Novartis Ag v. Ezra Ventures LLC , 909 F.3d 1367 ( 2018 )

United States Court of Appeals
for the Federal Circuit
______________________
NOVARTIS AG, NOVARTIS PHARMACEUTICALS
CORPORATION, MITSUBISHI TANABE PHARMA
CORPORATION, MITSUI SUGAR CO. LTD.,
Plaintiffs-Appellees
v.
EZRA VENTURES LLC,
Defendant-Appellant
______________________
2017-2284
______________________
Appeal from the United States District Court for the
District of Delaware in Nos. 1:15-cv-00150-LPS, 1:15-cv-
00975-LPS, Chief Judge Leonard P. Stark.
______________________
Decided: December 7, 2018
______________________
JANE M. LOVE, Gibson, Dunn & Crutcher LLP, New
York, NY, argued for all plaintiffs-appellees. Plaintiffs-
appellees Novartis AG, Novartis Pharmaceuticals Corpo-
ration also represented by ROBERT TRENCHARD;
ALEXANDER N. HARRIS, San Francisco, CA; MICHAEL A.
VALEK, Dallas, TX.
JOSEPH M. O’MALLEY, JR., Paul Hastings LLP, New
York, NY, for plaintiffs-appellees Mitsubishi Tanabe
2 NOVARTIS AG v. EZRA VENTURES LLC
Pharma Corporation, Mitsui Sugar Co. Ltd. Also repre-
sented by ERIC WILLIAM DITTMANN.
SHASHANK UPADHYE, Amin Talati Upadhye LLP,
Chicago, IL, argued for defendant-appellant. Also repre-
sented by BRENT ALLEN BATZER, JOSEPH CWIK, JONATHAN
JACOB KRIT, YIXIN H. TANG.
______________________
Before MOORE, CHEN, and HUGHES, Circuit Judges.
CHEN, Circuit Judge.
SUMMARY
This case concerns the interplay between a patent
term extension (PTE) granted pursuant to 35 U.S.C. § 156
and the obviousness-type double patenting doctrine. The
Delaware District Court concluded that, in accordance
with statutory construction principles and as a logical
extension of this court’s holding in Merck & Co. v. Hi-Tech
Pharmacal Co., 482 F.3d 1317 (Fed. Cir. 2007), obvious-
ness-type double patenting does not invalidate an other-
wise validly obtained PTE under § 156. We agree and
accordingly affirm.
BACKGROUND
Defendant-Appellant Ezra Ventures LLC (Ezra) filed
an Abbreviated New Drug Application (ANDA) relating to
a generic version of Novartis’s branded multiple sclerosis
drug Gilenya®. Novartis filed an infringement suit
against Ezra in response, asserting claims 9, 10, 35, 36,
46, and 48 of U.S. Patent No. 5,604,229.
The ’229 patent claims a large group of compounds,
including fingolimod, the active ingredient in Gilenya®.
Because the ’229 patent was filed before the effective date
of the Uruguay Round Agreements Act of 1994 (URAA),
its patent term is governed by the law in effect at that
time—the rule of 17 years from issuance. Pub. L. No.
NOVARTIS AG v. EZRA VENTURES LLC 3
103-465, §532, 108 Stat. 4809, 4983–85. The ’229 patent
thus was set to expire on February 18, 2014, 17 years
from its issuance date, but Novartis secured a PTE of five
years on the patent pursuant to 35 U.S.C. § 156. Section
156 was part of the Drug Price Competition and Patent
Term Restoration Act of 1984 (Hatch-Waxman Act) and
was enacted to restore the value of the patent term that a
patent owner loses during the early years of the patent
because the product cannot be commercially marketed
without approval from a regulatory agency (e.g., Food and
Drug Administration approval). Pub. L. No. 98-417, 98
Stat. 1585, 1598. Section 156 allows a term extension of
up to five years, equal to the regulatory review period, on
a patent covering a product subject to regulatory review.
