United States Court of Appeals
`for the Federal Circuit
`______________________
`
`NOVARTIS AG, LTS LOHMANN THERAPIE-
`SYSTEME AG,
`Appellants
`
`v.
`
`NOVEN PHARMACEUTICALS INC.,
`Appellee
`______________________
`
`2016-1678, 2016-1679
`______________________
`
`Appeals from the United States Patent and Trade-
`mark Office, Patent Trial and Appeal Board in Nos.
`IPR2014-00549,
`IPR2014-00550,
`IPR2015-00265,
`IPR2015-00268.
`
`______________________
`
`Decided: April 4, 2017
`______________________
`
`CHARLOTTE JACOBSEN, Fitzpatrick, Cella, Harper &
`Scinto, New York, NY, argued for appellants. Also repre-
`sented by NICHOLAS N. KALLAS, CHRISTOPHER EARL LOH,
`JARED LEVI STRINGHAM.
`
`
`STEVEN J. LEE, Andrews Kurth Kenyon LLP, New
`York, NY, for appellee. Also represented by CHRISTOPHER
`JUSTIN COULSON, KULSOOM ZEHRA HASAN, MICHAEL K.
`LEVY.
`
`Sandoz Inc. IPR2016-00318
`Sandoz v. Eli Lilly, Exhibit 1138-0001
`
`

`

`2
`
`
`
` NOVARTIS AG v. NOVEN PHARM. INC.
`
`FRANCES LYNCH, Office of the Solicitor, United States
`Patent and Trademark Office, Alexandria, VA, argued for
`intervenor Michelle K. Lee. Also represented by NATHAN
`K. KELLEY, KAKOLI CAPRIHAN, SCOTT WEIDENFELLER.
`______________________
`
`Before PROST, Chief Judge, WALLACH and STOLL, Circuit
`Judges.
`WALLACH, Circuit Judge.
`The instant appeals concern inter partes reviews of
`U.S. Patent Nos. 6,316,023 (“the ’023 patent”) and
`6,335,031 (“the ’031 patent”) (together, “the Patents-in-
`Suit”). In two separate final written decisions, the U.S.
`Patent and Trademark Office’s (“USPTO”) Patent Trial
`and Appeal Board (“PTAB”) found that various claims of
`the Patents-in-Suit (“the Asserted Claims”)1 would have
`been obvious over the prior art. See Noven Pharm., Inc. v.
`Novartis AG (Noven I), No. IPR2014-00549, 2015 WL
`5782080, at *23 (P.T.A.B. Sept. 28, 2015) (finding the
`disputed claims of the ’023 patent unpatentable as obvi-
`ous); Noven Pharm., Inc. v. Novartis AG (Noven II), No.
`IPR2014-00550, 2015 WL 5782081, at *23 (P.T.A.B. Sept.
`28, 2015) (finding the disputed claims of the ’031 patent
`unpatentable as obvious). The PTAB maintained its
`findings when asked to reconsider them. See Noven
`Pharm., Inc. v. Novartis AG (Noven III), No. IPR2014-
`00549, 2015 WL 9599194, at *8 (P.T.A.B. Nov. 30, 2015)
`(denying request to reconsider Noven I); Noven Pharm.,
`Inc. v. Novartis AG (Noven IV), No. IPR2014-00550, 2015
`WL 9599195, at *8 (P.T.A.B. Nov. 30, 2015) (denying
`request to reconsider Noven II). Appellants Novartis AG
`and LTS Lohmann Therapie-Systeme AG (together,
`
`1 The Asserted Claims include claims 1–2, 4–5, and
`7–8 of the ’023 patent and claims 1–3, 7, 15–16, and 18 of
`the ’031 patent.
`
`Sandoz Inc. IPR2016-00318
`Sandoz v. Eli Lilly, Exhibit 1138-0002
`
`

