Yes we can:
Can Amarin win on appeal in the Vascepa patent litigation?
Zachary Silbersher
Amarin ($AMRN) has lost its trial against Hikma and Dr. Reddy’s. On March 30, the Honorable Miranda M. Du from the United States District Court for the District of Nevada issued a bench order following a multi-day trial in January. Judge Du held that although Amarin had proven that the generics would induce infringement of the asserted patents by selling their prospective generic versions of Vacepa®, all of the patents were nonetheless invalid as obvious. As a result, Judge Du denied an injunction against Hikma and Dr. Reddy’s for selling generic versions of Vascepa®. What happens now?
Will Amarin file an appeal?
Amarin is almost certain to file its notice of appeal to the Federal Circuit shortly, which will start the process of appellate review. Unless the parties seek and are granted an expedited appeal, then the appeal should last approximately one year, give or take a few months. (That assumes there are no delays from the current pandemic.) Although the district court has held the patents are invalid, neither Hikma nor Dr. Reddy’s can launch until their drugs individually receive FDA approval. As of March 30, Amarin’s press release indicated that neither company had yet to receive approval.
Will Hikma or Dr. Reddy’s launch at risk? Typically, a launch before resolution of a Federal Circuit appeal in a Hatch-Waxman litigation is considered to be an at-risk launch. Small-molecule generics do not often launch at-risk because, given the discounted price that generics typically sell compared to the brand before generic entry, a generic’s at-risk launch can give rise to liability (in the form of the brand’s lost profits) that exceeds the generic’s profits.
Here, there may be some pressure on either Hikma or Dr. Reddy’s, should one of them receive FDA approval before the other, to launch at risk to capture some time as the only generic on the market. However, Amarin has indicated that it will move for a preliminary injunction to prevent the generics from launching at-risk. In exchange, Amarin is likely to post a bond against the generics’ lost profits in the event Amarin loses the appeal. Given that, an at-risk launch in this case is, as of right now, is probably less likely.
Although Amarin lost at trial, it did prevail on its argument that Hikma and Dr. Reddy’s will induce infringement of the asserted patents. Thus, the generics are likely to file a cross-appeal that seeks to reverse that finding. This post will focus, however, on Amarin’s appeal of the invalidity determination.
Will Amarin prevail on its appeal?
The best strategy for winning an appeal is not to lose at trial. While the generics faced the high burden of showing the patents were invalid based on clear-and-convincing evidence, the burden shifts on appeal. The standard applied by the Federal Circuit for reviewing a determination that a patent was obviousness is a bit complicated, but it is important to understand in order to properly handicap Amarin’s chances on appeal.
On the one hand, the ultimate legal conclusion of obviousness is assessed de novo, which means the Federal Circuit is not obligated to defer to the district court. That’s good for Amarin because it means that the Court can technically make up its own mind whether the patents are obviousness. On the other hand, any factual findings determined by the Judge should, technically, be subject to deference by the Federal Circuit. They are reviewed only for clear error. That requires that the Federal Circuit find that a clear mistake was made, rather than finding that the appellate court disagrees with the finding by the district court. That will technically make it harder for Amarin to argue that certain factual findings underpinning of the Judge’s obviousness determination were erroneous.
Taking a broad view of the Court’s bench order, Judge Du bought into the generics’ invalidity story. (See Bench Order at 57). Lovasa was known to reduce triglycerides in patients with high TG levels, but was also known to increase LDL-C. Lovasa included two ingredients, EPA and DHA. A person of skill would have been motivated to determine which of those two ingredients was responsible for increasing LDL-C. Lo and behold, Mori conducted a study on that precise question, and Mori concluded that DHA increased LDL-C to a statistically-significant amount, whereas EPA did not. Given that, Judge Du found that the generics showed a prima facie case of obviousness.
None of this is likely to be too controversial on appeal. Put another way, those factual findings, which are subject to deference by the Federal Circuit, will be difficult for Amarin to successfully challenge on appeal. On the other hand, there are two potential weaknesses within the district court’s bench order where Amarin may make hay and try to show that the Judge’s invalidity decision should be reversed, or at the very least, remanded for further proceedings.
Was it surprising that EPA would not increase LDL-C in patients with severe TG levels?
The first issue is a factual finding. After finding that the generics had made a prima facie case of obviousness, the Court addressed Amarin’s counter arguments. Amarin’s principle contention was that a person of skill in 2008 (around the time the patents were filed) would not have expected that pure EPA would not increase LDL-C in patients with TG levels in excess of 500 mg/dL. (I previously blogged that this fact issue was a close call, but Amarin likely had a slight advantage at trial given the clear-and-convincing evidence standard.)
