December 17, 2015
Federal Circuit Addresses Substantial Evidence as Standard of Review in IPR
In June, 2014, the PTAB declared all challenged claims in two IPR trials brought by Gnosis S.p.A. to be unpatentable based on obviousness grounds. Gnosis S.p.A. v. S. Ala. Medical Science Found., IPR2013-00116 and Gnosis S.p.A. v. Merck & Cie,IPR2013-00117. In forty pages of opinion-and-dissent between the two cases, a divided panel of the Federal Circuit today affirmed these decisions as supported by substantial evidence. Merck & Cie v. Gnosis S.p.A., (Gnosis I) and S. Ala. Medical Science Found. v. Gnosis S.p.A. (Gnosis II). Of particular note is a thorough dissent filed by Judge Newman wherein she argues, unsuccessfully, that the substantial evidence standard should not apply to IPR proceedings to assure that the legislative purposes of IPR are met.
Substantively, the patents-at-issue are directed to homocysteine, a metabolic byproduct that forms in the course of mammalian biosynthesis of certain amino acids and nucleotides. Over-accumulation of homocysteine causes cardiac, skeletal, and nervous disorders. The technology in question here relates to treating this over-accumulation (hyperhomocysteinemia) by administering a particular isomer of a particular folate metabolite (L-5-MTHF). At the time of invention, folic acid was used to treat hyperhomocysteinemia, and L-5-MTHF was known as a biologically occurring metabolite of folic acid that was involved in various metabolic pathways for clearing homocysteine . Gnosis therefore argued—and the PTAB agreed—that it would have been obvious at the time of invention to cut out the middle man, so to speak, and administer L-5-MTHF directly instead of supplementing with folic acid so that the body could, after a lengthy series of enzymatic conversions, turn the folic acid into L-5-MTHF.
Of course, biological and chemical realities were not quite so simple as Gnosis’ argument for obviousness would imply. South Alabama Medical Science Foundation (SAMSF), the patentee, and their licensee, Merck, countered that at the time of invention L-5-MTHF had many known disadvantages that would discourage this strategy. For one thing, there was evidence that L-5-MTHF is not retained well in cells, such that large doses would be required to get a useful amount into the patient’s cells. This large dose problem is made doubly tricky by the fact that L-5-MTHF is not as stable as folic acid. The propensity of L-5-MTHF to degrade would mean that the dose that the manufacturer supplies would have to be correspondingly larger to account for degradation. Finally, there was some evidence that patient homocysteine levels could increase following L-5-MTHF administration, which would exacerbate rather than alleviate hyperhomocysteinemia.
Gnosis had a variety of published reports countering all of these points, and Merck had other reports countering Gnosis’ reports, and so on and so forth. The end result, as far as the PTAB was concerned, was that when all the evidence was weighed up together, the preponderance of the evidence supported a conclusion of obviousness.
Although Judge Hughes’ majority opinion does not touch on this point, the “preponderance of the evidence” standard of §316(e) is probably outcome determinative here. If this evidence had been considered under the “clear and convincing” standard for §282(a), the fact-finder would presumably have to say “Gnosis has a bunch of evidence and Merck has a bunch of counter evidence; I suspect that Gnosis’ evidence is more credible, but it is not ‘clearly and convincingly’ more credible, so the patentee gets the benefit of the doubt.” Because the challenger only had to prove unpatentability by a preponderance of the evidence, however, the PTAB as fact-finder was free to decide that Gnosis’ evidence was more credible on balance.
Judge Newman’s dissent touches upon this point, stating that, “[o]n questions that are close, as here illustrated, the standard of review can affect the result.” Gnosis I (dissent) at 13. Thus, she argues, it is incorrect for the Federal Circuit to review PTAB decisions under the highly deferential “substantial evidence” standard. Gnosis I (dissent) at 4. Specifically, Judge Newman remarks that “[t]he substantial evidence standard determines whether the decision could reasonably have been made, not whether it was correctly made.” Id. It is the Federal Circuit’s job, per Judge Newman, to assure that the PTAB’s factual findings are actually supported by the preponderance of the evidence.