`

`NOVARTIS AG v. NOVEN PHARM. INC.
`
`3
`
`“Novartis”) contest numerous aspects of the Final Written
`Decisions, including the PTAB’s conclusion that prior
`judicial opinions did not control its inquiry and the
`PTAB’s factual findings in support of its obviousness
`conclusion. We affirm.
`DISCUSSION
`I. Subject Matter Jurisdiction and Standard of Review
`We possess subject matter jurisdiction pursuant to 28
`U.S.C. § 1295(a)(4)(A) (2012). “We review the PTAB’s
`factual findings for substantial evidence and its legal
`conclusions de novo.” Redline Detection, LLC v. Star
`Envirotech, Inc., 811 F.3d 435, 449 (Fed. Cir. 2015) (cita-
`tion omitted). “Substantial evidence is something less
`than the weight of the evidence but more than a mere
`scintilla of evidence,” meaning that “[i]t is such relevant
`evidence as a reasonable mind might accept as adequate
`to support a conclusion.” In re NuVasive, Inc., 842 F.3d
`1376, 1379–80 (Fed. Cir. 2016) (internal quotation marks
`and citations omitted).
`II. The PTAB Properly Concluded that the Asserted
`Claims of the Patents-in-Suit Would Have Been Obvious
`A patent claim is unpatentable when “the differences
`between the subject matter sought to be patented and the
`prior art are such that the subject matter as a whole
`would have been obvious at the time the invention was
`made to a person having ordinary skill in the art
`[(‘PHOSITA’)] to which said subject matter pertains.” 35
`U.S.C. § 103(a) (2006).2 Obviousness “is a question of law
`
`
`2 Congress amended § 103 when it passed the
`Leahy-Smith America Invents Act (“AIA”). Pub. L. No.
`112-29, § 3(c), 125 Stat. 284, 287 (2011). However, be-
`cause the applications that led to the Patents-in-Suit have
`never contained (1) a claim having an effective filing date
`
`Sandoz Inc. IPR2016-00318
`Sandoz v. Eli Lilly, Exhibit 1138-0003
`
`

`

`4
`
`
`
` NOVARTIS AG v. NOVEN PHARM. INC.
`
`based on underlying findings of fact.” In re Gartside, 203
`F.3d 1305, 1316 (Fed. Cir. 2000) (citation omitted). The
`underlying factual findings include (1) “the scope and
`content of the prior art,” (2) “differences between the prior
`art and the claims at issue,” (3) “the level of ordinary skill
`in the pertinent art,” and (4) the presence of secondary
`considerations of nonobviousness such “as commercial
`success, long felt but unsolved needs, failure of others,”
`and unexpected results. Graham v. John Deere Co. of
`Kan. City, 383 U.S. 1, 17 (1966); see United States v.
`Adams, 383 U.S. 39, 50–52 (1966).
`The PTAB found that the Asserted Claims of the Pa-
`tents-in-Suit would have been obvious over several differ-
`ent combinations of prior art references. See Noven I,
`2015 WL 5782080, at *23; Noven II, 2015 WL 5782081, at
`*23. The PTAB found that claims 1–2, 4–5, and 7 of the
`’023 patent would have been obvious over a combination
`of two prior art references—United Kingdom Patent
`Application GB 2,203,040 (“Enz”) (J.A. 588–610) and
`Japanese Patent Application 59-184121 (“Sasaki”) (J.A.
`634–37)—and that claim 8 would have been obvious over
`a combination of Enz, Sasaki, and two other references.3
`See Noven I, 2015 WL 5782080, at *23. The PTAB also
`found that claims 1–3, 7, 15–16, and 18 of the ’031 patent
`would have been obvious over Enz and Sasaki. See Noven
`II, 2015 WL 5782081, at *23.
`
`
`on or after March 16, 2013 or (2) a reference under 35
`U.S.C. §§ 120, 121, or 365(c) to any patent or application
`that ever contained such a claim, the pre-AIA § 103
`applies. See id. § 3(n)(1), 125 Stat. at 293.
`3 The PTAB found that Novartis did not separately
`argue the patentability of claim 8 of the ’023 patent, see
`Noven I, 2015 WL 5782080, at *14, and Novartis does not
`contest that finding here, see generally Appellants’ Br.
`
`Sandoz Inc. IPR2016-00318
`Sandoz v. Eli Lilly, Exhibit 1138-0004
`
`

