Celgene Corporation v. Peter

United States Court of Appeals
for the Federal Circuit
______________________
CELGENE CORPORATION,
Appellant
v.
LAURA A. PETER, DEPUTY UNDER SECRETARY
OF COMMERCE FOR INTELLECTUAL PROPERTY
AND DEPUTY DIRECTOR OF THE UNITED
STATES PATENT AND TRADEMARK OFFICE,
Intervenor
______________________
2018-1167, 2018-1168, 2018-1169
______________________
Appeals from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in Nos. IPR2015-
01096, IPR2015-01102, IPR2015-01103.
--------------------------------------------------
CELGENE CORPORATION,
Appellant
v.
LAURA A. PETER, DEPUTY UNDER SECRETARY
OF COMMERCE FOR INTELLECTUAL PROPERTY
AND DEPUTY DIRECTOR OF THE UNITED
STATES PATENT AND TRADEMARK OFFICE,
Intervenor
______________________
2 CELGENE CORPORATION v. PETER
2018-1171
______________________
Appeal from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in No. IPR2015-
01092.
______________________
Decided: July 30, 2019
______________________
GREGORY A. CASTANIAS, Jones Day, Washington, DC,
argued for appellant. Also represented by JIHONG LOU,
JENNIFER LORAINE SWIZE; GASPER LAROSA, New York, NY;
ANTHONY INSOGNA, San Diego, CA; FRANK CHARLES
CALVOSA, F. DOMINIC CERRITO, ANDREW CHALSON, Quinn
Emanuel Urquhart & Sullivan, LLP, New York, NY.
AMY J. NELSON, Office of the Solicitor, United States
Patent and Trademark Office, Alexandria, VA, argued for
intervenor. Also represented by MEREDITH HOPE
SCHOENFELD, THOMAS W. KRAUSE. Also argued by
KATHERINE TWOMEY ALLEN, Appellate Staff, Civil Division,
United States Department of Justice, Washington, DC.
Also represented by MARK R. FREEMAN, SCOTT R.
MCINTOSH, JOSEPH H. HUNT.
______________________
Before PROST, Chief Judge, BRYSON and REYNA,
Circuit Judges.
PROST, Chief Judge.
The Coalition for Affordable Drugs VI LLC (“CFAD”)
filed a petition for inter partes review (“IPR”) challenging
the validity of all of the claims of U.S. Patent No. 6,045,501(“the ’501 patent”) and three petitions for IPR challenging
the validity of all of the claims of U.S. Patent No. 6,315,720(“the ’720 patent”). The Patent Trial and Appeal Board
CELGENE CORPORATION v. PETER 3
(“Board”) determined that all of the claims of the ’501
patent and claims 1–9 and 11–32 of the ’720 patent were
obvious. Celgene Corporation (“Celgene”) appeals the
Board’s decisions.
For the reasons explained below, we affirm the Board’s
decisions finding the appealed claims obvious. We also
hold that the retroactive application of IPR proceedings to
pre-AIA patents is not an unconstitutional taking under
the Fifth Amendment.
I
A
A teratogen is an agent known to disturb the
development of an embryo or fetus. Teratogenic drugs can
cause birth defects or other abnormalities following fetal
exposure during pregnancy. One example of a teratogenic
drug is thalidomide. Thalidomide, first synthesized in
1957, was originally marketed for use as a sedative in
many countries, not including the United States. See ’501
patent col. 1 ll. 19–22. Following reports of serious birth
defects, thalidomide was withdrawn from all markets by
1962. Id. at col. 1 ll. 22–24. Despite these teratogenic
effects, thalidomide has proven to be effective in treating
other conditions. See id. at col. 1 ll. 24–35. The ’501 patent
and the ’720 patent are generally directed to methods for
safely distributing teratogenic or other potentially
hazardous drugs while avoiding exposure to a fetus to
avoid adverse side effects of the drug.
B
In order to obtain FDA approval to sell and distribute
thalidomide, Celgene developed a system to safely
distribute thalidomide to patients, which it called the
System for Thalidomide Education and Prescription Safety
(“Original S.T.E.P.S.”). Appeal No. 18-1171, Appellant’s
Br. 8–9. According to Celgene, the ’501 patent is directed
to its Original S.T.E.P.S. program. See id. at 10.
4 CELGENE CORPORATION v. PETER
Celgene’s ’501 patent relates to “methods for delivering
a drug to a patient while preventing the exposure of a
foetus or other contraindicated individual to the drug.”
’501 patent at Abstract. Claim 1 is representative and
states:
1. A method for delivering a teratogenic drug to
patients in need of the drug while avoiding the
delivery of said drug to a foetus comprising:
a. registering in a computer readable storage
medium prescribers who are qualified to
prescribe said drug;
b. registering in said medium pharmacies to fill
prescriptions for said drug;
c. registering said patients in said medium,
including information concerning the ability of
female patients to become pregnant and the
ability of male patients to impregnate females;
d. retrieving from said medium information
identifying a subpopulation of said female
patients who are capable of becoming pregnant
and male patients who are capable of
impregnating females;
e. providing to the subpopulation, counseling
information concerning the risks attendant to
fetal exposure to said drug;
f. determining whether patients comprising
said subpopulation are pregnant; and
g. in response to a determination of non-
pregnancy for said patients, authorizing said
registered pharmacies to fill prescriptions from
said registered prescribers for said non-
pregnant registered patients.
CELGENE CORPORATION v. PETER 5
Id. at claim 1. Claim 2 recites “[t]he method of claim 1
wherein said drug is thalidomide.” The remaining claims
depend from claim 1 and are not limited to thalidomide.
CFAD filed a petition for IPR challenging all ten claims
of the ’501 patent. The Board instituted review of claims
1–10 on a single ground—obviousness based on Powell, 1
Mitchell, 2 and Dishman. 3 Coalition for Affordable Drugs
VI LLC v. Celgene Corp., No. IPR2015-01092, Paper 20
(P.T.A.B. Oct. 27, 2015).
In its final written decision, the Board held that CFAD
had shown by a preponderance of the evidence that claims
1–10 of the ’501 patent are unpatentable as obvious over
the combination of Powell, Mitchell, and Dishman.
Coalition for Affordable Drugs VI LLC v. Celgene Corp., No.
IPR2015-01092, Paper 73, at 33 (P.T.A.B. Oct. 26, 2016)
(“’501 Final Written Decision”). The Board denied
Celgene’s request for rehearing.
C
In the interim, Celgene “overhaul[ed]” its Original
S.T.E.P.S. program to create what it called an “Enhanced
S.T.E.P.S.” program. Appeal No. 18-1167, Appellant’s Br.
1 R.J. Powell & J.M.M. Gardner-Medwin, Guideline
for the Clinical Use and Dispensing of Thalidomide, 70
Postgrad Med. J. 901–904 (1994) (Appeal No. 18-1171, J.A.
324–25).
2 Allen A. Mitchell et al., A Pregnancy-Prevention
Program in Women of Childbearing Age Receiving
Isotretinoin, 333:2 New Eng. J. Med. 101–06 (July 13, 1995)
(Appeal No. 18-1171, J.A. 328–33).
3 Benjamin R. Dishman et al., Pharmacists’ Role in
Clozapine Therapy at a Veterans Affairs Medical Center, 51
Am. J. Hosp. Pharm. 899–901 (Apr. 1, 1994) (Appeal No.
18-1171, J.A. 334–36).
6 CELGENE CORPORATION v. PETER
8–9. According to Celgene, the ’720 patent is directed to its
Enhanced S.T.E.P.S. program. See id. at 10.
