Saturday, May 12, 2018

Altaire wins on evidentiary issues at CAFC; a split vote on standing, and injury-in-fact

The case is nominally an appeal of a PTAB decision:

Appellant Altaire Pharmaceuticals, Inc. (“Altaire”)
sought post-grant review of claims 1–13 (“the Asserted
Claims”) of Appellee Paragon Bioteck, Inc.’s (“Paragon”)
U.S. Patent No. 8,859,623 (“the ’623 patent”). The U.S.
Patent and Trademark Office’s Patent Trial and Appeal
Board (“PTAB”) issued a final written decision determining
that Altaire failed to prove that the Asserted Claims
were unpatentable for obviousness over two production
lots of Altaire’s phenylephrine hydrochloride ophthalmic
solution products, Lots #11578 and #11581,

There is much more going on here; from the dissent:

The undisputed facts are these: In 2011, Altaire and
Paragon entered into an agreement to pursue U.S. Food
and Drug Administration (“FDA”) approval for Altaire’s
phenylephrine hydrochloride products (the “Agreement”).
By its terms, the Agreement terminates on May 30, 2021.
See Joint Appendix (“J.A.”) 1909. Subsequently, a dispute
arose between the parties, which apparently led Altaire to
file two lawsuits in federal court in the Eastern District of
New York. In the first suit, Altaire Pharmaceuticals, Inc.
v. Paragon BioTeck, Inc., Case No. 2:15-cv-02416
(E.D.N.Y.) (“the breach of contract suit”), Altaire alleges
that Paragon breached the Agreement by, among other
things, disclosing Altaire’s confidential and proprietary
product information in its patent application and in its
resulting U.S. Patent No. 8,859,623 (“the ’623 patent”).
See Complaint and Jury Demand at 7 (No. 2:15-cv-02416)
(E.D.N.Y. April 28, 2015). P

BUT the issues decided are evidentiary in nature.

There was an initial standing issue, which was a basis for the dissent
opinion; the majority noted:

We recently “established the legal standard for
demonstrating standing in an appeal from a final agency
action,” including “the burden of production[,] the evidence
an appellant must produce to meet that burden[,]
and when an appellant must produce that evidence.”
Phigenix, Inc. v. Immunogen, Inc., 845 F.3d 1168, 1172
(Fed. Cir. 2017) (footnote omitted). We explained that
“[a]n appellant’s obligation to establish injury in fact
remains firm even though it need not meet all the normal
standards for redressability and immediacy when, as
here, a statute provides that appellant with a right to
appeal.” Id. at 1172 n.2 (internal quotation marks and
citation omitted); see 35 U.S.C. § 141(c).


While we recognize that “[a] claim is not ripe for adjudication
if it rests upon contingent future events that may
not occur as anticipated, or indeed may not occur at all,”
Texas v. United States, 523 U.S. 296, 300 (1998) (internal
quotation marks and citation omitted), we conclude that,
under these circumstances, Altaire’s injury is inevitable.
Therefore, Altaire has satisfied its burden of production
by producing sufficient evidence that the threat of infringement
litigation is an injury that is “real” and “imminent.”
Prasco, 537 F.3d at 1339.

Having determined that Altaire faces imminent injury,
we next must determine whether that injury is concrete
and particularized. See Spokeo, 136 S. Ct. at 1548
(“Particularization is necessary to establish injury in
fact . . . .”); id. (“Concreteness . . . is quite different from

Graver Tank is cited:

First, § 42.65(b) does not require that the affidavit
corroborating the technical test or data be submitted by
an expert. Cf. Graver Tank & Mfg. Co. v. Linde Air
Prods. Co., 339 U.S. 605, 609 (1950) (stating that, in the
context of the doctrine of equivalents, “[p]roof can be
made in any form,” including “through testimony of
experts or others versed in the technology” (emphasis

Of evidentiary issues:

Although the PTAB “has broad discretion to regulate
the presentation of evidence,” Belden, 805 F.3d at 1081,
that discretion is not without limits, see Ultratec, Inc. v.
CaptionCall, LLC, 872 F.3d 1267, 1274 (Fed. Cir. 2017)
(stating that “[t]he agency does not have unfettered
discretion in [evidentiary] matters”). The PTAB’s decision
to assign no weight to Mr. Al Sawaya’s testimony was an
abuse of discretion. See id. at 1275 (holding that the
PTAB “abused its discretion when it refused to admit and
consider . . . trial testimony”); cf. Aqua Prods., Inc. v.
Matal, 872 F.3d 1290, 1325 (Fed. Cir. 2017) (en banc)
(plurality opinion) (“[A]n agency’s refusal to consider
evidence bearing on the issue before it is, by definition,
arbitrary and capricious within the meaning of 5 U.S.C.
§ 706, which governs review of agency adjudications.
That means that the agency must take account of all the
evidence of record, including that which detracts from the
conclusion the agency ultimately reaches.” (citations
On remand, the PTAB must consider Mr. Al Sawaya’s testimony when
evaluating the reliability of the TMQC-247 and optical
rotation test data.