See 35 U.S.C. §§ 156(a), (c), (g)(6). Section 156(a) sets
forth the requirements for a patent to qualify for a PTE,
the details of which are not relevant here.
A patent owner often owns multiple patents that cov-
er the same product that has been subject to regulatory
review, but only one patent’s term can be extended. See
35 U.S.C. § 156(c)(4). The patent owner makes a choice
among its qualifying patents. “Congress chose not to limit
the availability of a patent term extension to a specific
parent or continuation patent but instead chose a flexible
approach which gave the patentee the choice.” Merck, 482
F.3d at 1323; 130 Cong. Rec. 23765 (1984) (“[O]ne patent
on a product, not necessarily the first, can be extend-
ed . . . .”); id. at 24444 (“Under this amendment, the
patent holder would be allowed to select the patent to be
extended. . . . I believe this amendment is acceptable
because it gives the patentholder the flexibility to select
the most important patent for extension.”).
Here, Novartis owned at least two patents covering
Gilenya® that could qualify for PTE under § 156(a): the
’229 patent and U.S. Patent No. 6,004,565, which claims a
method of administering fingolimod. Novartis chose to
apply for PTE on the ’229 patent. With the PTE granted
4 NOVARTIS AG v. EZRA VENTURES LLC
to the ’229 patent, the ’229 patent now expires on Febru-
ary 18, 2019. Because the ’565 patent issued from a
patent application filed after the effective date of the
URAA, its term expired on September 23, 2017—20 years
from its earliest effective filing date. See Merck & Co. v.
Kessler, 80 F.3d 1543, 1547 (Fed. Cir. 1996) (explaining
the post-URAA regime, citing § 154(a)(2) and § 154(c)(1)).
The ’229 patent is thus a pre-URAA patent whereas the
’565 patent is a post-URAA patent, governed by different
statutory patent term regimes. Below is a timeline of the
relevant dates between the two patents.
On September 22, 2016, the district court denied Ez-
ra’s Federal Rule of Civil Procedure 12(c) motion for
judgment on the pleadings, where Ezra argued that the
’229 patent should be ruled invalid, or otherwise terminal-
ly disclaimed for the patent term past the expiration date
of the unasserted ’565 patent. Specifically, Ezra argued
that the granted extension of the ’229 patent’s term
beyond the life of the ’565 patent is impermissible because
it: (1) de facto also extends the life of the ’565 patent, and
thereby violates § 156(c)(4)’s requirement that only “one
patent be extended”; (2) violates the “bedrock principle”
that the public may practice an expired patent; and (3)
renders the ’229 patent invalid for statutory- and obvi-
NOVARTIS AG v. EZRA VENTURES LLC 5
ousness-type double patenting because Novartis’s ’229
patent claims are not patentably distinct from its ’565
patent claims.
While § 156(c)(4) specifies that “in no event shall more
than one patent be extended . . . for the same regulatory
review period for any product,” the district court conclud-
ed that Ezra’s argument regarding the de facto extension
of the ’565 patent required reading “effectively” into the
statute as a modifier of “extended.” The district court
found that such a reading did not make sense when
compared to other uses of the word “extend” in the same
statute, which the district court found to “refer to the
legal status conferred upon a patent chosen to benefit
from PTE.” Novartis AG v. Ezra Ventures, LLC, 2016 WL
5334464, at *2 (D. Del. Sept. 22, 2016). Further, the
district court relied on this court’s decision in Merck,
where we concluded that a terminally disclaimed patent
could still have its term extended with a PTE because
“Congress chose not to limit the availability of a patent
term extension to a specific parent or continuation patent
but instead chose a flexible approach which gave the
patentee the choice.” Id. (citing 482 F.3d at 1323). The
district court reasoned that “[e]xtension of the term of a
patent that has been terminally disclaimed [as allowed in
Merck] ‘de facto’ or ‘effectively’ extends the life of the
patent over which it is terminally disclaimed,” much like
the extension of the ’229 patent’s term effectively extends
the life of the related ’565 patent here. Id. at *3. Thus,
the district court concluded that the ’229 patent’s term
extension was permissible under § 156.
