to PTA.

The PTAB also found unpersuasive the appellant’s reliance on the Federal Circuit’s holding in Novartis v. Ezra declining to allow “a judge-made doctrine [to] cut off a statutorily-authorized time extension” and its reliance on the Mitsubishi case that extended this holding to PTA. Id. at *6, 9. The PTAB instead found that this “ignores the plain text of § 154 and the actual holding in Novartis v. Ezra.” Id. at *7. It stated that “the statutory language in § 154 is clear that any terminal disclaimer should be applied after any PTA (i.e., a PTA cannot adjust a term beyond the expiration date in any disclaimer). 35 U.S.C. § 154(b)(2)(B) (‘No patent the term of which has been disclaimed beyond a specified date may be adjusted under this section beyond the expiration date specified in the disclaimer.’).” Id. The PTAB added that, unlike PTE, “a PTA under § 154 shall not extend the term of a patent past the date of any terminal disclaimer.” Id. The PTAB reasoned that “[o]bviousness-type double patenting and terminal disclaimers are two sides of the same coin: the problem and the solution. Just as Novartis v. Ezra found a rule on terminal disclaimers was ‘directly relevant’ to double patenting and therefore applied that rule to double patenting as ‘a logical extension,’ so too we hold that the statutory rule for terminal disclaimers in § 154 is directly relevant to double patenting and we apply that same rule to double patenting as a logical extension.” Id. at *8.

Alternatively, the PTAB held that even if ODP is considered before PTA is applied (i.e., using the original, identical patent expiry dates), ODP still invalidated the challenged patent over the other patent—meaning that patents with the same expiration dates can be invalid over each other for ODP. Id. at *10-11. The PTAB based this holding on the rationale that patents subject to ODP must be commonly owned to prevent harassment. Although the patents were commonly owned at the time, if the patents were assigned to different entities in the future, the fact that no terminal disclaimer could be filed at that point because both patents had expired would support a pre-emptive finding that the challenged patent was invalid even before PTA was applied. Id. In reaching this conclusion, the PTAB relied in part on an old line of cases from Underwood v. Gerber, 149 U.S. 224 (1893) whose relevance to the modern ODP doctrine is uncertain; it did not rely on clear Federal Circuit precedent invalidating patents with identical expiration dates for ODP.

The PTAB dismissed the holding and rationale in Mitsubishi v. Sandoz that PTA was not subject to ODP. It noted the district court split with Magna and found gaps in the Mitsubishi court’s analysis, including the failure to consider ODP for patents expiring the same day, allegedly misreading and over-relying on Novartis v. Ezra’s holding that a judge-made doctrine should not nullify a statutory grant, and finding distinguishable or erroneous facts.

Ultimately the PTAB held that obviousness-type double patenting should be considered after any PTA was applied. Id. at *9. As for the patent at issue, due to PTA, the challenged patent expired after the reference patent, and its claims were admittedly obvious over the reference patent claims. The PTAB therefore found that the claims of the challenged patent were properly rejected for obviousness-type double patenting over the earlier-expiring claims of the reference patent. Id. at *10.

Takeaway

When determining and relying on patent coverage of valuable biopharmaceutical products, patent holders should exercise care in view of the PTAB’s opinion in Ex Parte Cellect that PTA is vulnerable to obviousness-type double patenting challenges. However, with contradictory district court opinions, until the Federal Circuit weighs in, we are left with two opposing schools of thought on this issue.