Judge Du found there was no evidence to support this contention. (Bench Order at 59). In particular, despite testimony by Amarin’s expert to the contrary, the Judge found that Mori showed that EPA did not increase LDL-C. This was a highly disputed factual issue at trial. Amarin argued that Mori was directed to a different patient population—namely, patients with TG levels below 500 mg/dL. Indeed, a big theme that Amarin developed at trial and in its post-trial briefs was that a patient’s increase in LDL-C was correlated to its baseline TG levels. In other words, Amarin contended that the understanding among persons of skill in 2008 was that those patients with higher baseline TG levels would experience higher spikes in LDL-C when administered TG-lowering drugs. According to Amarin, that was the reason Mori did not alter the expectation among persons of skill that patients with TG levels within the scope of the claims, namely above 500 mg/dL, would experience an increase in LDL-C when administered pure EPA.
Judge Du essentially rejected this factual finding. Rather, the Judge found there was no evidence that patients with severe TG levels metabolize drugs any differently than those with lower TG levels. Nor did the Court find any relationship between a patient’s baseline TG levels and increases in LDL-C. (Bench Order at 60).
Yet, on appeal, Amarin is likely to stress that there was in fact evidence in support of this proposition. Amarin is likely to point to the understood mechanism of action for how TG-lowering drugs worked, namely by clearance of VLDL to IDL and to LDL, which buttressed the expectation of persons of skill that TG-lowering drugs yielded higher levels of LDL for patients with higher baseline TG levels. (See e.g., Amarin’s post-trial brief at 15 and 18). By contrast, and importantly, the generics did not emphasize a different mechanism of action, which is also something that Amarin is likely to emphasize to the appellate court.
Therefore, this is one factual finding made by the Judge underpinning the ultimate obviousness determination that may be weak enough to warrant a reversal on appeal. Is it enough to move the needle? It is probably still something of a longshot. The question will be whether the generics showed by clear-and-convincing evidence that persons of skill in 2008 did not have an expectation that administering EPA to patients with TG levels in excess of 500 mg/dL would not increase LDL-C. On the one hand, to the extent Amarin can show that the Court overlooked critical evidence casting doubt on that issue, such as evidence related to the mechanism of action, then Amarin may be able to show that the generics did not actually prove this expectation with enough evidence, and thus there was a clear mistake by the Court.
On the other hand, as discussed above, because this is a factual finding made by the Court, the Federal Circuit will technically defer to the district court, and therefore only search for whether the Court’s factual finding on this issue was clearly erroneous. Amarin likely has a greater chance of success if it can show that the Court overlooked certain evidence (such as that pertaining to the mechanism of action), rather than disputing how the Court interpreted either the testimony of the experts, such as Dr. Toth, or the prior art, such as Mori.
Did the Court correctly apply the law of secondary considerations?
The second area of potential weakness in the Court’s bench order, which Amarin may try to exploit on appeal, relates to Judge Du’s analysis of the secondary considerations. Unlike the foregoing issue, this is a legal issue, not a factual issue. Thus, if the Court incorrectly applied the law of secondary considerations, that will not be afforded any deference by the Federal Circuit, thus theoretically making Amarin’s job easier.
In the bench order, in the course of analyzing whether the patents are obviousness, Judge Du first determined that the generics had made a prima facie case of obviousness. Given that, Judge Du next turned to whether any secondary considerations of obviousness nevertheless warranted rejecting the generics’ invalidity challenge. (There is currently a debate brewing at the Federal Circuit whether a district court should first determine there is a prima facie case of obviousness before considering secondary considerations, or whether secondary considerations should be assessed collectively with the other factors informing whether a prima facie case exists. While Amarin’s tactic on appeal may seek to exploit this disagreement as a way of showing Judge Du’s analysis was erroneous, it is not clear it would have a material impact on the outcome of the case. This is because Judge Du, for better or worse, did conduct a thorough review of the secondary considerations.)
In the course of addressing the secondary considerations, Judge Du first addressed whether the REDUCE-IT trial was such a secondary consideration that showed that the asserted patents were somehow surprising or unexpected. Amarin’s basic argument was that since the results of REDUCE-IT were truly surprising, surely that should demonstrate that Amarin’s asserted patents are not “obvious”. As we previously blogged, we did not think REDUCE-IT had a sufficient nexus to the patents actually asserted in this case to be relevant. For five separate reasons, Judge Du found the same, namely, that REDUCE-IT is irrelevant to the patent claims actually asserted in this case. Given the depth of the Court’s analysis on this issue, Amarin will have a difficult time prevailing on appeal by challenging Judge Du’s findings with respect to REDUCE-IT.