The district court also explained that “expiration of a
patent does not grant the public an affirmative right to
practice a patent; it merely ends the term of the patent-
ee’s right to exclude others from practicing the patent.”
Id. The district court then pointed to other ways in which
the ’565 patent subject matter could still be blocked from
public use, e.g., other patent rights or contractual obliga-
6 NOVARTIS AG v. EZRA VENTURES LLC
tions. Id. Further, the district court found that Ezra had
not provided authority indicating that a policy in favor of
dedicating an expired patent’s subject matter to the public
can override Congress’s express statutory language. Id.
Finally, the district court found that a judgment on
the pleadings was improper for Ezra’s double patenting
challenge because the analysis included factual issues
underlying a “construction of the claims in [the] earlier
patent and later patent” and a “determination of whether
differences between claims render them patentably dis-
tinct.” Id. (citing Eli Lilly & Co. v. Barr Labs., Inc., 251
F.3d 955, 968 (Fed. Cir. 2001)). The district court directed
Ezra to file for summary judgment based on double pa-
tenting at a later time, “should it have a good faith basis
to do so.” Id.
Five months after the district court denied Ezra’s
Rule 12(c) motion, Ezra stipulated that its ANDA product
infringes claims 9, 10, 35, 36, 46, and 48 of the ’229 patent
if these claims are not invalid, expired, or unenforceable.
Two months later, Ezra sent a letter to the district court
stating that it would “not present further evidence on the
issue of improper statutory and obviousness-type double
patenting,” and withdrew its other pending defenses.
Ezra stated that its decision disposed of all pending
triable issues and rendered a trial moot.
Following Ezra’s letter, both Novartis and Ezra filed
their respective proposed final judgments, and the district
court issued judgment on June 9, 2017. The district court
found the ’229 patent valid, unexpired, and enforceable
with the PTE, found infringement of the ’229 patent, and
imposed an injunction on Ezra’s ANDA product until the
expiration of the ’229 patent in 2019.
NOVARTIS AG v. EZRA VENTURES LLC 7
Ezra now appeals on the issues of statutory construc-
tion of § 156 and obviousness-type double patenting. 1 We
have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).
DISCUSSION
This court reviews questions of statutory interpreta-
tion de novo, without deference to the district court’s
interpretation. Glaxo Operations UK Ltd. v. Quigg, 894
F.2d 392, 395 (Fed. Cir. 1990). Obviousness-type double
patenting is an issue of law premised on underlying
factual inquiries. Otsuka Pharm. Co. v. Sandoz, Inc., 678
F.3d 1280, 1290 (Fed. Cir. 2012). Accordingly, we consid-
er the district court’s ultimate conclusion on obviousness-
type double patenting without deference, but we review
any predicate findings of fact for clear error. Eli Lilly &
Co. v. Teva Parenteral Meds., Inc., 689 F.3d 1368, 1376
(Fed. Cir. 2012). To the extent any of Ezra’s arguments
are tied to the district court’s denial of its Rule 12(c)
motion, rather than the district court’s final judgment, we
review such denial according to the law of the regional
circuit, which in this case calls for de novo appellate
review. McRO, Inc. v. Bandai Namco Games Am. Inc.,
837 F.3d 1299, 1311 (Fed. Cir. 2016); DiCarlo v. St. Mary
Hosp., 530 F.3d 255, 259 (3d Cir. 2008).
I. The Validity of the ’229 Patent’s Term Extension
A. Section 156’s “One Extended Patent” Rule
As stated above, § 156 was passed as part of the
Hatch-Waxman Act, “establish[ing] a patent term exten-
sion for patents relating to certain products subject to
regulatory delays that could not be marketed prior to
Ezra also initially appealed on standing and li-
1
censing issues in Appeal Nos. 2017-2283, -2286, and -
2287, consolidated with this appeal, but those appeals
were withdrawn before oral argument in this case.