Celgene’s ’720 patent relates to “[i]mproved methods
for delivering to a patient in need of the drug, while
avoiding the occurrence of an adverse side effect known or
suspected of being caused by the drug.” ’720 patent at
Abstract. Claim 1, written in Jepson format, states:
1. In a method for delivering a drug to a patient in
need of the drug, while avoiding the occurrence of
an adverse side effect known or suspected of being
caused by said drug, wherein said method is of the
type in which prescriptions for said drug are filled
only after a computer readable storage medium has
been consulted to assure that the prescriber is
registered in said medium and qualified to
prescribe said drug, that the pharmacy is
registered in said medium and qualified to fill the
prescription for said drug, and the patient is
registered in said medium and approved to receive
said drug, the improvement comprising:
a. defining a plurality of patient risk groups
based upon a predefined set of risk parameters
for said drug;
b. defining a set of information to be obtained
from said patient, which information is
probative of the risk that said adverse side
effect is likely to occur if said drug is taken by
said patient;
c. in response to said information set, assigning
said patient to at least one of said risk groups
and entering said risk group assignment in
said medium;
d. based upon said information and said risk
group assignment, determining whether the
CELGENE CORPORATION v. PETER 7
risk that said adverse side effect is likely to
occur is acceptable; and
e. upon a determination that said risk is
acceptable, generating a prescription approval
code to be retrieved by said pharmacy before
said prescription is filled.
CFAD filed three petitions for IPR, each challenging all
32 claims of the ’720 patent. The Board instituted review
of claims 1–32 in all three cases. In the first IPR, the Board
instituted review based on obviousness over the Thalomid
Package Insert, 4 Cunningham, 5 Zeldis, 6 and other prior
art. Coalition for Affordable Drugs VI, LLC v. Celgene
Corp., No. IPR2015-01096, Paper 21 (P.T.A.B. Oct. 27,
2015). In the second IPR, the Board instituted review
based on obviousness over Powell and Dishman, in view of
Cunningham, and further in view of Mann 7 and other prior
art. Coalition for Affordable Drugs VI, LLC v. Celgene
Corp., No. IPR2015-01102, Paper 21 (P.T.A.B. Oct. 27,
2015). In the third IPR, the Board instituted review based
on obviousness over the same references as the second IPR
but using Mitchell instead of Powell as the base reference.
4 ThalomidTM (Thalidomide) Capsules Revised
Package Insert (July 15, 1998) (Appeal No. 18-1167, J.A.
411–32).
5 U.S. Patent No. 5,832,449 (Appeal No. 18-1167,
J.A. 440–62).
6 Jerome B. Zeldis et al., S.T.E.P.S.TM: A
Comprehensive Program for Controlling and Monitoring
Access to Thalidomide, Clinical Therapeutics® 21:2, 319–
30 (1999) (Appeal No. 18-1167, J.A. 491–502).
7 Thaddeus Mann & Cecelia Lutwak-Mann, Passage
of Chemicals into Human and Animal Semen: Mechanisms
and Significance, 11:1 CRC Critical Reviews in Toxicology
1, 1–14 (1982) (Appeal No. 18-1167, J.A. 8237–52).
8 CELGENE CORPORATION v. PETER
Coalition for Affordable Drugs VI, LLC v. Celgene Corp.,
No. IPR2015-01103, Paper 22 (P.T.A.B. Oct. 27, 2015).
In each of its final written decisions, the Board held
that CFAD had shown by a preponderance of the evidence
that claims 1–32 of the ’720 patent were unpatentable as
obvious over the instituted ground. Coalition for
Affordable Drugs VI, LLC v. Celgene Corp., No. IPR2015-
01096, Paper 73 (P.T.A.B. Oct. 26, 2016) (“-01096 Final
Written Decision”); Coalition for Affordable Drugs VI, LLC
v. Celgene Corp., No. IPR2015-01102, Paper 75 (P.T.A.B.
Oct. 26, 2016) (“-01102 Final Written Decision”); Coalition
for Affordable Drugs VI, LLC v. Celgene Corp., No.
IPR2015-01103, Paper 76 (P.T.A.B. Oct. 26, 2016) (“-01103
Final Written Decision”). Following Celgene’s request for
rehearing, the Board modified its final written decisions to
uphold the patentability of claim 10 because CFAD failed
to prove that claim obvious by a preponderance of the
evidence.
D
Celgene timely appealed all four IPRs. We
consolidated the appeals from the three IPRs on the ’720
patent (Appeal Nos. 18-1167, 18-1168, 18-1169) and
designated the appeal from the IPR on the ’501 patent
(Appeal No. 18-1171) as a companion case. CFAD did not
participate in these appeals. The Director of the United
States Patent and Trademark Office (“PTO”) intervened
pursuant to 35 U.S.C. § 143.
We have jurisdiction over these appeals pursuant to
28 U.S.C. § 1295(a)(4)(A).
II
On appeal, Celgene argues that the Board erred in
finding all claims of the ’501 patent and claims 1–9 and 11–
32 of the ’720 patent obvious. Celgene also argues that the
retroactive application of IPRs to patents filed before
September 16, 2012, when the relevant provisions of the
CELGENE CORPORATION v. PETER 9
Leahy-Smith America Invents Act went into effect (“pre-
AIA patents”), is an unconstitutional taking. We begin by
addressing the merits of these appeals. Then, because we
affirm the Board’s obviousness determinations, we turn to
the constitutional challenge.
A
1
Obviousness is a question of law based on underlying
factual determinations. Belden Inc. v. Berk-Tek LLC, 805
F.3d 1064, 1073 (Fed. Cir. 2015). We review the Board’s
ultimate obviousness determination de novo and
underlying factual findings for substantial evidence.
Harmonic Inc. v. Avid Tech., Inc., 815 F.3d 1356, 1363 (Fed.
Cir. 2016). Substantial evidence is “more than a mere
scintilla” and means “‘such relevant evidence as a
reasonable mind might accept as adequate to support a
conclusion.’” Biestek v. Berryhill, 139 S. Ct. 1148, 1154
(2019) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197,
229 (1938)).
We review the Board’s determination of the broadest
reasonable interpretation of the claim language de novo.
Straight Path IP Grp., Inc. v. Sipnet EU S.R.O., 806 F.3d
1356, 1360 (Fed. Cir. 2015). 8
8 We note that the PTO has since changed the claim
construction standard used in IPR proceedings. See 37
C.F.R. § 42.100(b); Changes to the Claim Construction
Standard for Interpreting Claims in Trial Proceedings
Before the Patent Trial and Appeal Board, 83 Fed. Reg.
51,340 (Oct. 11, 2018) (to be codified at 37 C.F.R. pt. 42).
The new standard applies only to petitions filed on or after
November 13, 2018, and therefore does not impact these
cases. In these IPRs, the claims were to be construed using
the broadest reasonable interpretation in light of the
10 CELGENE CORPORATION v. PETER
2
We begin with the ’501 patent. Celgene seeks reversal,
or at least vacatur and remand, of the Board’s
determination that CFAD established by a preponderance
of the evidence that claims 1–10 would have been obvious
over the combination of Powell, Mitchell, and Dishman.
The Board relied on Powell’s teachings of the clinical use
and dispensing of thalidomide; Mitchell’s description of a
pregnancy-prevention program for women users of
Accutane, another teratogenic drug; and Dishman’s
disclosure of a registry for pharmacies, prescribers, and
users of clozapine, an anti-psychotic drug with serious
potential side effects. ’501 Final Written Decision at 13.
