In an April 11, 2019 order, Judge Andrews of the District of Delaware ruled that a Hatch-Waxman defendant’s obviousness defenses were precluded under 35 U.S.C. § 315(e)(2) even though the barring PTAB decision issued over a year after the court had held an obviousness trial.  Novartis Pharm. Corp. v. Par Pharm., Inc., No. 14-cv-01289 (D. Del. Apr. 11, 2019), Docket No. 198.  Read on for the details.

In Novartis v. Par, Novartis asserted U.S. Patent No. 5,655,772, and Par challenged the validity of the asserted claims. While the case was pending, Par filed an IPR petition on several claims of the patent, including four of five claims asserted in the district court case, and the IPR was instituted. Meanwhile, the district court case proceeded to trial on obviousness and obviousness-type double patenting (“OTDP”), and the court invalidated the asserted claims for OTDP; it did not reach the obviousness defenses related to the ‘772 patent. Novartis Pharm. Corp. v. Par Pharm., Inc., No. 14-cv-01289 (D. Del. May 16, 2017), Docket No. 180. On appeal, the Federal Circuit reversed the OTDP holding and remanded the case. Novartis Pharm. Corp. v. Breckenridge Pharm. Inc., 909 F.3d 1355 (Fed. Cir. 2018).  While the appeal was pending, the PTAB issued a final written decision in the IPR proceeding denying the obviousness challenge. IPR2016-00084 (PTAB Jan. 11, 2018), Paper 73. Novartis then moved to estop the obviousness defenses and counterclaims in district court under § 315. Par took “no position on estoppel” (another defendant had opposed the estoppel motion, but it subsequently settled out of the case).

Judge Andrews determined that the obviousness defenses were estopped even though he already had held an obviousness trial, Par had relied on twenty-seven prior art references at trial, and those twenty-seven references were not raised in the IPR proceeding. “The plain language of the statute does not indicate that Congress intended for there to be a time limitation on the estoppel defense of a final written decision,” Judge Andrews noted, slip op. at 5, and he “determined that estoppel may apply post-trial,” id. at 6. He also found that Par “could have raised” the twenty-seven prior art references in the IPR proceeding because it used them at the district court trial, which took place before Par’s IPR reply deadline. Id. Contingent on Novartis’s withdrawal of the infringement allegations for the unchallenged claim, and its grant of a covenant not to sue for that claim, Judge Andrews granted Novartis’s motion for estoppel. Id. at 7.

This case highlights estoppel issues that can arise when a district court fails to reach all the issues raised at trial. The district court had held an obviousness trial involving twenty-seven prior art references in September 2016, over a year before the preclusive PTAB decision issued in January 2018, and the court issued its trial opinion ten months before the PTAB’s ruling. Because the court did not reach the obviousness defenses and counterclaims in its final judgment, however, the fully-tried claims were estopped. In light of this order, Practitioners should consider apprising courts of the estoppel issues that may arise from partial rulings.