8 NOVARTIS AG v. EZRA VENTURES LLC
regulatory approval.” Merck, 482 F.3d at 1320. Section
156 provides an extension of up to five years if certain
conditions are met. See 35 U.S.C. § 156(g)(6). Subsection
156(c)(4) provides that “in no event shall more than one
patent be extended under subsection (e)(1) for the same
regulatory review period for any product.” This provision
is relevant here because Novartis has multiple patents
that cover the drug fingolimod. Subsection 156(e)(1)
states that the Director of the U.S. Patent and Trademark
Office makes the determination of a patent’s term exten-
sion eligibility, and if the requirements of subsection
156(a) are met, then the Director “shall issue” the exten-
sion for that patent. See 35 U.S.C. § 156(e)(1).
Although § 156 recognizes that a patent owner may
own multiple patents relating to a product, a method of
using that product, and/or a method of manufacturing the
product, nothing in the statute restricts the patent own-
er’s choice for patent term extension among those patents
whose terms have been partially consumed by the regula-
tory review process. Importantly, Congress did not,
through § 156, compensate a loss of term for all patents
affected by regulatory review. In striking a balance
between the competing interests of new drug developers
and low-cost generic competitors, Congress limited a PTE
grant for such a patent owner to only one of its patents.
Ezra argues that Novartis violated § 156(c)(4) be-
cause, in its view, two patents were extended here: the
extension of the ’229 patent’s term “effectively” extended
the ’565 patent’s term as well, because the ’229 patent
covers a compound necessary to practice the methods
claimed by the ’565 patent.
We agree with the district court, however, that there
is no reason to read “effectively” as a modifier to “extend”
in the language of § 156(c)(4). As a basic principle of
statutory construction, courts “ordinarily resist[] reading
words into a statute that do not appear on its face.” Bates
NOVARTIS AG v. EZRA VENTURES LLC 9
v. United States, 522 U.S. 23, 29 (1997). Further, as the
district court found, “throughout the rest of § 156, ‘ex-
tend,’ ‘extension,’ and ‘extending’ refer to the legal status
conferred upon a patent chosen to benefit from PTE.”
Novartis, 2016 WL 5334464, at *2 (citing 35 U.S.C.
§ 156(a) and (b)). This legal status is the literal changing
of the patent’s expiration date by the Director under
§ 156, ensuring a government-granted de jure exclusion-
ary right for an extended time period—as opposed to an
“effective” or “de facto” exclusion. Section 156(c)(4)’s
language that “in no event shall more than one patent be
extended under subsection (e)(1) for the same regulatory
review period for any product” was intended to limit a
legally conferred PTE (not an “effective” or “de facto”
PTE) to one patent selected by the patent owner. Here,
only the ’229 patent was selected and then legally extend-
ed with a certificate of extension “recorded in the official
file of the patent and . . . considered as part of the original
patent.” 35 U.S.C. § 156(e)(1). That the method of the
’565 patent cannot be practiced during the ’229 patent’s
extended term is a permissible consequence of the legal
status conferred upon the ’229 patent by § 156.
Ezra also contends that in order to comply with § 156,
“Novartis had to make a choice [as to which patent to
extend] in such a way as to ensure that ‘in no event shall
more than one’ patent be extended.” Appellant’s Br. 22.
We see nothing in the text, structure, or history of § 156
that imposes such a requirement on patent owners. In
fact, we have found the opposite in Merck: Congress chose
not to limit the availability of a patent term extension to a
specific patent and instead chose “a flexible approach
which gave the patentee the choice.” 482 F.3d at 1323.
As long as the requirements for a patent term extension
recited in § 156(a) are met, the Director of the Patent and
Trademark Office “shall” grant a PTE on the patent of
patentee’s choice. See 35 U.S.C. § 156(e)(1).
10 NOVARTIS AG v. EZRA VENTURES LLC
We thus conclude that Novartis’s selection of its ’229
patent for term extension does not violate § 156(c)(4).