The Board determined that a person of ordinary skill in the
art would have been motivated to combine Powell,
Mitchell, and Dishman “to address the problem of limiting
thalidomide access to patients likely to suffer serious
adverse side effects, including birth defects in a developing
fetus.” Id. at 24.
On appeal, Celgene challenges three aspects of the
Board’s obviousness determination: (1) its finding that the
prior art satisfies the “computer readable storage medium,”
limitation, which rises and falls with a claim construction
argument; (2) its finding that it would have been obvious
to counsel male patients about the risks of teratogenic
drugs; and (3) its findings on secondary considerations. We
address each in turn.
a
Before the Board, Celgene argued that the term
“computer readable storage medium” in claim 1 requires a
centralized computer readable storage medium, namely “a
centralized database that includes all registration
specification. Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct.
2131, 2146 (2016).
CELGENE CORPORATION v. PETER 11
information regarding the claimed prescribers,
pharmacies, and patients.” ’501 Final Written Decision at
9–10. The Board considered Celgene’s proffered
construction and rejected its argument that the computer
readable storage medium of claim 1 must be centralized.
Id. at 10–11. First, the Board noted that the term
“centralized” does not appear in claim 1. Id. at 10. In
addition, the Board found that the specification does not
require that all registration information be centralized in
one database. Id. (“‘The computer readable storage
medium in which the pharmacies are registered may be the
same as, or different from the computer readable storage
medium in which the prescribers are registered.’” (quoting
’501 patent col. 4 ll. 54–57)). Finally, the Board considered
and rejected Celgene’s prosecution history and extrinsic
evidence arguments. See id. at 10–11.
On appeal, Celgene again argues that the claims
require a centralized computer readable storage medium.
Appeal No. 18-1171, Appellant’s Br. 31–36. According to
Celgene, the claims’ use of the term “said medium”
referring back to “a computer readable storage medium”
indicates that it must be a single, centralized computer
readable storage medium. Id. at 32. But, as the PTO
points out, the use of “a” or “an” in an open-ended
“comprising” claim connotes “one or more.” Appeal No. 18-
1171, Intervenor’s Br. 26–27; Baldwin Graphic Sys., Inc. v.
Siebert, Inc., 512 F.3d 1338, 1342 (Fed. Cir. 2008). And
“[t]he subsequent use of definite articles ‘the’ or ‘said’ in a
claim to refer back to the same claim term does not change
the general plural rule, but simply reinvokes that non-
singular meaning.” Baldwin, 512 F.3d at 1342. Exceptions
to the general rule that “a” or “an” means more than one
arise only when “the language of the claims themselves, the
specification, or the prosecution history necessitate a
departure from the rule.” See id. at 1342–43.
Neither the claims themselves, the specification, nor
the prosecution history necessitate such a departure.
12 CELGENE CORPORATION v. PETER
See ’501 Final Written Decision at 10–11. The claims recite
“a computer readable storage medium” and do not specify
that it is centralized. The specification does not require
that the computer readable storage medium be centralized.
In fact, the specification envisions that there may be
multiple, distinct computer readable storage media, i.e.,
separate media for prescribers, pharmacies, and patients.
See ’501 patent at col. 4 ll. 54–57, col. 10 ll. 13–17.
Further, we are not persuaded by Celgene’s argument
that the prosecution history disclaimed a non-centralized
computer readable storage medium. See Appeal No. 18-
1171, Appellant’s Br. 33–34. We agree with the PTO that
the better reading of the prosecution history is that
Celgene distinguished the claimed invention from the prior
art on the basis that the invention uses a computer
readable storage medium while the prior art used the
Internet. See Appeal No. 18-1171, Intervenor’s Br. 31–33.
Finally, because the intrinsic evidence does not require
a centralized computer readable storage medium, the
Board was correct to not allow the extrinsic evidence,
including expert testimony, to “trump the persuasive
intrinsic evidence in this case.” ’501 Final Written Decision
at 10. Under the broadest reasonable interpretation, the
Board was therefore correct in determining that claim 1
was not limited to a centralized computer readable storage
medium.
Based on the Board’s finding that the computer
readable storage medium recited in claim 1 need not be
centralized, the Board found that Dishman’s
“computerized lockout system” satisfied the claim
limitation. Id. at 18–20. Celgene concedes that Dishman
teaches a decentralized storage medium and does not
dispute that Dishman satisfies this limitation under the
Board’s construction. See Appeal No. 18-1171, Appellant’s
Br. 37. Because Celgene’s challenge relies entirely on its
CELGENE CORPORATION v. PETER 13
proposed claim construction and we affirm the Board’s
construction, Celgene’s challenge must fail. 9
For these reasons, Celgene’s arguments on the
“computer readable storage medium” limitation are
unpersuasive and are not grounds for reversal or vacatur
and remand.
b
Claim 1 of the ’501 patent requires providing “male
patients who are capable of impregnating females” with
“counseling information concerning the risks attendant to
fetal exposure to said drug.” Celgene argues that
counseling male patients about the risks of fetal exposure
to the drug upon or after fertilization would not have been
obvious. Appeal No. 18-1171, Appellant’s Br. 25–31.
In finding this limitation obvious, the Board relied on
CFAD’s expert Dr. Jeffrey Fudin’s opinion that at the time
of the alleged invention, “the sperm of male patients could
be damaged by teratogenic drugs and consequently result
in birth defects, if the male was to impregnate a female.”
’501 Final Written Decision at 15–16. For support, Dr.
Fudin relied on the Mann study, which showed that
thalidomide had negative effects on the sperm of male
rabbits and the fetuses resulting from mating with female
rabbits. See id. at 15–17.
The Board evaluated Dr. Fudin’s opinion and the
supporting Mann study and credited his testimony that a
person of ordinary skill in the art would have “understood
9 Even under Celgene’s claim construction, the
Board determined that its ultimate determination on
obviousness would not change. ’501 Final Written Decision
at 11, 20. Specifically, the Board held, in the alternative,
that using a centralized database would have been obvious.
See id. at 20.
14 CELGENE CORPORATION v. PETER
the necessity of counseling males, capable of impregnating
females, about the risks that attend fetal exposure to a
teratogenic drug.” Id. at 16–17. The Board acknowledged
that Powell stated that “[n]o effects on male sperm are
recognized,” but found that statement alone insufficient to
defeat Dr. Fudin’s testimony that an ordinarily skilled
artisan would have recognized that sperm of male patients
treated with teratogenic drugs could lead to birth defects
in fetuses. Id. at 17.
On appeal, Celgene primarily disputes the Board’s
reading of Powell, specifically the statement that “[n]o
effects on male sperm are recognized.” See Appeal No. 18-
1171, Appellant’s Br. 26–29. The Board found that, when
read in context, this statement in Powell refers to the
contraceptive effects thalidomide has on male sperm, not
the teratogenic effects thalidomide has on male sperm. See
’501 Final Written Decision at 17. Celgene argues that
“[n]o reasonable fact finder could possibly read” this
sentence in Powell “as referring to the contraceptive effects
of thalidomide.” Appeal No. 18-1171, Appellant’s Br. 27.
But, the Board’s decision on this limitation relied on Dr.
Fudin’s opinion, supported by Mann, as described above.
