April 9, 2018
In an attempt to understand the frequency of commercial success arguments and the likelihood of success of those arguments in TC 1600 IPRs, I used information from Oblon’s TC 1600 library to compile statistics. As seen below, commercial success is not often relied upon, even for IPRs challenging patents covering named drugs. And, digging into the details of the cases reveals that—even when argued—commercial success very rarely wins the day.
Using the 200 TC 1600 IPRs from the 2016 fiscal year as a sample group, I determined that 134 of the 200 proceedings (67%) in this group are associated with a named drug. Of these 200 IPRs, commercial success was raised substantively (enough so that the Final Written Decision discussed commercial success) in only 19 proceedings at the time of writing.
All 19 cases that relied on commercial success are associated with named drugs, including:
Of these 19 proceedings, the claims were upheld in 7 cases and found unpatentable in 12 cases:
But, of the seven cases where commercial success was raised, did commercial success carry the day? Ultimately not. In six of the seven proceedings, the Patent Trial and Appeal Board (“Board”) found that the Petitioner had not met its substantive burden. One case found that, although the Petitioner relied on inherency, it had not proven that the claimed result “necessarily” flowed from the prior art. In five other (related) cases, the Board found that the Petitioner had not established motivation to combine with a reasonable expectation of success, and in those cases, the Board explicitly stated that it did not rely on Patent Owner’s evidence of secondary considerations, including commercial success.
Only in one case—IPR2016-00204 (covering Vimpat®)—was commercial success arguably influential. And even here, the Board stated that the claims would likely be found patentable even without secondary considerations, though agreed that the commercial success evidence presented was persuasive (in addition to other types of secondary considerations).
Though commercial success was not decisive on its own here, the Patent Owner’s arguments may serve as a useful benchmark for how these types of arguments should be presented, as common challenges were addressed. First, the Petitioner tried to argue that there could be no nexus to commercial success because earlier blocking patents covered Vimpat®. The Board distinguished this case from Federal Circuit precedent (Merck & Co. v. Teva Pharms. USA, 395 F.3d 1364 (Fed. Cir. 2005) and Galderma Labs v. Tolmar, Inc., 737 F.3d 731 (Fed. Cir. 2013)), noting that in those cases, the blocking patents recited the same compound as in the later-issued claims, whereas here the alleged “blocking” patent covered numerous other compounds as well. Accordingly, although the presumption of nexus was “significantly undercut” the “entire probative weight of the evidence of commercial success” was not discarded on this basis. IPR2016-00204, Paper 85, 40–41 (PTAB March 22, 2017).
The Petitioner also attempted to dismiss evidence of commercial success by arguing that Vimpat® has only 4% of the antiepileptic drug market, asserting that this small share is insufficient to show commercial success. But, this was not considered persuasive because Vimpat® is only approved for use in a subset of adult patients, and there are several well-established and low-priced generics on the market affecting market share. Taken together, the small market share did not detract from the “probative value of its upward-trending sales and prescriptions, and significant overall sales.” Id., 41. This finding is significant because it illustrates that a Patent Owner should certainly address market share in its arguments and evidence regarding commercial success, and confront anything that may be viewed problematically in a proactive fashion.
Perhaps of more interest to Patent Owners is to try to understand why commercial success is often not successful. As noted above, 12 proceedings substantively raised commercial success (in conjunction with other secondary considerations arguments) where the claims were ultimately found unpatentable.
These proceedings include patents covering Zytiga®, Tarceva®, Jevtana® Kit, OxyContin®, and Humira®. Although the Board agreed in every case that the products at issue demonstrated commercial success in terms of dollar value or sales, this was insufficient. Specifically, all shared common failings with regard to commercial success and lack of nexus.
The Board reiterated several times that there can be no nexus for commercial success if the claimed elements were known in the prior art, and in several instances, there was insufficient evidence tying the commercial success to the claimed features (rather than prior art elements). This can be particularly challenging for dosing patents where the compound itself is known in the art.
Relatedly, in proceedings covering four of the five drugs, the Board noted the presence of earlier blocking patents and tended to discount or give little weight to commercial success evidence. For example, the Board stated several times “[w]here ‘market entry by others was precluded [due to blocking patents], the inference of non-obviousness of [the claims], from evidence of commercial success, is weak.’” Galderma Labs., L.P. v. Tolmar, Inc., 737 F.3d 731, 740 (Fed. Cir. 2013) (bracketed materials original, quoting Merck & Co. 395 F.3d at 1377).” See, e.g., IPR2016-00172, Paper 60, at 40–41 (PTAB May 16, 2017). In some cases the Board specifically called out the Patent Owner’s failure to address blocking patents in its commercial success arguments.
Thus, a Patent Owner should preemptively address blocking patents and attempt to distinguish Merckand Galderma if possible. But in many cases, the hurdles to overcoming nexus or preexisting blocking patents may prove too challenging to effectively rely on commercial success, even for the “most successful pharmaceutical product in the world” as the Patent Owner characterized Humira® in its papers (based on over $16 billion dollars in sales in 2016).
Given that evidence of commercial success is unlikely to carry the day, Patent Owners may be better served by saving the word count in their Responses to address patentability challenges in depth on the merits.