Anacor Pharmaceuticals, Inc. v. Iancu

May 17, 2018

On May 14, 2018, in Anacor v. Iancu, the Federal Circuit issued its opinion affirming the Board’s invalidation of Anacor’s tavaborole patent. The patent-in-suit, U.S. Patent No. 7,582,621, entitled “Boron-containing Small Molecules,” is directed to the use of tavaborole to treat fungal infections. According to the disclosure, tavaborole can be used to treat a fungal infection known as onychomycosis, which is a nail disease responsible for approximately half of all nail disorders in humans. In an inter parties review, the Patent Trial and Appeal Board found all of the claims of the ’621 patent unpatentable for obviousness. Anacor appealed with respect to only one of the claims and the Federal Circuit affirmed.

On appeal, Anacor argued that the Board violated due process and the procedural requirements of the Administrative Procedure Act by failing to provide Anacor with adequate notice of, and an opportunity to respond to, the grounds of rejection ultimately adopted by the Board. Anacor argued, in part, that the Board improperly relied on new evidence not included in the petition – the Segal and Mertin references – to establish expectations of those of ordinary skill in the art. While these references were not included in the petition, the Segal reference was introduced by Anacor in its patent owner response, and the Mertin reference was first cited by Anacor’s expert during deposition. In rejecting Anacor’s due process argument, the Federal Circuit noted that there is no blanket prohibition against the introduction of new evidence during an IPR proceeding. Rather, the Court stated that the introduction of new evidence in the course of the trial is to be expected, and as long as the opposing party is given notice of the evidence and an opportunity to respond, the introduction of such evidence is permissible under the APA. Because Anacor had the opportunity to address the references, and in fact discussed Segal in its patent owner response and Mertin at the hearing, the Court concluded that Anacor was not denied its procedural rights.

In addition, Anacor argued that the Board improperly combined two other references – Austin and Brehove – in determining obviousness. Specifically, Anacor argued that the Board mistakenly concluded that the compounds disclosed in the Austin and Brehove references are structurally similar, and failed to appreciate their dissimilarities and the fact that even small structural differences could result in significant differences in chemical and biological properties. The Federal Circuit noted, however, that Anacor’s argument is premised on the misapprehension that the Board viewed structural similarity as a binary factor – either present or absent – and that the Board found it was present in this case. According to the Court, that is not an accurate characterization of the Board’s assessment of structural similarity in this case. In the final written decision, the Board viewed the existence of some structural similarity between the compounds in Austin and Brehove as evidence that the references might be good candidates to be combined. But, according to the Court, the Board attributed more significance to the functional similarities of the two compounds. In other words, notwithstanding any structural differences, the Board focused on the fact that both compounds were shown to be effective against a fungus that was known to cause onychomycosis.

While it is true that in the case of patents on new chemical compounds, the obviousness inquiry often turns on the structural similarities and differences between the compounds claimed and those in the prior art, the Federal Circuit distinguished those cases, stating that Anacor’s patent does not involve a new chemical compound. According to the Court, where a patent is directed to a new treatment using a known compound, it is reasonable to assume that similar compounds that share certain common properties are apt to share other related properties as well. In addressing Anacor’s arguments, the Court reiterated the importance of structural similarity in assessing the motivation to combine and reasonable expectation of success, but found that in this instance, the Board understood that the petitioner’s theory was not based on structural similarities alone, but was based on the combination of structural and functional similarity.

The Court rejected Anacor’s challenges to the Board’s reasoning and upheld the Board’s conclusion that the challenged claim of the ’621 patent is invalid for obviousn ess.