As to evidence in a reply:

After Paragon unexpectedly challenged Altaire’s
TMQC-247 test data for failure to comply with § 42.65(b)
in its Patent Owner Response, see J.A. 1112–15, Altaire
submitted its Reply, appending additional information on
the TMQC-247 test, see J.A. 1418–25, 1505–606. This
included Exhibits 1027 and 1028. See J.A. 1505–32.
Similar to the Second Al Sawaya Declaration, Altaire
properly “respond[ed] to [those] arguments raised in
[Paragon’s Patent Owner R]esponse” by submitting additional
evidence demonstrating the reliability of the
TMQC-247 testing method. 37 C.F.R. § 42.23(b); see 5
U.S.C. § 556(d); see also Belden, 805 F.3d at 1078. To the
extent Paragon wished to contest this additional evidence,
the PTAB could have permitted Paragon to file a surreply.
See Belden, 805 at 1081.
In light of Paragon’s past reliance on the TMQC-247
test data, we conclude that the PTAB abused its discretion
by “refus[ing] to consider evidence” regarding the
reliability of the TMQC-247 testing method. Aqua, 872
F.3d at 1325 (citation omitted); see Ultratec, 872 F.3d at
1275. On remand, the PTAB shall consider all relevant
TMQC-247 information in determining whether Altaire
satisfied the requirements of § 42.65(b) and, if it did,
whether the TMQC-247 test data render obvious the
Asserted Claims.

Some odd arguments:

Finally, regarding the optical rotation test, the PTAB
determined that Paragon “presented sufficient evidence to
challenge the accuracy of estimating enantiomer purity
based on the specific rotation,” such that it “[was] not
persuaded that [Altaire]’s optical-rotation data amount to
a preponderance of the evidence to show that Altaire’s
[p]roduct[s] meet[] the chiral-purity limitations of the
[Asserted C]laims.”
J.A. 19, 20. As with the TMQC-247
test data, Paragon relied upon this optical rotation test
data before the FDA. See J.A. 783–91. Indeed, the ’623
patent itself recognizes that the optical rotation test can
be used to determine chiral purity.
See ’623 patent col. 4
ll. 33–34.

Nevertheless, the PTAB rejected the data, stating
that, “for the optical rotation data, as for the [TMQC-247]
data, [Altaire] has not provided any affidavit in compliance
with . . . § 42.65(b).” J.A. 19. However, as explained
above, see supra Section II.B–C, the PTAB abused its
discretion by refusing to consider Mr. Al Sawaya’s testimony
and the additional information on the TMQC-247
test data. To the extent the PTAB’s decision to reject as
unpersuasive the optical rotation test data rested upon
these erroneous determinations, the PTAB must reconsider
the reliability of the optical rotation test data pursuant
to § 42.65(b) on remand.

The dissent as to standing:

I start from the premise that the standing issue in
this case turns entirely on the pending litigation in the
Eastern District of New York. I say that because, although
both Altaire and the majority point to the Agreement’s
2021 termination date, Appellant’s Br. 47–48,
Majority Op. at 12, I am unable to see how the fact that
the Agreement is scheduled to terminate in 2021 supports
standing at this point. Put most simply, what we have is
a situation in which the parties to a contract that is due to
terminate in approximately three years are in a dispute.
At the same time, in view of the terms of the Agreement,
Altaire cannot infringe the ’623 patent while the Agreement
is in effect. These circumstances, it seems to me,
come nowhere near providing Altaire with grounds for
claiming that it is subject to imminent harm. Timing is
important for a showing of imminence, or immediacy.

The longer the time between when suit is initiated and
when potential infringement may occur, “the more likely
the case lacks the requisite immediacy.” Sierra Applied
Scis., Inc. v. Advanced Energy Indus., Inc., 363 F.3d 1361,
1379 (Fed. Cir. 2004).

***In passing, this is a case about enantiomers.


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