Celgene’s main challenge to Dr. Fudin’s opinion and his
reliance on Mann was that the Mann study was conducted
on male rabbits rather than human men. Appeal No. 18-
1171, Appellant’s Br. 30–31, Reply Br. 7–8. The Board
considered and rejected this argument. See ’501 Final
Written Decision at 17 (noting that Celgene previously
admitted that studies related to rabbit sperm were
relevant to evaluating the effects of thalidomide on human
sperm). Substantial evidence supports the Board’s
ultimate determination, based on Dr. Fudin’s opinion as
supported by Mann, that it would have been obvious in
light of the prior art to counsel male patients about the
risks of fetal exposure to the drug.
CELGENE CORPORATION v. PETER 15
c
Finally, Celgene challenges the Board’s determination
that Celgene’s evidence of objective indicia of non-
obviousness was unpersuasive. The Board considered and
weighed Celgene’s evidence of long-felt but unmet need,
industry praise, and unexpected results. Substantial
evidence supports the Board’s conclusions on each of these
secondary considerations and its conclusion that they do
not outweigh the showing of obviousness.
The Board found that Celgene failed to establish a
long-felt but unsolved need because it did not show that the
prior art methods of controlling the distribution of
hazardous drugs—including Mitchell and Dishman—were
insufficient to meet any need to control distribution of
thalidomide. ’501 Final Written Decision at 28. The Board
acknowledged Celgene’s evidence of industry praise and
gave it weight. See id. The Board also considered Celgene’s
evidence of unexpected results but ultimately gave it “little
weight” because the Board was not persuaded that the
results obtained by combining the features of the prior art
drug distribution programs to control distribution of
thalidomide would have been truly unexpected. See id. at
28–29. The Board concluded that the evidence of secondary
considerations did not outweigh the strong showing of
obviousness. See id. at 29.
On appeal, Celgene challenges the Board’s findings on
unexpected results and long-felt need. Appeal No. 18-1171,
Appellant’s Br. 38–41, Reply Br. 16–23. On unexpected
results, Celgene faults the Board’s decision to give its
evidence “little weight” and argues that it should have been
given “significant, if not dispositive weight.” Appeal No.
18-1171, Appellant’s Br. 39–40. However, substantial
evidence supports the Board’s assessment and weighing of
this evidence, and we decline to reweigh the evidence on
appeal. See In re NTP, Inc., 654 F.3d 1279, 1292 (Fed. Cir.
2011) (“This court does not reweigh evidence on appeal, but
16 CELGENE CORPORATION v. PETER
rather determines whether substantial evidence supports
the Board’s fact findings.”); Regents of the Univ. of Cal. v.
Broad Inst., Inc., 903 F.3d 1286, 1294 (Fed. Cir. 2018) (“We
do not reweigh the evidence. It is not our role to ask
whether substantial evidence supports fact-findings not
made by the Board, but instead whether such evidence
supports the findings that were in fact made.”).
On long-felt need, Celgene identifies what it contends
is an “inconsisten[cy]” between the Board’s determination
in this IPR on the ’501 patent and the IPRs on the ’720
patent. Appeal No. 18-1171, Reply Br. 22–23. In this case,
the Board found no long-felt but unmet need for a better
system to distribute potentially hazardous drugs like
thalidomide in part because existing systems were
available and adequate. ’501 Final Written Decision at 28.
As explained below, in the IPRs on the ’720 patent, the
Board found that there was a motivation to improve
existing distribution systems for potentially hazardous
drugs because of the severity of the possible adverse effects.
See, e.g., -01096 Final Written Decision at 22–23.
Contrary to Celgene’s assertion, this tension is not
irreconcilable. The fact that there is no long-felt, unmet
need does not necessarily mean that there is no motivation
to improve a system. See Spectrum Pharm., Inc. v. Sandoz
Inc., 802 F.3d 1326, 1336 (Fed. Cir. 2015) (upholding
district court’s finding that “despite the motivation . . .
there was not a long-felt but unmet need”). In fact, Celgene
stated that it was “committed to making the S.T.E.P.S.
program succeed and will make any modifications to the
program that are necessary to ensure its effectiveness.”
See Appeal No. 18-1167, J.A. 501. Especially in this
context involving safety, we see no conflict between finding
a motivation to improve the safety of existing systems even
though the existing systems were mostly successful. We
conclude that substantial evidence supports the Board’s
assessment of Celgene’s evidence of long-felt, unresolved
need.
CELGENE CORPORATION v. PETER 17
Finally, we see no error in the Board’s ultimate
determination of obviousness. Before concluding that the
claims would have been obvious, the Board weighed the
“strong showing of obviousness” against the “appropriate
weight” given to evidence of industry praise and the “little
weight” given to evidence of unexpected results. ’501 Final
Written Decision at 28–29.
We therefore affirm the Board’s holding that claims 1–
10 of the ’501 patent are unpatentable as obvious over the
asserted prior art.
3
Turning to the ’720 patent, Celgene seeks reversal, or
at least vacatur and remand, of the Board’s determinations
that CFAD established by a preponderance of the evidence
that claims 1–9 and 11–32 would have been obvious over
the prior art. The Board’s analysis relevant to this appeal
was nearly identical across all three proceedings. See -
01096 Final Written Decision at 15–26; -01102 Final
Written Decision at 16–27; -01103 Final Written Decision
at 16–27; see also Appeal No. 18-1167, Appellant’s Br. 27,
Intervenor’s Br. 26.
On motivation, the Board determined that a person of
ordinary skill in the art would have been motivated to
improve the existing distribution methods of potentially
hazardous drugs because “where significant safety risks
exist with a drug, one would continuously search for safer
ways to control the distribution of the drug.” -01096 Final
Written Decision at 22–23; -01102 Final Written Decision
at 24–25; -01103 Final Written Decision at 24–25.
The Board construed the claim term “prescription
approval code” and adopted Celgene’s proposed
construction: “[A] code representing that an affirmative
risk assessment has been made based upon risk-group
assignment and the information collected from the patient,
and that is generated only upon a determination that the
18 CELGENE CORPORATION v. PETER
risk of a side effect occurring is acceptable.” -01096 Final
Written Decision at 12–13; -01102 Final Written Decision
at 13; -01103 Final Written Decision at 13.
The Board then considered whether the prior art
taught the following disputed limitation: “upon a
determination that said risk is acceptable, generating a
prescription approval code to be retrieved by said
pharmacy before said prescription is filled.” The Board
determined that it would have been obvious to a person of
ordinary skill in the art because they would have
appreciated that Cunningham’s approval code, used to
track and manage trial pharmaceutical products, could
likewise be used by prescribers and pharmacies to track
and manage prescription pharmaceutical products. -01096
Final Written Decision at 24; -01102 Final Written Decision
at 26; -01103 Final Written Decision at 26. The Board
concluded that:
We further hold that the claimed improvement
recited in the challenged claims represents a
combination of known prior art elements
(identifying patient risk groups, collecting patient
information relating to the risk, determining
whether the risk is acceptable, and controlling
dispensation of the drug using both a prescription
and an approval code) for their known purpose
(control distribution of drug) to achieve a
predictable result (avoid giving patients drugs that
have an unacceptable risk of side effects).
-01096 Final Written Decision at 24–25; -01102 Final
Written Decision at 26; -01103 Final Written Decision at 26.
On appeal, Celgene challenges two aspects of the
Board’s obviousness determination: (1) its finding that
there was a motivation to improve the existing distribution
methods of potentially hazardous drugs; and (2) its finding
that a person of skill in the art would have been motivated
to develop the claimed invention. We address each below.