Yet, after addressing REDUCE-IT, Judge Du analyzed each of the secondary considerations for which evidence had been submitted at trial. These included, (i) unexpected benefits; (ii) satisfaction of long-felt need; (iii) skepticism; (iv) praise; and (v) commercial success. The Court found that most of these secondary considerations did not weigh in favor of Amarin’s arguments that the patents should not be invalidated, whereas two of them (long-felt need and commercial success) did not weigh in favor of obviousness.
At that point, Judge Du conducted a “weighing of the secondary considerations.” Despite finding that long-felt need and commercial success actually supported Amarin’s arguments that the patents were not obviousness, the Court concluded that, “these secondary considerations [long-felt need and commercial success] are outweighed by the fact that the Court found Plaintiffs’ other proffered secondary considerations favor Defendants.” (Bench Order at 69).
This is a peculiar analysis. The Court essentially found that Amarin’s evidence of some secondary considerations outweighed evidence of other secondary considerations. It is not clear that that is how the law of secondary considerations actually works. Indeed, neither the Court nor either of the parties cited to any law holding that secondary considerations should be weighed against each other in this manner.
Nor is this an insignificant point. There have been many cases where a court denied an obviousness challenge to a patent based upon finding that a single secondary consideration, such as commercial success, overcame a prima facie case of obviousness. Here, Judge Du essentially found that two secondary considerations weighed against invalidating the patents, namely, long-felt need and commercial success. That alone may technically have been sufficient to defeat the generics’ invalidity challenge.
On the other hand, there is definitely law holding that even if evidence of secondary considerations exists in favor of upholding a patent’s validity, that does not necessarily mean a patent will not be invalidated—especially where the prima facie case of obviousness is particularly strong. This illustrates how any weaknesses in the Court’s analysis of the prima facie case, such as that discussed in the preceding section, may relate to and inform whether an error was committed by Judge Du in the course of analyzing the secondary considerations. Put another way, the two potential weaknesses in the bench order discussed in this post may, in fact, buttress each other.
Moreover, patent-holders typically present evidence of as many secondary considerations as possible. Given that they are typically weighed individually, rather than against each other, there is typically little risk of pursuing multiple secondary considerations. Here, however, the Court essentially penalized Amarin for presenting evidence of multiple considerations. In other words, despite finding that long-felt need and commercial success favored patentability, the Court found that other secondary considerations submitted by Amarin favored obviousness.
There are certain legal doctrines where a series of factors are weighed against each other in the manner that Judge Du did for the secondary considerations in this case. But in those cases, the factors are typically finite, and they collectively speak to the question at hand. By contrast, in the context of secondary considerations, there are not necessarily a finite number of secondary considerations that Courts are obliged to consider on reviewing the obviousness of a patent. Each one, standing on its own, can theoretically save a patent from invalidation. Rather, it is typically up to the patent-holder to argue for as many as they wish.
Given that neither the Court nor the parties cited caselaw holding that the Judge’s manner of analysis of weighing the secondary considerations against each other was appropriate, then that shows this is a potential weakness in the Court’s bench order. Namely, it is a weakness that Amarin may be able to exploit on appeal to show the Court’s determination of obviousness was erroneous. Moreover, this was not a harmless application of the law, given that the Court’s manner of weighing the secondary considerations against each other appears to have directly impacted the outcome of this case.
If either of these issues are taken up by the Federal Circuit, how will that impact the underlying litigation? If the Federal Circuit finds that the district court improperly weighed the evidence of secondary considerations, that will more likely result in a remand of the case back to the district court to correct its analysis. If the Federal Circuit finds that the district court overlooked evidence regarding the expectation of whether pure EPA would increase LDL-C in patients with severe triglyceridemia, that may warrant a reversal or a remand, depending on how the issue shakes out. In short, it is not impossible this case finds its way back to the district court and continues for another couple years.
Amarin lost at trial. That necessarily mitigates any litigant’s chances of success on appeal at the outset. But the burden of proving patents are invalid in district court litigation remains a high one, and there are potential weaknesses within the Court’s decision that give Amarin a non-negligible chance of prevailing on appeal. Amarin’s opening brief, which will be filed sometime this summer or early fall, should provide more insight.
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