Last week, in Novartis Pharmaceuticals Corp. v. Par Pharmaceutical Inc., District Judge Richard G. Andrews of the U.S. District Court for the District of Delaware granted a Motion for Estoppel under 35 U.S.C. § 315(e)(2) filed by Novartis Pharmaceuticals Corp.  Defendant Par Pharmaceutical Inc. had taken no position on the estoppel issue.

The dispute between the parties began when Novartis filed three suits against Par (as well as related suits against Breckenridge Pharmaceutical, Inc. and West-Ward Pharmaceutical Corp.), with the parties agreeing that the validity of the patent at issue, U.S. Patent No. 5,665,772, would be tried only once.  Defendants challenged the validity of claims 1-3, 7, and 10 of the '772 patent, arguing that the claims were obvious in view of 27 references.

While litigation was pending, Par challenged claims 1-3 and 8-10 of the '772 patent in an inter partes review proceeding.  After the U.S. Patent and Trademark Office Patent Trial and Appeal Board instituted Par's IPR, the other Defendants filed four additional IPR petitions challenging the '772 patent, along with motions to join Par's IPR.  The Board instituted two of the four additional IPRs and joined them with Par's IPR.  The Board declined to institute and join IPRs challenging claim 7 of the '772 patent because claim 7 had been omitted from Par's IPR.

In March 2017, the District Court determined that the asserted claims of the '772 patent were invalid for obviousness-type double patenting, but did not address Defendants' obviousness defenses or counterclaims, and the District Court's decision was appealed.  The Federal Circuit reversed the District Court's finding of obviousness-type double patenting in Novartis Pharmaceuticals Corp. v. Breckenridge Pharmaceutical Inc., 909 F.3d 1355, 1367 (Fed. Cir. 2018).  Prior to the Federal Circuit's reversal, the Board issued a final written decision in Par's IPR upholding the patentability of claims 1-3 and 8-10 of the '772 patent.

Following the Board decision and appeal, the District Court asked the parties to file a status report summarizing the issues that still needed to be addressed in litigation.  Novartis suggested that 35 U.S.C. § 315(e)(2) would possibly estop Defendants' obviousness defenses and counterclaims based on the Board's final written decision, and the District Court issued an order requesting briefing from Novartis on estoppel and from Defendants on obviousness.  Following that order, the suits involving Breckenridge and West-Ward were dismissed by joint stipulation, and Novartis filed its Motion for Estoppel under 35 U.S.C. § 315(e)(2).  In addition to taking no position on the estoppel issue, Par also declined to file a brief on obviousness, stating that it believed that a decision could be rendered based on the briefing and testimony already submitted to the Court.

In considering Novartis' motion, the Court noted that § 315(e)(2) provides that:

The petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision under section 318(a) . . . may not assert in either a civil action arising in whole or in part under section 1338 of title 28 . . . that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter parties review.

While pointing out that the Federal Circuit has not directly addressed the issue of whether estoppel applies to prior art references that were not raised in the IPR proceeding, the District Court listed a number of decisions in which a majority of District Courts had determined that IPR estoppel applies to any prior art reference that reasonably could have been raised, even if not actually raised, in an IPR proceeding (including decisions in the District of Delaware, the Eastern District of New York, the Eastern District of Wisconsin, and the Eastern District of Texas).  The Court also noted that:

[T]he general purpose of the statute as well as the statutory language indicate that the most plausible interpretation is that any prior art that the IPR petitioner could have raised in the proceeding is estopped if there is a final written decision from the PTAB that the challenged claims are valid.

In addition, the Court pointed out that "one of the policy objectives behind the introduction of IPR proceedings was an intention to conserve judicial resources," adding that "[a]llowing an IPR petitioner to have two bites at the apple by holding back certain obviousness combinations runs counter to both the clear language and purpose behind § 315."  Despite Breckenridge's argument that IPR estoppel should not apply after a district court has held trial, the Court indicated that it did "not think the application of IPR estoppel is dependent on the order in which certain events occur," and stated that "[t]he plain language of the statute does not indicate that Congress intended for there to be a time limitation upon the estoppel effect of a final written decision of an IPR."

On the issue of whether estoppel should apply to the 27 references put forward by Defendants at trial, Novartis argued that the 27 references all "could reasonably have been raised" in the IPR proceeding because they were used in the September 2016 trial which occurred before the reply due date in the IPR.  The District Court therefore determined that Defendants were precluded from pursuing a § 103 invalidity argument as to claims 1-3 and 8-10 of the '772 patent.  However, because no IPR was instituted as to claim 7 of the '772 patent, the Court determined that IPR estoppel did not apply for this claim.  Nevertheless, Novartis had withdrawn its infringement contention as to claim 7 and had agreed to provide Par with a covenant not to sue on that claim.  The Court therefore granted Novartis' Motion for Estoppel with respect to claims 1-3 and 8-10 of the '772 patent.

Novartis Pharmaceuticals Corp. v. Par Pharmaceutical Inc. (D. Del. 2019)
Memorandum Order by District Judge Andrews