CELGENE CORPORATION v. PETER 19
a
Celgene first argues that there was no motivation to
improve the existing method for avoiding birth defects from
exposure to thalidomide (the Original S.T.E.P.S. program)
because it was working so well that there had been no
reports of birth defects or even potential fetal exposure to
thalidomide using that system. Appeal No. 18-1167,
Appellant’s Br. 32–33, 35–37. Celgene contends that
because there were no problems with the Original
S.T.E.P.S. program, a person skilled in the art would not
have been motivated to improve it. See id. Celgene
essentially argues that there was no motivation because,
“[i]f it ain’t broke, don’t fix it.” Id. at 33.
The Board considered and rejected this argument,
finding that there was a motivation because there are
serious concerns with distributing a drug, like thalidomide,
that is known to cause severe adverse side effects. -01096
Final Written Decision at 22–23; -01102 Final Written
Decision at 24–25; -01103 Final Written Decision at 24–25
(“[W]here significant safety risks exist with a drug, one
would continuously search for safer ways to control the
distribution of the drug. Put simply, where significant
safety concerns exist[], one of ordinary skill in the art
would not wait until an accident occurred to seek out
improvements.”).
The Board’s motivation determination is supported by
substantial evidence. For example, in Zeldis, Celgene
professed its commitment to making improvements to the
S.T.E.P.S. program. Appeal No. 18-1167, J.A. 501
(“Celgene is committed to making the S.T.E.P.S. program
succeed and will make any modifications to the program
that are necessary to ensure its effectiveness.”).
Finally, Celgene challenges the Board’s motivation as
too “generic.” Appeal No. 18-1167, Appellant’s Br. 35–37.
We disagree. The desire to decrease the risks of
administering a drug with adverse side effects, like
20 CELGENE CORPORATION v. PETER
thalidomide, is a specific motivation to improve the prior
art. See, e.g., Tokai Corp. v. Easton Enters., Inc., 632 F.3d
1358, 1371–72 (Fed. Cir. 2011) (upholding obviousness
determination and motivation finding based on the “need
in the prior art for safer utility lighters”); Hologic, Inc. v.
Minerva Surgical, Inc., 764 F. App’x 873, 880 (Fed. Cir.
2019) (“The lack of any specific safety concerns does not
preclude a motivation to make a device safer.”). We
disagree with Celgene’s assertion that approving of this
motivation “leave[s] no room for patents on improvement.”
Appeal No. 18-1167, Appellant’s Br. 37. In a case like this,
where safety is a concern and where the potential adverse
side effects are so severe, the Board did not err in finding
that the desire to improve a system that is working well
qualifies as a valid motivation.
b
Celgene also argues that, even if there had been a
general motivation to improve the prior art systems,
“substantial evidence does not show that there was
motivation to overhaul that program with the particular,
prospective, doctor-interfering system claimed by the
’720 patent.” Appeal No. 18-1167, Appellant’s Br. 38; see
also id. at 38–43.
First, Celgene faults the Board for allegedly failing to
explain “how the prior art renders obvious the claims’
required affirmative risk assessment.” Id. at 40. Contrary
to Celgene’s assertions, the Board did not “ignore” its
affirmative risk assessment argument. In fact, the Board
incorporated the notion of affirmative risk assessment into
its claim construction and considered it in its obviousness
findings. See -01096 Final Written Decision at 12–15; -
01102 Final Written Decision at 13–16; -01103 Final
Written Decision at 13–16. The Board relied on each of the
primary references—Thalomid Package Insert, Powell,
and Mitchell—for the teaching of an affirmative risk
assessment. See -01096 Final Written Decision at 17–18,
CELGENE CORPORATION v. PETER 21
20 (Thalomid Package Insert); -01102 Final Written
Decision at 17–18, 21–22 (Powell); -01103 Final Written
Decision at 17–18, 21–22 (Mitchell). And the Board found
that it would have been obvious to modify the methods for
limiting distribution of drugs with adverse side effects to
high risk groups, disclosed in Thalomid Package Insert,
Powell, or Mitchell, to require issuance of an approval code
prior to dispensing the drug as disclosed in Cunningham.
See -01096 Final Written Decision at 23–25; -01102 Final
Written Decision at 25–27; -01103 Final Written Decision
at 25–27. Substantial evidence supports those findings.
Next, Celgene faults the Board for not including the
word “prospective” in its final written decisions. Appeal
No. 18-1167, Appellant’s Br. 40. But the term “prospective”
does not appear in claim 1 or in the Board’s construction of
“prescription approval code.” Thus, it is neither erroneous
nor particularly surprising that it does not appear in the
Board’s final written decisions.
Finally, Celgene argues that none of the prior art
references disclose a system to “override” a doctor’s
prescription. See, e.g., Appeal No. 18-1167, Appellant’s Br.
40–42, Reply Br. 3–4, 6–7. However, a physician “override”
is not required by the language of claim 1 or by the Board’s
construction of “prescription approval code.”
We therefore affirm the Board’s determination that
claims 1–9 and 11–32 of the ’720 patent are unpatentable
as obvious over the asserted prior art.
B
We now turn to the constitutional issue of whether the
retroactive application of IPRs to pre-AIA patents is an
unconstitutional taking. 10
10 The parties’ arguments on the constitutional issue
are almost identical in the two appeals. Therefore, in this
22 CELGENE CORPORATION v. PETER
1
We must first decide whether to reach the
constitutional challenge even though Celgene did not raise
it before the Board and makes the argument for the first
time on appeal.
“It is well-established that a party generally may not
challenge an agency decision on a basis that was not
presented to the agency.” In re DBC, 545 F.3d 1373, 1378
(Fed. Cir. 2008). But we have discretion to reach issues
raised for the first time on appeal, and in DBC we
recognized that there are exceptions that may justify
considering constitutional arguments not raised below. Id.at 1379–80 (“Because we retain discretion to reach issues
raised for the first time on appeal, we must consider
whether this is one of those exceptional cases that
warrants consideration of the [constitutional] issue despite
its tardy presentation.”).
Departing from the general rule of waiver is
appropriate only in limited circumstances. See id. at 1380(stating that addressing an issue not raised below is “an
exceptional measure” appropriate only in “rare cases”); see
also Golden Bridge Tech., Inc. v. Nokia, Inc., 527 F.3d 1318,
1322–23 (Fed. Cir. 2008) (stating that “deviat[ing] from
this general rule of waiver” and “hearing new arguments
for the first time on appeal” is disfavored “absent limited
circumstances”). One such circumstance that can justify
departing from the general rule of waiver is an intervening
change in the law. See Golden Bridge, 527 F.3d at 1323.
We also consider whether the “interest of justice” guides us
to consider the issue despite the fact that it was not raised
below. See id.section, we cite only to the briefs in Appeal No. 18-1167
unless otherwise noted.
CELGENE CORPORATION v. PETER 23
The PTO concedes that we have discretion to deviate
from our general rule of waiver and that doing so here to
resolve the constitutional issue presented may be in the
interest of justice. As the PTO recognized, “[g]iven the
growing number of retroactivity challenges apparently
prompted by the reference to retroactivity in Oil States,
however, this Court may nevertheless conclude that the
interests of justice warrant addressing the retroactivity
question quickly to avert further uncertainty regarding the
constitutionality of inter partes review.” Intervenor’s Br.
37 (footnote omitted).
We have indeed seen a growing number of retroactivity
challenges following the Supreme Court’s decision in Oil
States, including several that are currently pending before
this court. The Supreme Court left open this challenge
with the following passage near the end of its decision in
Oil States:
Moreover, we address only the precise
constitutional challenges that Oil States raised
here. Oil States does not challenge the retroactive
application of inter partes review, even though that
procedure was not in place when its patent issued.