`

`NOVARTIS AG v. NOVEN PHARM. INC.
`
`5
`
`Instead of raising arguments on the basis of a specific
`claim, patent, or Final Written Decision, Novartis raises
`broad legal and factual arguments with application to
`both of the Final Written Decisions. See Appellants’ Br. 6
`n.1 (stating that the appealed decisions “are substantively
`nearly the same” and that it will refer only to Noven II
`throughout its brief), 35–65 (presenting arguments); see
`also Appellee’s Br. 1 n.1 (agreeing to follow Novartis’s
`convention and cite only to Noven II). After providing a
`brief description of the Patents-in-Suit, we address No-
`vartis’s arguments in turn.
`A. The Patents-in-Suit
`The Patents-in-Suit belong to the same patent family,
`with the ’023 patent having issued from a continuation of
`the application that led to the ’031 patent.4 Entitled “TTS
`Containing an Antioxidant,” the Patents-in-Suit generally
`disclose a “[p]harmaceutical composition comprising” a
`compound commonly known as rivastigmine “in free base
`or acid addition salt form and an antioxidant.” ’023
`patent, Abstract; ’031 patent, Abstract. The rivastigmine
`in the Patents-in-Suit “is useful . . . for the treatment of
`Alzheimer’s disease.” ’023 patent col. 1 ll. 15–17; ’031
`patent col. 1. ll. 14–16.
`B. Prior Judicial Opinions Did Not Bind the PTAB
`Novartis alleges that a fundamental legal error per-
`vades the PTAB’s Final Written Decisions: the PTAB
`
`4
`“A continuing patent application is an application
`filed subsequently to another application, while the prior
`application is pending, disclosing all or a substantial part
`of the subject-matter of the prior application and contain-
`ing claims to subject-matter common to both applica-
`tions . . . .” U.S. Water Servs., Inc. v. Novozymes A/S, 843
`F.3d 1345, 1348 n.1 (Fed. Cir. 2016) (internal quotation
`marks and citation omitted).
`
`Sandoz Inc. IPR2016-00318
`Sandoz v. Eli Lilly, Exhibit 1138-0005
`
`

`

`6
`
`
`
` NOVARTIS AG v. NOVEN PHARM. INC.
`
`unlawfully reached different conclusions than our court
`and the U.S. District Court for the District of Delaware
`(“Delaware District Court”), which addressed the “same”
`arguments and the “same” evidence and found the Assert-
`ed Claims nonobvious in two prior opinions. Appellants’
`Br. 29; see id. at 35–39, 46–47, 52–56, 60–62 (discussing
`Novartis Pharm. Corp. v. Watson Labs., Inc., 611 F. App’x
`988 (Fed. Cir. 2015) and Novartis Pharm. Corp. v. Noven
`Pharm., Inc. (Noven D. Del.), 125 F. Supp. 3d 474 (D. Del.
`2015)). In support of that position, Novartis relies sub-
`stantially on a single sentence from our decision in In re
`Baxter International, Inc. See, e.g., id. at 30 (discussing
`678 F.3d 1357, 1365 (Fed. Cir. 2012)).
`legal
`factual and
`Novartis’s argument
`fails on
`grounds. As an initial matter, the record here differed
`from that in the prior litigation, meaning that Novartis’s
`argument rests on a faulty factual predicate. With re-
`spect to Watson, the PTAB found that it “does not control
`here because [Appellee] Noven [Pharmaceuticals Inc.
`(‘Noven’)] has presented additional prior art” like Sasaki
`“and declaratory evidence that was not before the [c]ourt”
`in that case.5 Noven II, 2015 WL 5782081, at *2. Similar-
`ly, as to Noven D. Del., the PTAB found that it did not
`control because the parties provided additional evidence
`that was not before the Delaware District Court.6 Id.; see
`
`
`5 Mylan Pharmaceuticals Inc. initially joined Noven
`as an appellee here, but later withdrew.
`6 Noven also argues that the “record additionally
`includes four confidential Novartis documents that were
`not of the record in Noven [D. Del].” Appellee’s Br. 11; see
`id. at 11–13 (discussing the contents of the confidential
`documents). The PTAB did not identify these documents
`as the basis for not following Noven D. Del., see Noven II,
`2015 WL 5782081, at *2, and neither will we, see Burling-
`ton Truck Lines, Inc. v. United States, 371 U.S. 156, 169
`
`Sandoz Inc. IPR2016-00318
`Sandoz v. Eli Lilly, Exhibit 1138-0006
`
`