B. The Interaction Between Section 156 and
Obviousness-Type Double Patenting
This case also presents the question of whether the
’229 patent is invalid due to obviousness-type double
patenting because the term extension it received causes
the ’229 patent to expire after Novartis’s allegedly pa-
tentably indistinct ’565 patent. We conclude, as a logical
extension of our holding in Merck & Co. v. Hi-Tech Phar-
macal Co., that obviousness-type double patenting does
not invalidate a validly obtained PTE in such a scenario.
In Merck, U.S. Patent No. 4,797,413 was terminally
disclaimed after the expiration of U.S. Patent No.
4,677,115 to overcome an obviousness-type double patent-
ing rejection during prosecution. 482 F.3d at 1318–19.
The ’413 patent later received a PTE of 1,233 days pursu-
ant to § 156. Id. at 1319. Appellant Hi-Tech Pharmacal
Co. argued that “as a condition for the lifting of the dou-
ble-patenting rejection and thus the grant of the ’413
patent, Merck disclaimed any extension of its term be-
yond the expiration of the ’115 patent and is thus fore-
closed from obtaining a term extension under § 156.” Id.
at 1321. This court upheld the validity of the ’413 pa-
tent’s term extension grant. Id. at 1324. We first recog-
nized that a straightforward reading of § 156 mandates a
term extension so long as the other enumerated statutory
requirements for a PTE are met. Id. at 1321–22 (citing 35
U.S.C. § 156(a)). We then noted the contrast between
§ 156 for PTE with the language of § 154 for patent term
adjustments: § 154 “expressly excludes patents in which
a terminal disclaimer was filed from the benefit of a term
adjustment for PTO delays,” but § 156 contains “no simi-
lar provision that excludes patents in which a terminal
disclaimer was filed from the benefits of Hatch-Waxman
extensions.” Id. at 1322. Thus, this court concluded that
NOVARTIS AG v. EZRA VENTURES LLC 11
“[t]he express prohibition against a term adjustment
regarding PTO delays [under § 154(b)], the absence of any
such prohibition regarding Hatch-Waxman extensions,
and the mandate in § 156 that the patent term shall be
extended if the requirements enumerated in that section
are met, support the conclusion that a patent term exten-
sion under § 156 is not foreclosed by a terminal disclaim-
er.” Id.
We agree with the district court’s observation that if a
patent is terminally disclaimed to another patent to
overcome an obviousness-type double patenting rejection
and then term-extended under § 156 (as in Merck), it
necessarily will expire after the patent to which it had
been subject to an obviousness-type double patenting
rejection. Such an extension would result in the situa-
tion, as here, where the term of patent protection afforded
to the patentably indistinct patent to which the extended
patent was terminally disclaimed is—in Ezra’s words—
“effectively” extended because of a PTE granted pursuant
to § 156.
Ezra attempts to distinguish Merck by characterizing
that case as involving “invalidity for obviousness-type-
double-patenting . . ., not statutory construction of Section
156,” and arguing that the Merck court’s rationale only
“spoke to the impact of a new PTE on preexisting termi-
nal disclaimers.” Appellant’s Br. 21–22. But the bulk of
the Merck opinion engages in a statutory construction of
§ 156. See 482 F.3d at 1321–23. And its holding on the
validity of a PTE for a patent that was terminally dis-
claimed in order to overcome an obviousness-type double
patenting rejection is directly relevant to the instant case.
Finally, Ezra argues that a PTE must not be granted
if such an extension violates other provisions of law, such
as invalidity under 35 U.S.C. §§ 102 and 103 or obvious-
ness-type double patenting. We agree to the extent of
considering a patent’s validity without a § 156 extension.
12 NOVARTIS AG v. EZRA VENTURES LLC
For example, if a patent, under its original expiration
date without a PTE, should have been (but was not)
terminally disclaimed because of obviousness-type double
patenting, then this court’s obviousness-type double
patenting case law would apply, and the patent could be
invalidated. However, if a patent, under its pre-PTE
expiration date, is valid under all other provisions of law,
then it is entitled to the full term of its PTE.