Nor has Oil States raised a due process challenge.
Finally, our decision should not be misconstrued as
suggesting that patents are not property for
purposes of the Due Process Clause or the Takings
Clause.
Oil States Energy Servs., LLC v. Greene’s Energy Grp.,
LLC, 138 S. Ct. 1365, 1379 (2018). While Celgene’s
constitutional challenge does not rely on a change in the
law articulated in Oil States, it raises an issue not directly
resolved by Oil States. Oil States was decided on April 24,
2018, well after the Board’s October 26, 2016 final written
decisions in the IPRs involved in this appeal, which at least
partially explains why Celgene did not raise the argument
before the Board.
24 CELGENE CORPORATION v. PETER
Even if Celgene had raised its constitutional challenge
before the Board, it is unclear how the Board could have
corrected the alleged constitutional defect as it could have
in DBC. See DBC, 545 F.3d at 1379 (“If DBC had timely
raised this issue before the Board, the Board could have
evaluated and corrected the alleged constitutional
infirmity by providing DBC with a panel of administrative
patent judges appointed by the Secretary.”). 11
Moreover, the constitutional challenge presented here
is purely a question of law, so addressing it would not
require us “to make factual findings” for the first time on
appeal. See Golden Bridge, 527 F.3d at 1323.
Finally, the briefing on the constitutional issue in this
case is sufficiently thorough for our review. See Appellant’s
Br. 44–52; Intervenor’s Br. 35–44; Reply Br. 20–28. This
case stands in sharp contrast with Trading Technologies
International, Inc. v. IBG LLC, 921 F.3d 1378, 1385 (Fed.
Cir. 2019), where we declined to consider a number of
11 The Supreme Court has “stated that ‘adjudication
of the constitutionality of congressional enactments has
generally been thought beyond the jurisdiction of
administrative agencies.’” Elgin v. Dep’t of Treasury,
567 U.S. 1, 16 (2012) (quoting Thunder Basin Coal Co. v.
Reich, 510 U.S. 200, 215 (1994)). When asked at oral
argument if the Board had authority to adjudicate a
constitutional challenge to the AIA, the PTO responded
that if the Board determined that the retroactive
application of IPRs to pre-AIA patents was an
unconstitutional taking, the Board could exercise its
discretion to decline to institute the IPR. See Oral
Argument at 36:52–37:57, Celgene Corp. v. Peter (No. 2018-
1167), http://www.cafc.uscourts.gov/oral-argument-
recordings. That decision, however, would be unreviewable
but for the possibility of mandamus. See Cuozzo, 136 S. Ct.
at 2142.
CELGENE CORPORATION v. PETER 25
constitutional challenges to IPRs included in “a total of four
sentences” in the appellant’s opening brief. Id. (“Such a
conclusory assertion with no analysis is insufficient to
preserve the issue for appeal.”). Here, a single
constitutional issue received thorough briefing from the
parties and was addressed extensively at oral argument.
See Oral Argument at 5:06–21:50, 50:22–52:56 (Celgene),
36:27–48:47 (Director), Celgene Corp. v. Peter (No. 2018-
1167), http://www.cafc.uscourts.gov/oral-argument-
recordings. 12
We therefore conclude that this is one of those
exceptional circumstances in which our discretion is
appropriately exercised to hear Celgene’s constitutional
challenge even though it was not raised below.
12 As to the suggestion that we wait until a case
reaches us where the retroactivity challenge was raised
below and decided by the Board, the first such case
identified is Agarwal v. TopGolf International, Inc., No. 18-
2270. In TopGolf, the Board allowed additional briefing on
the constitutional issues left open by Oil States. In a single
sentence of analysis, the Board determined that the
retroactive application of IPRs was not unconstitutional,
reasoning that “the patent at issue here was subject to ex
parte reexamination, and, therefore, the United States
Patent and Trademark Office has always had the ability to
look at the patentability of an issued United States
Patent.” TopGolf Int’l, Inc. v. Amit Agarwal, No. IPR2017-
00928, Paper 40, at 80 (P.T.A.B. June 13, 2018). On
appeal, Mr. Agarwal’s constitutional challenge to the
retroactive application of IPRs to pre-AIA patents is one
page of his opening brief. Brief for Appellant at 69–70,
Agarwal v. TopGolf Int’l, Inc. (No. 18-2270). The reply brief
is due on November 12, 2019, and the case will likely not
be argued for at least several months thereafter.
26 CELGENE CORPORATION v. PETER
2
We now turn to the merits of Celgene’s constitutional
challenge that the retroactive application of IPRs to pre-
AIA patents is an unconstitutional taking.
The Takings Clause of the Fifth Amendment states
that private property shall not “be taken for public use,
without just compensation.” U.S. Const. amend. V. The
PTO does not dispute that a valid patent is private
property for the purposes of the Takings Clause. See
Intervenor’s Br. 43 (“A patent holder has a property
interest in a valid patent . . . .”); Oral Argument at 41:06–
41:22, Celgene Corp. v. Peter (No. 2018-1167),
http://www.cafc.uscourts.gov/oral-argument-recordings.
(“We don’t dispute that a valid patent is property for
purposes of the Takings Clause.”).
Celgene argues that the retroactive application of IPRs
to their pre-AIA patents without just compensation is an
unconstitutional taking under the Fifth Amendment.
Appellant’s Br. 44–52. Specifically, Celgene advances a
regulatory takings theory and argues that subjecting its
pre-AIA patents to IPR, a procedure that did not exist at
the time its patents issued, unfairly interferes with its
reasonable investment-backed expectations without just
compensation. Id. at 44–45, 49–51.
The PTO responds on two fronts. First, the PTO argues
that when the Board finds claims unpatentable in an IPR,
it does not effectuate a taking under the Fifth Amendment
because the patent owner “never had a valid property right
because the patent was erroneously issued in the first
instance.” Intervenor’s Br. 38; see also id. at 38–41.
Second, the PTO argues that Celgene’s takings claim fails
“because patents have been subject to reconsideration and
cancellation by the USPTO in administrative proceedings
for nearly four decades, and Celgene’s own patent[s were]
issued subject to this administrative revocation authority.”
Id. at 42; see also id. at 42–44. The PTO does not expressly
CELGENE CORPORATION v. PETER 27
engage Celgene’s reasonable investment-backed
expectations argument. But the PTO does respond that
“the AIA did not alter patent holders’ substantive rights.”
See id. at 43. Rather, the PTO maintains that the AIA
“merely revised the procedures by which [the] USPTO
conducts these administrative proceedings” and that the
procedural differences do not effect a Fifth Amendment
taking. See id.
In determining whether the retroactive application of
IPRs to pre-AIA patents is an unconstitutional taking, we
consider the effect that doing so has on the patent right
granted by the PTO, and specifically whether IPRs differ
from the pre-AIA review mechanisms significantly enough,
substantively or procedurally, to effectuate a taking. We
conclude that they do not. On this basis, we reject
Celgene’s challenge even apart from the rationales of our
prior decisions—which we also think control the outcome
here, but which Celgene asks us to reconsider—that
rejected constitutional challenges to retroactive
application of the pre-AIA ex parte reexamination
mechanism. 13
13 In Patlex Corp. v. Mossinghoff, 758 F.2d 594 (Fed.
Cir. 1985), we faced a challenge to the retroactive
application of ex parte reexaminations and held that it did
not violate the due process clause of the Fifth Amendment,
the jury trial guarantee of the Seventh Amendment, or
Article III. Id. at 603, 605. Our retroactivity analysis in
Patlex relied in part on the “curative” nature of
reexaminations and that “[c]urative statutes have received
relatively favored treatment from the courts even when
applied retroactively.” Id. at 603.
