Astellas case highlights patent eligibility under Section 101 and the party presentation principle

In Astellas Pharma Inc. v. Sandoz Inc., the US Court of Appeals for the Federal Circuit vacated a sua sponte district court ruling that found Astellas’s asserted patent ineligible under Title 35 of the US Code, Section 101. The Federal Circuit decision affirmed the applicability of the party presentation principle with respect to issues of patent eligibility under Section 101; as with other grounds of invalidity, the district court’s role in patent eligibility is limited to determining whether the patent challenger has met its burden.

The district court rules sua sponte on patent eligibility under Section 101

Astellas asserted US Patent No. 10,842,780 (the ’780 patent) against several generic defendants, including Sandoz, Inc. in Hatch-Waxman litigation in the US District Court for the District of Delaware. The ’780 patent, directed to sustained release dosage forms of compositions comprising mirabegron and methods of treating overactive bladder using the same, is listed in the US Food and Drug Administration’s Orange Book for Astellas’s Myrbetriq® drug product. Although other invalidity defenses were asserted, no defendant raised the issue of patent eligibility under Section 101, either during the trial or post-trial briefing.

Despite this, the district court held that the asserted claims were “invalid as directed to patent-ineligible subject matter under [Section] 101.” In doing so, the court relied on Astellas’s post-trial briefing argument concerning invalidity under Title 35 of the US Code, Section 112. Astellas argued that the ’780 patent was adequately enabled because it claims the discovery of the dissolution rate that would address the food effect of mirabegron in patients and achieving it using previously known formulation technology. According to the district court, the claimed discovery of the food-effect-resolving dissolution profile described by Astellas is a natural law applied via routine, conventional, and well-known methods, and thus invalid subject matter. The district court also denied Sandoz’s motion for additional findings of fact and conclusions of law on issues of noninfringement and validity under Section 112.

The Federal Circuit vacates and remands: Applying the party presentation principle

On an appeal by Astellas, the Federal Circuit vacated the district court’s ruling because it decided an issue not raised by any party at any stage of the case and in doing so, the district court abused its discretion by disregarding the longstanding principle of party presentation.

In finding that the principle of party presentation applied, the Federal Circuit explained that rendering a patent invalid on a basis not advanced by any party is not a circumstance where a court may “take a modest initiating role in the shape of a litigation.” Instead, Section 282 requires that a patent be presumed valid and that the party asserting invalidity bears the burden of establishing such invalidity by clear and convincing evidence. A court’s role in adjudicating patentability is therefore limited to determining whether the patent’s challenger met this burden of proving invalidity.

The Federal Circuit further noted that the district court’s treatment of patent eligibility suffered a fundamental flaw. The district court treated eligibility under Section 101 as a threshhold inquiry, akin to subject-matter jurisdiction. However, the Federal Circuit noted that the presumption of validity under Section 282 applies equally to all grounds of validity, including subject matter eligibility. Therefore, for purposes of the party presentation principle, a district court must treat validity under Section 101 for an issued patent the same as validity under Sections 102, 103, and 112 and may not rule on eligibility sua sponte.

The Federal Circuit distinguished the facts in Astellas from previous cases where it had considered Section 101 issues not raised by the parties on appeal from decisions of the Board of Patent Appeals and Interferences because “a reviewing court can (and should) affirm an agency decision on a legal ground not relied on by the agency if there is no issue of fact, policy, or agency expertise.” District court litigations, however, implicate no such agency decisions. The court similarly distinguished district court decisions involving the validity of issued patents from the PTO’s decision to grant a patent in the first instance. For the purpose of obtaining patent protection, eligibility under Section 101 remains a threshold inquiry.

Astellas also requested that the case be reassigned to a different district court judge on remand. The Federal Circuit denied this relief, and found, inter alia, that the district court’s failure to abide by the party presentation principle alone did not warrant such a remedy.

Astellas’s impact: Section 101 cannot be decided sua sponte by district courts

The Astellas decision makes clear that district courts should treat eligibility of issued patents under Section 101 in the same manner they treat other invalidity defenses. Patent challengers are encouraged to include fulsome Section 101 analyses in their invalidity contentions if they plan to pursue such defenses during the litigation. Conversely, if a patent challenger fails to raise a Section 101 defense, the Astellas decision puts a patent owner on firm footing for appealing a district court’s decision to consider the issue sua sponte.

Though the Federal Circuit decided Astellas on procedural grounds, it also expressed serious doubts about the substantive merits of the district court’s Section 101 analysis. Practitioners litigating patent disputes involving small molecules are encouraged to continue following Federal Circuit Section 101 jurisprudence as it evolves.

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