Anacor loses in appeal of result of IPR decision coming from petition of Coalition for Affordable Drugs

In 2015, the Coalition for Affordable Drugs X LLC
filed a petition requesting inter partes review of all 12
claims of the ’621 patent. The Board instituted review
and found that the claims would have been obvious in
light of the combination of Int’l Pat. Appl. No.
PCT/GB95/01206 (“Austin”) and U.S. Pat. Appl. No.
10/077,521 (“Brehove”). Both Austin and Brehove teach
the use of boron heterocycles as antifungal agents that
inhibit C. albicans, among other fungi. Boron heterocy-
cles are organic compounds that contain both boron and
carbon in a ring structure.2
Austin teaches the use of oxaboroles—boron heterocycles
that include a five-member ring containing three
carbon atoms, one oxygen atom, and one boron atom—as
fungicides. Austin discloses tavaborole as one of a small
group of oxaboroles that were tested for antifungal activity
and teaches that tavaborole is a highly effective agent
that inhibits a variety of fungi, including C. albicans.



Footnote 4:


Dr. Stephen Kahl, another of the petitioner’s experts,
testified to the same effect. He stated, “I think a
[person of ordinary skill] would presume that if a compound
showed significant antifungal activity against any
of a variety of fungi, would have reasonable reason to look
at those against a specific fungus and expect some success.
. . . [F]ungi are rather simple organisms. And it’s
not unusual that a compound that . . . has antifungal
activity in one fungus, might be expected or at least
evaluated in another fungus.”




Of Anacor's arguments:



On appeal, Anacor first argues that the Board violated
due process and the procedural requirements of the
Administrative Procedure Act (“APA”) by failing to provide
Anacor with adequate notice of, and an opportunity
to respond to, the grounds of rejection ultimately adopted
by the Board.
Under the APA, a patent owner involved in an inter
partes review is entitled to notice of and a fair opportunity
to address the grounds of rejection. 5 U.S.C. §§ 554(b)–
(c), 557(c); Dell Inc. v. Acceleron, LLC, 818 F.3d 1293,
1301 (Fed. Cir. 2016). Therefore, an agency “may not
change theories in midstream without giving respondents
reasonable notice of the change and the opportunity to
present argument under the new theory.” Genzyme
Therapeutic Prod. Ltd. P’ship v. Biomarin Pharm. Inc.,
825 F.3d 1360, 1366 (Fed. Cir. 2016) (quoting Belden Inc.
v. Berk-Tek LLC, 805 F.3d 1064, 1080 (Fed. Cir. 2015)).

Anacor argues that the Board’s decision violated the
APA and due process in two related ways. First, Anacor
contends that the petitioner abandoned one prior art
reference in its reply (Brehove) and shifted to a new
theory of invalidity (relying on Austin in light of Segal
and Mertin), and that the Board adopted that new theory
without giving Anacor proper notice or an opportunity to
respond to it. Second, Anacor argues that, in bolstering
this new theory of obviousness, the petitioner impermissibly
relied on new evidence, not included in the petition, to
satisfy its burden of showing a prima facie case of obviousness.
We reject Anacor’s argument that the Board violated
the APA or due process by adopting a new theory of
obviousness not presented in the petition. Unlike in In re
NuVasive, Inc., 841 F.3d 966 (Fed. Cir. 2016), on which
Anacor relies, the Board’s final written decision was
based on the same combination of references—Austin and
Brehove—and the same series of inferences that the
petition proposed.

(...)

We also reject Anacor’s argument that the Board improperly
relied on new evidence to which Anacor did not
have an opportunity to respond. Anacor argues that the
Board improperly cited two references—Mertin and
Segal—that were not cited in the petition. There is,
however, no blanket prohibition against the introduction
of new evidence during an inter partes review proceeding.
In fact, “the introduction of new evidence in the course of
the trial is to be expected in inter partes review trial
proceedings and, as long as the opposing party is given
notice of the evidence and an opportunity to respond to it,
the introduction of such evidence is perfectly permissible
under the APA.” Genzyme, 825 F.3d at 1366; see also
Novartis AG v. Torrent Pharm. Ltd., 853 F.3d 1316, 1325–
26 (Fed. Cir. 2017) (finding no APA violation because
patent owner was not “surprised” where a reference was
discussed in patent owner’s response, in depositions, and
at the hearing, because “it is quite clear that [the patentee]
had more than sufficient notice and opportunity to be
heard on [the reference’s] potential relevance”).

In addition, the petitioner in an inter partes review
proceeding may introduce new evidence after the petition
stage if the evidence is a legitimate reply to evidence
introduced by the patent owner, or if it is used “to document
the knowledge that skilled artisans would bring to
bear in reading the prior art identified as producing
obviousness.” Genzyme, 825 F.3d at 1369 (quoting Ariosa
Diagnostics v. Verinata Health, Inc., 805 F.3d 1359, 1365
(Fed. Cir. 2015)).8
It was not improper for the Board to cite Segal and
Mertin (along with Nimura) as evidence of the knowledge
that a skilled artisan would bring to bear in reading
Austin and Brehove, even though those references were
not cited in the petition. Anacor argues that Segal, Mertin,
and Nimura “surfaced for the first time in Petitioner’s
Reply,” but that is not so. Anacor discussed both Nimura
and Segal in its patent owner’s response and related
submissions; indeed, Anacor spent three pages of its
patent owner’s response addressing Segal. For that
reason, it was not improper for the Board to rely on those
references to show what a person of skill in the art would
believe about whether a compound effective against a
yeast such as C. albicans would be likely to be effective
against a dermatophyte.


Also



Anacor next argues that the Board improperly shifted
the burden of proof by requiring the patent owner to
disprove obviousness. Relying on In re Magnum Oil Tools
International, Ltd., 829 F.3d 1364 (Fed. Cir. 2016), Anacor
contends that the record provides no basis to conclude
that tavaborole’s activity against dermatophytes would be
expected and that, in adopting the petitioner’s position
without supporting evidence, the Board necessarily shifted
the burden of proof to Anacor.
Unlike in In re Magnum, nothing in the Board’s final
written decision suggests that the Board improperly
shifted the burden to the patent owner to disprove obviousness.
To the contrary, the Board expressly and repeatedly
stated that it was the petitioner’s burden to
“show[] by a preponderance of the evidence that claims 1–
12 of the ’521 patent are unpatentable.” Final Written
Decision, at 3; see also id. at 9, 10, 18, 22, 23, 37, 42

Notwithstanding those statements, Anacor argues
that the Board effectively shifted the burden of proof to
the patent owner because the Board’s conclusions rested
not on the petitioner’s presentation of evidence in support
of an argument, but rather on whether Anacor had sufficiently
disproved that argument. In particular, Anacor
contends that the Board failed to require proof from the
petitioner as to the mechanism of action that would lead
to the conclusion that tavaborole would kill both C. albicans
and dermatophytes, and that the Board did not
explain why the evidence that dermatophytes are usually
more sensitive than yeasts to antimycotics applies to
tavaborole.
In substance, Anacor’s argument is not that the Board
shifted the burden of proof to Anacor, but that the Board
improperly relaxed the burden on the petitioner to prove
its case. That argument, however, does not suggest that
the Board shifted the burden of proof to Anacor, but
instead is directed to the question whether there was
substantial evidence to support the Board’s finding of
obviousness.