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Altaire Pharmaceuticals, Inc. v. Paragon Bioteck, Inc.

Plan to File Future ANDA to Permit Continued Manufacture Sufficient to Confer Article III Standing

Altaire Pharmaceuticals, Inc. v. Paragon Bioteck, Inc., __ F.3d __, 2018 WL 2167293 (Fed. Cir. May 11, 2018) (O’Malley, Schall (dissenting), WALLACH) (PTAB) (3 of 5 stars)

Fed Cir part-reverses, part-vacates PGR nonobviousness determination. Paragon’s patent claims related to ophthalmic use of a composition including phenylephrine of “chiral purity” ≥ 95%. Altaire had Article III standing to appeal the PTAB’s final decision of nonobviousness. Altaire carried its burden to show a concrete, particularized injury by demonstrating that, at some future point, Altaire would file an ANDA and would be subject to suit under Paragon’s patent. Such injury was “inevitable,” notwithstanding that Altaire and Paragon are currently operating under an agreement under which Altaire manufactures ophthalmic phenylephrine products for Paragon. The opinion describes how Paragon had already begun efforts to terminate the agreement, which will expire on its own in 2021, and Altaire’s repeated statements that it plans to file an ANDA to manufacture and sell ophthalmic phenylephrine products in its own right. Altaire’s injury is both concrete and particularized, as the existence of the patent is an obstacle to Altaire’s commercial plans. Further, the estoppel that would attach from Altaire’s participation in the PGR process further demonstrates concrete, particularized injury. Phigenix, 845 F.3d 1168 (Fed. Cir. 2017), and Consumer Watchdog, 753 F.3d 1258 (Fed. Cir. 2014), are not contradictory, as Altaire is already a manufacturer of the technology in question.

The PTAB abused its discretion by assigning no weight to testimony from an Altaire witness concerning the chirality of certain lots Altaire manufactured and tendered to Paragon prior to Paragon’s filing date. The PTAB’s basis for that decision—that Altaire had failed to timely qualify the witness as an expert—was improper. First, Rule 42.65 does not require that affidavits corroborating technical data be from experts. Second, the opinion describes how, while the witness’s first declaration had not laid out his qualifications as an expert, he had submitted a second declaration addressing qualifications after Paragon challenged him. “To the extent the PTAB was concerned about Paragon’s ability to respond to the extensive qualifications set forth in the Second . . . Declaration, the PTAB could have permitted Paragon to file a surreply.” Op. at 16.

The PTAB also abused its discretion by refusing to consider certain evidence about standards and sample preparation methods used to perform high-performance liquid chromatography (“HLPC”) on the lots in question. The opinion notes that in prior interactions, Paragon had not challenged Altaire’s HLPC methodology, including when submitting results to the FDA. “[W]e conclude that Altaire had no reason to suspect that Paragon would later challenge the data, upon which it previously relied, as unreliable before the PTAB.” Id. at 18. When Paragon did challenge the data, Altaire used its reply to provide additional information. “To the extent Paragon wished to contest this additional evidence, the PTAB could have permitted Paragon to file a surreply.” Id.

Based on the foregoing, on remand the PTAB must reconsider its conclusion that certain tests tendered by Altaire were insufficient to carry its evidentiary burden to show that Altaire’s pre-patent product met the claims’ chiral purity limitations.

Dissent: Judge Schall would have dismissed for lack of jurisdiction on standing grounds. In his view, Altaire failed to demonstrate that it is threatened with imminent harm.

KEYWORDS: ARTICLE III; STANDING; INJURY IN FACT; ABUSE OF DISCRETION; POST-GRANT REVIEW