II. Ezra’s Policy Concerns
This case does not raise the traditional concern with
obviousness-type double patenting of a patent owner
“extending his exclusive rights to an invention through
claims in a later-filed patent that are not patentably
distinct from claims in the earlier filed patent.” Proctor &
Gamble Co. v. Teva Pharm. USA, Inc., 566 F.3d 989, 999
(Fed. Cir. 2009). Here, it is the earlier-filed, earlier-
issued ’229 patent, not the later-filed, later-issued ’565
patent, that has the later expiration date, due to a statu-
torily-allowed term extension under § 156.
This case also does not present the concerns that
drove recent decisions of this court regarding obviousness-
type double patenting in the post-URAA context. For
example, there is no potential gamesmanship issue
through structuring of priority claims as identified in
Gilead Sciences, Inc. v. Natco Pharma Ltd., 753 F.3d 1208
(Fed. Cir. 2014). In Gilead, where the relevant patents
were both post-URAA patents, this court found that a
patent that issues after, but expires before, another
patent could qualify as a double patenting reference for
that other, later-expiring patent. Id. at 1211–12, 1217.
Gilead recognized a situation where “inventors could
routinely orchestrate” longer patent-exclusivity periods by
(1) filing serial patent applications on obvious modifica-
tions of an invention, (2) claiming different priority dates
in each, and then (3) strategically responding to prosecu-
tion deadlines such that the application claiming the
NOVARTIS AG v. EZRA VENTURES LLC 13
latest filing date issues first, without triggering a termi-
nal disclaimer for the earlier filed applications. Id. at
1215. This court prevented such an outcome by holding
that expiration dates were what “really mattered” for an
obviousness-type double patenting analysis in this con-
text. Id. at 1215. 2 Here, Ezra does not identify any
similar tactics on the part of Novartis. But for the § 156
PTE, the ’229 patent would have expired before the ’565
patent. 3 So there is also no concern that Novartis, once
its ’229 patent issued, sought to subsequently “secur[e] a
second, later expiring patent for the same invention” as in
Abbvie Inc. v. Mathilda & Terence Kennedy Institute of
Rheumatology Trust., 764 F.3d 1366, 1373 (Fed. Cir.
2014).
Further, this court has described obviousness-type
double patenting as a “judge-made doctrine” that is in-
tended to prevent extension of a patent beyond a “statuto-
ry time limit.” In re Berg, 140 F.3d 1428, 1431–32 (Fed.
Cir. 1998). Here, agreeing with Ezra would mean that a
judge-made doctrine would cut off a statutorily-authorized
time extension. We decline to do so.
CONCLUSION
By applying statutory construction principles, follow-
ing this court’s precedent in Merck, and addressing tradi-
tional obviousness-type double patenting principles, we
2 The effect of statutory term extensions was ex-
pressly not considered in Gilead. 753 F.3d at 1215 n.6.
3 This is true of the ’229 and ’565 patents even
though one was pre-URAA and the other post-URAA, a
circumstance that can raise issues such as those ad-
dressed in Novartis Pharmaceutical Corp. v. Breckenridge
Pharmaceutical Inc., Nos. 2017-2173, 2017-2175, 2017-
2176, 2017-2178, 2017-2179, 2017-2180, 2017-2182, 2017-
2183, 2017-2184 (Fed. Cir. Dec. 7, 2018).
14 NOVARTIS AG v. EZRA VENTURES LLC
hold that a PTE pursuant to § 156 is valid so long as the
extended patent is otherwise valid without the extension.
Thus, the district court was correct in finding that the
’565 patent is not a double patenting reference to the ’229
patent and that the ’229 patent is valid through the end of
its PTE. 4 Accordingly, we affirm the district court’s final
judgment.
AFFIRMED
COSTS
No Costs.
4 Because we find that the ’565 patent is not a dou-
ble patenting reference for the ’229 patent, we need not
address Ezra’s arguments as to whether the ’229 patent is
patentably indistinct from the ’565 patent. Ezra presents
no other arguments as to the invalidity of the ’229 patent
to this court.