We later considered a challenge to the retroactive
application of ex parte reexaminations based on the
Takings Clause in Joy Technologies, Inc. v. Manbeck, 959
F.2d 226 (Fed. Cir. 1992), superseded by statute on other
28 CELGENE CORPORATION v. PETER
The validity of patents has always been subject to
challenge in district court. And for the last forty years,
patents have also been subject to reconsideration and
possible cancellation by the PTO. As explained below, IPRs
do not differ significantly enough from preexisting PTO
mechanisms for reevaluating the validity of issued patents
to constitute a Fifth Amendment taking.
By the time Celgene filed the application that became
the ’501 patent (1998) and the patent was issued (2000),
and by the time Celgene filed the application that became
the ’720 patent (2000) and the patent was issued (2001), ex
parte reexamination had existed for roughly two decades.
Ex parte reexamination, created by Congress in 1980 and
still available today, allows “[a]ny person at any time” to
“file a request for reexamination.” 35 U.S.C. § 302. The
PTO determines whether the request raises “a substantial
new question of patentability affecting any claim of the
patent.” Id. § 303(a). If it does, the reexamination is
“conducted according to the procedures established for
initial examination,” and the patent owner has the
opportunity to amend claims. Id. § 305. The
reexamination results in the confirmation of claims found
grounds. Applying our reasoning in Patlex, we rejected the
patent owner’s argument that ex parte reexamination and
subsequent cancellation of some claims of its patent
constituted a taking even though no PTO reexamination
mechanisms existed when its patent issued. See id. at 228–
29.
The patent owners in Patlex and Joy Technologies had
a stronger argument than Celgene does here because,
before the creation of ex parte reexaminations, there were
no PTO reexamination procedures. In contrast, pre-AIA
patent owners, including Celgene, have known for almost
forty years that their patents were issued subject to
substantively similar forms of PTO reexamination.
CELGENE CORPORATION v. PETER 29
to be patentable and the cancellation of claims found to be
unpatentable. Id. § 307(a).
Inter partes reexamination, created by Congress in
1999, was also available when Celgene filed the
’720 patent, although not when it filed the ’501 patent. A
third party could request inter partes reexamination, and
the standard to initiate the reexamination was whether the
request raised a “substantial new question of
patentability.” 35 U.S.C. §§ 311–12 (1999) (amended).
Inter partes reexamination “granted third parties greater
opportunities to participate in the Patent Office’s
reexamination proceedings,” and, following amendments
in 2002, also allowed third parties to participate in any
appeal of the PTO’s final reexamination decision.
See Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2137
(2016).
Celgene’s pre-AIA patents were therefore granted
subject to existing judicial and administrative avenues for
reconsidering their validity. Not only were they subject to
challenge in district court, “[f]or several decades, the
Patent Office has also possessed the authority to
reexamine—and perhaps cancel—a patent claim that it
had previously allowed.” Id.IPRs are the most recent legislative modification to the
PTO’s longstanding reconsideration procedures. 14 In 2011,
as part of the AIA, Congress created IPRs, which replaced
inter partes reexamination. Leahy–Smith America Invents
Act, Pub. L. No. 112-29, § 6, 125 Stat. 284, 299–313 (2011)
(codified as amended at 35 U.S.C. §§ 311–19 (2012)). IPRs
allow a third party to request that the PTO “reexamine the
claims in an already-issued patent and to cancel any claim
14 Celgene’s suggestion that PTO reconsideration “is
a creation of the 2011 AIA legislation” or only available
“[s]ince the AIA” is incorrect. See Appellant’s Br. 46.
30 CELGENE CORPORATION v. PETER
that the agency finds to be unpatentable in light of [the]
prior art” specified in 35 U.S.C. § 311(b). Cuozzo, 136 S. Ct.
at 2136.
In this case it suffices for us to decide that IPRs do not
differ sufficiently from the PTO reconsideration avenues
available when the patents here were issued to constitute
a Fifth Amendment taking. Celgene identifies a number of
differences between reexaminations and IPRs, including
that IPRs are adjudicative and have discovery, briefing,
and an oral hearing, Appellant’s Br. 47, but as explained
below, these differences are not sufficiently substantive or
significant to constitute a taking.
Unsurprisingly, Celgene does not grapple with the far
more significant similarities between IPRs and their
reexamination predecessors. In IPRs, patents are
reviewed on the same substantive grounds—anticipation
and obviousness, based on the same categories of prior
art—as ex parte and inter partes reexaminations. 15 IPRs
and reexaminations use the same preponderance of the
evidence standard of proof. See 35 U.S.C. § 316(e) (“In an
inter partes review instituted under this chapter, the
petitioner shall have the burden of proving a proposition of
unpatentability by a preponderance of the evidence.”); In
re Baxter Int’l, Inc., 678 F.3d 1357, 1364 (Fed. Cir. 2012)
(“In PTO reexaminations ‘the standard of proof [is] a
preponderance of the evidence.’” (quoting In re Swanson,
540 F.3d 1368, 1377 (Fed. Cir. 2008)). And the same
broadest reasonable interpretation standard for claim
construction used in reexaminations also applied in these
15 It is undisputed that the Board’s grounds for
determining unpatentability were available under the
reexamination procedures in place at the time the ’501
patent and ’720 patent issued in 2000 and 2001,
respectively.
CELGENE CORPORATION v. PETER 31
IPRs. 16 See In re CSB-Sys. Int’l, Inc., 832 F.3d 1335, 1340
(Fed. Cir. 2016) (“During reexamination proceedings of
unexpired patents, however, the Board uses the ‘broadest
reasonable interpretation consistent with the specification’
standard, or BRI.” (quoting In re NTP, Inc., 654 F.3d 1268,
1274 (Fed. Cir. 2011)).
IPRs and reexaminations are also similar in that the
Director has discretion to initiate the proceeding. In ex
parte reexamination, the Director determines “whether a
substantial new question of patentability affecting any
claim of the patent concerned is raised by the request.”
35 U.S.C. § 303(a). In IPRs, the Director has discretion to
institute IPR if there is “a reasonable likelihood that the
petitioner would prevail with respect to at least 1 of the
claims challenged in the petition.” Id. § 314(a). In both
proceedings, the Director’s discretionary determination is
final and non-appealable. See id. §§ 303(c), 314(d).
Notably, IPRs serve essentially the same purpose as
their reexamination predecessors. As the Supreme Court
has said:
The [IPR] proceeding involves what used to be
called a reexamination (and, as noted above, a
cousin of inter partes review, ex parte
reexamination, 35 U.S.C. § 302 et seq., still bears
that name). The name and accompanying
procedures suggest that the proceeding offers a
second look at an earlier administrative grant of a
patent. Although Congress changed the name from
“reexamination” to “review,” nothing convinces us
16 As noted above, the PTO has since changed the
claim construction standard used in IPR proceedings to
align with the standard used in district court proceedings,
a change that is favorable to the patent owner. See supra
note 8.
32 CELGENE CORPORATION v. PETER
that, in doing so, Congress wanted to change its
basic purposes, namely, to reexamine an earlier
agency decision.
Cuozzo, 136 S. Ct. at 2144; see also Oil States, 138 S. Ct. at
1374 (“Inter partes review is ‘a second look at an earlier
administrative grant of a patent.’” (quoting Cuozzo, 136 S.
