The Pharmaceutical CornerThe impact of the Federal Circuit's "all substantial rights" definition in obviousness-type double patenting
The doctrine of obviousness-type double patenting was created to prevent an improper time-wise extension of patent term in commonly owned patents. In Immunex v. Sandoz, the Federal Court adopted the “all substantial rights” test to determine common ownership, setting the stage for in-licensed patents to be subject to an obviousness-type double patenting attack with the licensee’s own patents used as prior art references. While the Federal Circuit applied the “all substantial rights” test, it ultimately upheld the validity of certain patents covering Enbrel®, a popular arthritis and psoriasis drug marketed by Amgen (which acquired Immunex in 2001).
Sandoz petitioned the Supreme Court for a writ of certiorari, seeking reconsideration of the Federal Circuit’s ruling. Sandoz argued that the Federal Circuit’s determination that the terms of Immunex’s exclusive license of the patents in suit did not encompass “all substantial rights” will allow patent owners to impermissibly extend exclusivity by purchasing similar licenses. See Petition for Writ of Certiorari, Sandoz Inc. v. Immunex Corp., 2021 WL 53114, at *1 (No. 20-1110, January 29, 2021). The Supreme Court, however, denied Sandoz’s petition on May 17, 2021.
This article outlines the underlying appellate decision and the potential implications on pharma patent licensing strategies.
Procedural history and Federal Circuit opinion
After Sandoz filed an abbreviated Biologics License Application to market a biosimilar version of Enbrel®, Roche and Immunex/Amgen filed an infringement action. Sandoz stipulated to infringement but argued the patents were invalid for a number or reasons, including obviousness-type double patenting. After a two-week bench trial in the District of New Jersey, the district court found the patents valid and entered final judgment for Immunex/Amgen and Roche in late 2019.
Sandoz appealed, contending that the district court erred in its determination that the patents were not commonly owned.
The common ownership issues in the case stem from the terms of the license between Roche and Immunex/Amgen. In the 1990s, both companies were separately researching tumor necrosis factor (TNF) receptors to determine whether suppression of TNF would result in a therapeutic benefit. Roche filed the applications for what became the patents in suit in 1995. After Immunex obtained FDA approval to market Enbrel® in 1998, Immunex obtained a license to Roche’s patent applications.
In 2004, the parties modified the terms of the license, with Roche granting Immunex an irrevocable, exclusive license to the patent family for the patents in suit. Immunex has the sole right to grant sublicenses, to prosecute the patent family, the right to obtain an assignment of the patents for $50,000, and first right to rectify any infringement with an entitlement to retain any award therefrom. Roche retains the right to practice the patents for internal non-clinical research and has the secondary right, but not the obligation, to rectify infringement with 180 days written notice to Immunex. Neither parties’ obligations under the contract are assignable without written consent.
On appeal, Sandoz argued that the Federal Circuit’s standing jurisprudence – an agreement that conveys “all substantial rights” in a patent is tantamount to an assignment – should also be an operative test for common ownership in obviousness-type double patenting. Because the license effectively assigned the patents-in-suit to Immunex, prior Immunex patents should count as double-patenting references.
The majority adopted Sandoz’s legal theory, noting that where one party receives the right to prosecute the patent at issue, the “all substantial rights” test is instructive for identifying the effective patentee in the “common ownership” analysis. But the court also found that the retention by Roche of a secondary enforcement right and the non-assignability of the contract preserved the agreement’s status as a license.
The dissent adopted the same “all substantial rights test,” but did find common ownership. Specifically, the dissent noted that Immunex amended the claims after obtaining prosecution rights to claim the same protein as the Immunex-owned patents already protecting Enbrel®, and that, in the dissent’s view, the rights retained by Roche were illusory – they did not meaningfully limit Immunex’s enjoyment of the patents in suit.
Sandoz’s petition for certiorari
Sandoz, in its petition for certiorari, emphasized the centrality of the concept of one patent per invention that underlies the judicially created doctrine of obviousness-type double patenting. Critically, according to Sandoz, Immunex has already enjoyed a period of exclusivity for Enbrel® based on its own patents. Sandoz quoted amici Association for Accessible Medicines and America’s Health Insurance Plans, which argued that the Federal Circuit opinion provides a blueprint for patent holders to improperly obtain a second monopoly.
Immunex’s opposition highlighted that the Federal Circuit applied the legal standard Sandoz proffered, and Sandoz took issue only with the factual application. The grounds for certiorari were undercut by the fact that the Federal Circuit opinion is not a departure from established precedent, nor is the legal pronouncement unclear. It is a fact-bound petition, Immunex argued, that is “ill-suited for the Court’s review.” Brief in Opposition to Petition for Writ of Certiorari, Sandoz Inc. v. Immunex Corp., 2021 WL 1614843, at *2 (No. 20-1110, April 12, 2021).
Potential impact of the case
As the Federal Circuit’s decision will not be reviewed by the Supreme Court, it could have a wide-ranging impact on licensing and patent protection in the pharmaceutical field. The Federal Circuit was extremely circumspect, limiting the application of the “all substantial rights” test in obviousness-type double patenting to situations where the right to prosecute a patent was transferred so as not to upset collaboration and licensing efforts. Future litigants will likely test the bounds of the “all substantial rights” test.
As it stands, the case provides useful guidance for collaborative pharmaceutical innovators. Stakeholders should be mindful of the rights retained by each party in patent license agreements. Maintaining enforcement rights and control over alienation commensurate with the rights retained by Roche in this case will guard against triggering an obviousness-type double patenting challenge to the in-licensed patents or the licensee’s own portfolio.