The Federal Circuit affirmed the PTAB’s final determination in Genzyme Therapeutic Products Limited Partnership v. Biomarin Pharmaceutical Inc., Nos. 2015-1720, 2015-1721 (Fed. Cir. June 14, 2016), holding that the PTAB did not violate the Administrative Procedure Act (APA) by relying upon prior art references not identified in the grounds on which the PTAB instituted review.  In particular, the Federal Circuit held that the PTAB properly relied upon those references to establish the state of the art at the time of invention of the claimed invention.

The patents at issue are Genzyme’s U.S. Patent Nos. 7,351,410 (“the ’410 patent”) and 7,655,226 (“the ’226 patent”), which are directed towards the treatment of Pompe disease. Pompe disease is a genetic condition that results in a deficiency or absence of a certain enzyme, acid alpha glucosidase (“GAA”), that is used to break down glycogen.  The inability to break down glycogen in the body causes the glycogen to accumulate in a patient’s heart and skeletal muscles, causing progressive deterioration and ultimate failure of those muscles.  Pompe’s disease can be treated by injecting GAA with mannose-6-phosphate (“M-6-P”) into patients, causing GAA to be taken up in heart and skeletal muscles with M-6-P receptors.

Biomarin filed two IPR petitions challenging the validity of Genzyme’s ’410 and ’226 patents. The PTAB instituted review of the ’410 and ’226 patents on grounds that the claims were invalid as obvious in view of the prior art. In its patent owner responses, Genzyme argued that the claims of the ’410 and ’226 patents were not obvious because each of the prior art references were directed towards in vitro experiments, and that there was no evidence that a person of ordinary skill would have a reasonable expectation of success applying those experiments in a human.  In its reply, Biomarin challenged Genzyme’s non-obviousness argument and identified two references in response – van der Ploeg ’91 and Kikuchi – showing successful in vivo tests administering GAA.  The van der Ploeg ’91 and Kikuchi references were not identified in the instituted grounds for review.

The PTAB found the challenged claims of the ’410 and ’226 invalid as obvious. In particular, the PTAB found that a person of ordinary skill could have arrived at the claimed inventions through “routine optimization” of the prior art.  In reaching this conclusion, the PTAB relied upon the Kikuchi and van der Ploeg ’91 references to establish the state of the art regarding in vivo studies.

Genzyme challenged the PTAB’s final determination, inter alia, on the grounds that the PTAB “relied on ‘facts and legal arguments’ that were not set forth in the institution decisions.” Id. (slip op., at 7).  In particular, Genzyme took issue with the fact that the PTAB’s final determination relied on the Kikuchi and van der Ploeg ’91 references to establish obviousness without providing notice of those specific references in its institution decision.  In Genzyme’s view, the PTAB improperly “change[d] theories in midstream,” thereby depriving Genzyme of notice and an opportunity to be heard as required by the APA. Id. (slip op., at 7-8).

On appeal, the Federal Circuit rejected Genzyme’s argument, holding that Genzyme had actual notice of the Kikuchi and van der Ploeg ’91 references and had an opportunity to be heard with regards to those references.

Parties to an IPR Have the Opportunity to Develop an Evidentiary Record
In rejecting Genzyme’s argument, the Federal Circuit held that “[t]here is no requirement, either in the Board’s regulations, in the APA, or as a matter of due process, for the institution decision to anticipate and set forth every legal or factual issue that might arise in the course of the trial.” Id. (slip op., at 9).  More specifically, the Federal Circuit noted that the purpose of trial in an IPR is to “give the parties an opportunity to build a record by introducing evidence—not simply to weight evidence of which the Board is already aware.” Id. (slip op., at 10).

Applying these principles, the Federal Circuit found that Genzyme had notice of the issues to be considered because Genzyme had itself raised the issue of the in vivo studies in its brief.  In particular, the Federal Circuit highlighted Genzyme’s argument in its briefing that in vivo studies should not be considered as rebuttal evidence, along with subsequent argument by counsel during trial that the in vivo studies could not be used to show a reasonable expectation of success. Id. (slip op., at 10-11).  From these arguments, the Federal Circuit concluded that “Genzyme had actual notice of the in vivo references and an opportunity to respond to them—an opportunity that Genzyme took advantage of in arguing that those references could only be used for limited purposes.” Id. (slip op., at 12).

References Used to Establish State of Art Do Not Need to be Cited in IPR Institution Decision
The Federal Circuit further made clear that the PTAB can rely upon references to “show the state of the art at the time of invention, regardless of whether that reference was cited in the Board’s institution decision.” Id. (slip op., at 14).  So long as the PTAB does not also rely upon these references to establish any claim limitations, these background references can be properly relied upon by the PTAB without being identified in the IPR institution decision.

Here, the Federal Circuit concluded that the Kikuchi and van der Ploeg ’91 references were properly used for the purpose of establishing the knowledge a person of ordinary skill would have possessed when reviewing prior art in the context of an obviousness analysis. Id. (slip op., at 14).  These references were not used to establish any claim elements – only the references identified in the institution decision were used to establish the claim elements.

Procedural Mechanisms Ensure a Party has the Opportunity to be Heard During an IPR
The Federal Circuit also noted that Genzyme had two procedural mechanisms available to respond to Biomarin’s arguments regarding the Kikuchi and van der Ploeg ’91 references: (1) a motion for leave to file a sur-reply to address those arguments, or (2) a motion to exclude those references. Id. (slip op., at 12-13).  These procedural mechanisms provided Genzyme with an opportunity to be heard, but Genzyme did not take advantage of either of these procedural mechanisms.

Genzyme affirms the PTAB’s ability to rely upon references cited in a Petitioner’s reply brief to establish the state of the art at the time of invention for the purposes of an obviousness analysis, even if those references were not cited in the Petition or identified in the IPR institution decision.  The IPR process allows for the introduction of evidence by both the petitioner and patent owner to develop a complete evidentiary record on the grounds set forth in the institution decision.  As such, parties to an IPR proceeding can introduce new prior art references during discovery to establish the state of the art, so long as those references are not substantively used to establish any claim limitations.

Genzyme further serves as a reminder that IPR proceedings provide procedural mechanisms that provide parties with an opportunity to be heard. To the extent that a party is denied from using these procedural mechanisms (e.g., denied from responding to new arguments raised in a reply brief), there may be an argument that the PTAB violated the due process protections afforded by the APA. See, e.g., Cuozzo Speed Technologies, LLC v. Lee, 579 U.S. __ (2016) (slip op., at 11-12) (noting that “shenanigans may be properly reviewable in the context of §319 and under the Administrative Procedure Act, which enables reviewing courts to set aside agency action that is contrary to constitutional right, in excess of statutory jurisdiction, or arbitrary [and] capricious” (internal quotations omitted)).