Incept LLC v. Palette Life Sciences Inc. et al., 2021-2063, 2021-2065 (Fed. Cir. Aug 16, 2023)
A product's commercial success in the marketplace can be used to prove the inventiveness of a patent, but a US court warns that free samples are not relevant. Affirming written decisions of the Patent Trial and Appeal Board ("PTAB") in two inter partes reviews, the Court of Appeals for the Federal Circuit ("CAFC") ruled that only actual product sales count towards supporting commercial success. The CAFC also clarified that a general preference for an alternative in the prior art does not teach way from the invention, and dependent claims will automatically fall with an independent claim when they are not argued separately.
Background
Incept LLC ("Incept") owned U.S. Patents Nos. 8,257,723 ("the '723 Patent") and 7,744,913 ("the '913 Patent"), which related to improved methods for treating prostate cancer using radiation therapy. The patents described the injection of a biodegradable filler gel between target tissue and non-target tissue to increase the distance between the two, reducing exposure to radiation for non-target tissues. Both patents claimed the filler was biodegradable.
Palette Life Sciences Inc. ("Palette") applied for inter parties review of both patents, claiming they were unpatentable for obviousness and anticipation. Palette claimed that an earlier patent ("Wallace") described a method for "rapid formation of a biocompatible gel ... at a selected site within a patient's body". The PTAB ultimately agreed with Palette, ruling the '723 and '913 patents unpatentable.
Anticipation
Incept argued on appeal that the PTAB committed a legal error by engaging in a "patchwork approach" and "picking and choosing" from Wallace's different teachings to piece together the elements of the '723 Patent. According to Incept, Wallace described "millions, if not billions, of different possible compositions, each with different properties". Incept likened this to a genus and species, arguing that "when a prior art reference describes a genus, and the challenged claim recites a species of that genus, anticipation turns on whether the genus was of such a defined and limited class that the POSITA could have "at once envisaged" each member of the genus".
The CAFC rejected Incept's argument, finding that Wallace explicitly described compositions that had the claimed characteristics of, and were used for, the same purpose as the compositions referred to in the '723 patent. The CAFC also found that the "genus and species" comparison inapplicable as the '723 patent claims were directed to a method of introducing fillers with certain general qualities, which the compositions in Wallace were also described as having:
"Incept cannot use the fact that Wallace describes multiple compositions to evade an anticipation finding where Wallace provides "as complete detail as is contained in the patent claim," such that a skilled artisan would have understood that Wallace's compositions had the same generic properties as those in the '723 patent claims".
Obviousness and Commercial Success
Incept argued that the PTAB ignored Wallace's teaching away from biodegradable compositions, but the CAFC rejected this argument. The PTAB had specifically noted that "Wallace's teaching that all suitable polymers disclosed are 'essentially nondegradable in vivo over a period of at least several months' ... teaches or at least suggests, that those polymers are essentially degradable in the body over a period of more than at least several months. The CAFC stated that:
A reference does not teach away if it 'merely expresses a general preference for an alternative invention but does not criticize, discredit or otherwise discourage investigation into the invention claimed.
Incept also argued that the PTAB did not separately analyze certain dependent claims of the two patents, which provided biodegradability time limits. Palette had identified disclosures in the prior art that taught each of these elements and Incept had not separately argued their patentability before the PTAB. Citing Genetech, the CAFC ruled:
Where a party "does not raise any arguments with respect to any other claim limitation, nor does it separately argue [the] dependent claim," "[the] dependent claim . . . stands or falls together with [the] independent claim."
Incept's final obviousness argument was that the PTAB imposed an "overly stringent standard" for showing commercial success. Incept had produced a table reflecting annual unit shipments to external customers for the years 2015-2019 to support its assertion that shipments of its SpaceOAR® hydrogel product had doubled year-on-year through 2019. However, the table not only included shipments for sale, but shipments of replacements and free samples as well. While Incept provided a breakdown of shipments attributed to units sold for the years 2015-2017, it did not provide a breakdown for the years 2018-2019. It merely relied on testimony to state that the number of replacement sand sample units for these years was "small".
The CAFC echoed the PTAB's ruling and found that such a record "does not demonstrate whether the year-over-year increase in units shipped is attributable to increased sales as opposed to an increase in samples and replacements that were shipped". As a result, Incept failed to sufficiently support its commercial success argument.
Commentary
Even on a good day, commercial success is a tricky standard to meet. It is merely a secondary consideration that courts weigh when determining whether a patent is obvious or inventive. Ideally, patent claims should include at least one feature that is not found in the prior art so that a court's decision does not depend on secondary considerations. Realistically though, new prior art may be later found, which will force a patent owner to rely on secondary considerations. Based on the CAFC's ruling against Incept, we can expect that any accounting information used to support patentability in these circumstances will be scrutinized closely.
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