Ct. at 2144)). 17
Moreover, the Supreme Court has described district
court challenges, ex parte reexaminations, and IPRs as
different forms of the same thing—reexamination. See
Return Mail, Inc. v. United States Postal Serv., 139 S. Ct.
1853, 1860 (2019) (“In sum, in the post-AIA world, a patent
can be reexamined either in federal court during a defense
to an infringement action, in an ex parte reexamination by
the Patent Office, or in the suite of three post-issuance
review proceedings before the Patent Trial and Appeal
Board.”). All three serve the purpose of correcting prior
agency error of issuing patents that should not have issued
in the first place:
Sometimes, though, bad patents slip through.
Maybe the invention wasn’t novel, or maybe it was
obvious all along, and the patent owner shouldn’t
enjoy the special privileges it has received. To
remedy these sorts of problems, Congress has long
permitted parties to challenge the validity of
patent claims in federal court. More recently,
17 The legislative history of the AIA confirms that one
of the objectives of IPRs was to “revisit and revise” issued
patents. See Cuozzo, 136 S. Ct. at 2140. In this way, IPRs
serve the broader goal of improving patent quality. See
H.R. Rep. No. 112-98, pt. 1, at 48 (2011), as reprinted in
2011 U.S.C.C.A.N. 67, 78 (explaining objective to “improve
patent quality and restore confidence in the presumption
of validity that comes with issued patents”).
CELGENE CORPORATION v. PETER 33
Congress has supplemented litigation with various
administrative remedies.
SAS Inst., Inc. v. Iancu, 138 S. Ct. 1348, 1353 (2018)
(citation omitted); see also Microsoft Corp. v. i4i Ltd. P’ship,
564 U.S. 91, 96 (2011) (describing district court challenges
as an “attempt to prove that the patent never should have
issued in the first place”); Fresenius USA, Inc. v. Baxter
Int’l, Inc., 721 F.3d 1330, 1338 (Fed. Cir. 2013) (stating that
“ex parte reexamination is a curative proceeding meant to
correct or eliminate erroneously granted patents”).
There are undoubtedly differences between IPRs and
their predecessors. This is not surprising given that
Congress passed the AIA with post grant review
procedures that were intentionally more robust and would
provide a “more efficient system for challenging patents
that should not have issued.” See H.R. Rep. No. 112-98, pt.
1, at 39–40 (2011), as reprinted in 2011 U.S.C.C.A.N. 67,
69. 18 Celgene is correct that IPRs are “adjudicatory in
nature.” Return Mail, 139 S. Ct. at 1860. Among the
“adjudicatory characteristics” of IPRs Celgene notes are
discovery, briefing, and an oral hearing. See Appellant’s
Br. 47. But these procedural differences come with the
longstanding recognition that “‘[n]o one has a vested right
in any given mode of procedure.’” Denver & Rio Grande W.
R.R. Co. v. Bhd. of R.R. Trainmen, 387 U.S. 556, 563 (1967)
(quoting Ex parte Collett, 337 U.S. 55, 71 (1949)). These
differences do not disrupt the expectation that patent
18 Implementing IPRs to create a more robust and
efficient system for challenging the validity of patents is
not unlike the PTO or Congress making the system more
robust by, for example, increasing the budget for or number
of examiners in the reexamination unit. While those
changes might result in significantly more requests for
reexamination and more claims being canceled, we doubt
that anyone would argue that they effectuate a taking.
34 CELGENE CORPORATION v. PETER
owners have had for nearly four decades—that patents are
open to PTO reconsideration and possible cancelation if it
is determined, on the grounds specified in § 311(b), that the
patents should not have issued in the first place.
Celgene also argues that statistics show that IPRs have
caused a permanent reduction in the value of patents
granted before the AIA. See Appellants’ Br. 48–49 (citing
statistics); Reply Br. 26–27 (citing statistics and arguing
that they show that “patents subjected to inter partes
review have been clobbered in ways previously
unimaginable”). 19 But Celgene has made no showing—nor
could it—that claims canceled in IPRs, including its own
claims, would have fared any better in the preexisting
reexamination procedures.
Recognizing that its patents were also always open to
challenge in district court, Celgene attempts to distinguish
IPRs from district court proceedings by arguing that while
IPRs resemble district court proceedings in some
respects, 20 IPRs lack the “same process or rights as civil
19 Celgene notes that almost as many IPRs were filed
and instituted in the first four years after they were
created as were filed in the twelve years inter partes
reexamination were available. Appellant’s Br. 48. This
statistic, which merely compares the frequency that these
procedures are utilized but does not compare ultimate
outcomes, does not sway our analysis.
20 That IPRs resemble district court litigation in some
ways is in line with one of the objectives of the AIA, which
was to provide an alternative to district court litigation.
See H.R. Rep. No. 112-98, pt. 1, at 48 (describing IPR as a
“quick and cost effective alternativ[e] to litigation”); S. Rep.
No. 110-259, at 20 (2008) (describing IPR as “a quick,
inexpensive, and reliable alternative to district court
litigation”). The fact that IPRs may have shifted some
CELGENE CORPORATION v. PETER 35
litigation.” See Appellants’ Br. 47–48; Reply Br. 26–27.
But the differences that Celgene identifies between district
court proceedings and IPRs only serve to demonstrate that
IPRs are similar to reexaminations. For example, IPRs use
a preponderance of the evidence burden of proof rather
than the district court’s clear and convincing evidence
burden of proof. And IPRs, at the time of these
proceedings, used the broadest reasonable interpretation
for claim construction rather than the narrower standard
from Phillips v. AWH Corp., 415 F.3d 1303, 1313 (Fed. Cir.
2005) (en banc) used in district court. While these IPR
standards differ from those used in district court, they were
previously used in ex parte and inter partes reexamination
procedures, as explained above. Celgene also notes that
the presumption of validity that applies in district court
proceedings, overcome only by clear and convincing
evidence, does not apply in IPRs. Reply Br. 26–27.
However, the presumption of validity also did not apply in
the preexisting reexamination proceedings. See In re Etter,
756 F.2d 852, 855–56 (Fed. Cir. 1985). Moreover, we long
ago explained that “[w]e do not consider the section 282
presumption [of validity] . . . to be a property right subject
to the protection of the Constitution.” Patlex Corp. v.
Mossinghoff, 758 F.2d 594, 605 (Fed. Cir. 1985), reh’g
granted on other grounds, 771 F.2d 480 (Fed. Cir. 1985). In
any event, because Celgene’s patents were granted subject
to similar reexamination standards, as discussed above,
the differences between IPRs and district court proceedings
that Celgene identifies do not create a constitutional issue.
In light of the foregoing, we hold that the retroactive
application of IPR proceedings to pre-AIA patents is not an
unconstitutional taking under the Fifth Amendment.
Patent owners have always had the expectation that the
validity challenges from the district court to the PTO does
not effectuate a taking.
36 CELGENE CORPORATION v. PETER
validity of patents could be challenged in district court. For
forty years, patent owners have also had the expectation
that the PTO could reconsider the validity of issued patents
on particular grounds, applying a preponderance of the
evidence standard. Although differences exist between
IPRs and their reexamination predecessors, those
differences do not outweigh the similarities of purpose and
substance and, at least for that reason, do not effectuate a
taking of Celgene’s patents.
III
We have considered Celgene’s remaining arguments
and find them unpersuasive. We affirm the Board’s
determination that all of the claims of the ’501 patent and
claims 1–9 and 11–32 of the ’720 patent are invalid as
obvious.
AFFIRMED