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The Turning Tide of Adoption of the Lead Compound Analysis Is Favoring Patent Owners at the PTAB

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Sterne, Kessler, Goldstein & Fox

The PTAB is starting to provide teeth to the Federal Circuit’s lead compound analysis making it more difficult for petitioners to successfully challenge chemical patents in AIA proceeding, as well as providing patent owners more tools to secure patents during prosecution.

Pre-2000 structurally similar compounds rendered chemical claims obvious

Historically, obviousness of chemical compounds was assessed under the standard articulated in the Federal Circuit's 1990 decision in In re Dillon.[i]

Under this approach, the claimed compound was prima facie obvious if the compound was structurally similar to the prior art compound, and the prior art provided any reason to makes the claimed compound.[ii] Thus, there was no requirement that the given prior art compound had more beneficial properties than other prior art compounds. There was also no requirement that the prior art compound had the same utility as the claimed compound.[iii]

Under the Dillon standard, any reason for modifying a structurally similar prior art compound with a stated utility was sufficient to establish a prima facie case of obviousness.

Post-2000 the USPTO and PTAB demonstrated a slower progression to embrace the lead compound framework than the federal courts

Seventeen years ago, the Federal Circuit articulated a new approach for assessing the obviousness of a chemical compound—the Lead Compound Analysis (LCA).[iv]

Under this approach, there must be a reason for a POSA to select a prior art compound as a "lead," and a reason to modify the prior art compound with a reasonable expectation of success.[v] A key distinction between the Dillon approach and the LCA is that to qualify as a "lead," the compound must possess some beneficial property that somehow distinguish it from other prior art compounds. Thus, by focusing on the most promising prior art compound rather than the closest prior art compound, the LCA imposes a much higher burden for showing obviousness in chemical arts.

While the federal courts were analyzing chemical compound claims under the LCA, the Board continued to focus on the closest prior art approach.

For example, in Ex parte Cao, the Board refused to apply the LCA in analyzing obviousness of a positional isomer.[vi] In fact, the Board made it clear that the chemical obviousness does not always require identification of a lead compound: "[t]he Eisai court did not promulgate a per se rule that chemical compounds can only be held obvious if a lead compound is first identified … [and] did not overrule the long-standing principles that … one who claims a compound, per se, which is structurally similar to a prior art compound must rebut the presumed expectation that the structurally similar compounds have similar properties."[vii]

Cases that followed seemed to be consistent with the Board's reluctance to operate under the LCA approach.

In Ex parte Mayorga, the Board found that one of 24 compounds qualified as a lead compound, despite the fact that it was not the most potent compound.[viii] In Board's view, "good activity relative to the other compounds" was sufficient for its selection as the lead.[ix]

In Ex parte Gaul, the Board was not persuaded by an argument that another prior art compound would been a better lead: "the ordinary artisan would not have picked just one compound."[x]

In Ex parte Dong, the Board found that the lack of biological data for prior art compound was not fatal for selecting one of the compounds as a lead, effectively ignoring the LCA: "[w]e are not persuaded, however, that [the lead compound cases] mandate that the only compounds useful for evaluating obviousness are those for which the prior art had provided specific comparative data."[xi]

The Tide Has Turned—the LCA is Faring Well for Patent Owners in IPRs

Despite this initial reluctance to accept the LCA, the Board has been operating under a strict LCA framework in IPR proceedings – which appears may lead to more denials of institution for patent owners or at least patent owner wins at final written decision. So petitioners need to better address LCA in their petition to increase their change for success.

In Sawai USA v. Nissan Chemical Industries LTD., the Board denied institution, finding that because the prior art "does not disclose any biological or pharmacokinetic data" for the alleged lead compound, the prior art "provides no suggestion that this compound … should serve as a lead compound."[xii] The Board continued to state that "structural similarities alone are not enough to inform a lead compound selection," expressly rejecting the Dillon approach.[xiii]

In Mylan Laboratories Limited v. Aventis Pharma S.A., the Board similarly found that there was no evidence to establish "whether a particular compound performs better or worse than [another prior art compound]," thus rejecting petitioner obviousness arguments.[xiv]

In Fustibal LLC v. Bayer Healthcare LLC, the Board denied institution because "the Petitioner nowhere engages in a 'lead compound analysis' and … merely assumes—without explanation—that the POSA would select [the lead compound] for modification."[xv]

Most recently, in Incyte Corporation v. Concert Pharmaceutical, Inc., the Board denied institution because petitioner failed to show that a POSA would have selected the alleged prior art compound as the lead.[xvi] According to the Board, it was not enough that the alleged lead compound was FDA approved because it did not distinguish it "from the panoply of known compounds in the prior art."[xvii]

All-in-all, the trend is clear—the Board is now strictly adhering to a lead compound framework when assessing obviousness of chemical compounds in AIA proceeds, and during prosecution. Thus, the predictions that chemical compound challenges might be more successful in AIA proceedings—based largely on Board's decisions in ex parte appeals—have not materialized. And both sides of the “v” need to take this into consideration to be successful.

[i] In re Dillon, 919 F.2d 688 (Fed. Circ. 1990).
[ii] Id. at 692.
[iii] Id.
[iv] Yamanouchi Pharm. Co., Ltd. v. Danbury Pharmacal, Inc., 231 f.3d 1339 9Fed. Cir. 2000).
[v] Otsuka Pharm. Co. Ltd. v. Sandoz Inc., 678 F.3d 1280, 1291 (Fed. Cir. 2012)|
[vi] Ex parte Cao, Appeal 2010-004081 (BPAI Sept. 19 2011).
[vii] Id. at 7-8.
[viii] Ex parte Mayorga, Appeal 2010-012157 (BPAI Sept. 29, 2011)
[ix] Id. at 8.
[x] Ex parte Gaul, Appeal 2011-010047, at 6 (BPAI Jan. 28, 2013)
[xi] Ex parte Dong, Appeal 2011-010047, at 6-7 (PTAB Jan. 28, 2013)
[xii] IPR2015-01647, Paper 9 at 14.
[xiii] Id.
[xiv] IPR2016-00627, Paper 10 at 12.
[xv] IPR2016-01490, Paper 9, at 17.
[xvi] IPR2017-01256, Paper 9, at 17.
[xvii] Id.


This article appeared in the December 2017 issue of PTAB Strategies and Insights. To view our past issues, as well as other firm newsletters, please click here.