`

`NOVARTIS AG v. NOVEN PHARM. INC.
`
`7
`
`id. at *5 (identifying as new evidence two declarations of
`Dr. Agis Kydonieus, two declarations of Dr. Christian
`Schöneich, and one declaration of Dr. Alexander M.
`Klibanov). Novartis tacitly concedes that the record here
`is different. See Appellants’ Reply 7 n.1 (“The USPTO
`and Noven argue that the parties submitted expert decla-
`rations and deposition testimony that was not before the
`Noven [D. Del.] Court. But neither disputes that these
`materials are substantively the same as the experts’
`testimony before the Noven [D. Del.] Court.” (emphasis
`added) (citations omitted)), 11 (“The [PTAB] sought to
`explain its rejection of this [c]ourt’s Watson decision on
`grounds that Noven presented art and evidence in the
`[inter partes review] that was not before the Watson
`[c]ourt[]. While differences in the record could justify a
`different outcome overall, under Baxter, they do not sup-
`port the [PTAB]’s contrary conclusions on the specific
`rivastigmine art and arguments previously adjudicated in
`Watson.” (emphasis added) (citation omitted)). It is
`unsurprising that different records may lead to different
`findings and conclusions.
`Nevertheless, even if the record were the same, No-
`vartis’s argument would fail as a matter of law. The
`PTAB determined that a “petitioner in an inter partes
`review proves unpatentability by a preponderance of the
`evidence (see 35 U.S.C. § 316(e)) rather than by clear and
`convincing evidence[] as required in district court litiga-
`tion,” meaning that the PTAB properly may reach a
`
`
`(1962) (“A simple but fundamental rule of administrative
`law is that a reviewing court, in dealing with a determi-
`nation or judgment which an administrative agency alone
`is authorized to make, must judge the propriety of such
`action solely by the grounds invoked by the agency.”
`(internal quotation marks, ellipses, brackets, and citation
`omitted)).
`
`Sandoz Inc. IPR2016-00318
`Sandoz v. Eli Lilly, Exhibit 1138-0007
`
`

`

`8
`
`
`
` NOVARTIS AG v. NOVEN PHARM. INC.
`
`different conclusion based on the same evidence. Noven
`II, 2015 WL 5782081, at *2 (italics omitted). That posi-
`tion comports with recent Supreme Court precedent,
`which held that
`[a] district court may find a patent claim to be val-
`id, and the [USPTO] may later cancel that claim
`in its own review. . . . This possibility, however,
`has long been present in our patent system, which
`provides different tracks—one in the [USPTO]
`and one in the courts—for the review and adjudi-
`cation of patent claims.
` As we have ex-
`plained . . . ,
`inter partes review
`imposes a
`different burden of proof on the challenger. These
`different evidentiary burdens mean that the pos-
`sibility of inconsistent results is inherent to Con-
`gress’[s] regulatory design.
`Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2146
`(2016) (citation omitted). Thus, the prior decisions in
`Watson and Noven D. Del. did not bind the PTAB.
`Finally, Baxter does not necessitate a different conclu-
`sion. There, we stated that the USPTO “ideally should
`not arrive at a different conclusion” if it faces the same
`evidence and argument as a district court. Baxter, 678
`F.3d at 1365. Novartis treats “ideally” in that passage as
`a mandate. See, e.g., Appellants’ Br. 30 (citing the rele-
`vant passage from Baxter and arguing that it “is legal
`error” for the PTAB to reach a different conclusion).
`However, the context in which that passage appears
`demonstrates that we used “ideally” to connote aspiration
`and, in fact, recognized that Congress has provided a
`separate review mechanism before the USPTO with its
`own standards. See Baxter, 678 F.3d at 1365 (“However,
`the fact is that Congress has provided for a reexamination
`system that permits challenges to patents by third par-
`ties, even those who have lost in prior judicial proceed-
`
`Sandoz Inc. IPR2016-00318
`Sandoz v. Eli Lilly, Exhibit 1138-0008
`
`

`

`NOVARTIS AG v. NOVEN PHARM. INC.
`
`9
`
`ings.”). We will not imbue Baxter with a meaning that the
`decision itself does not support.
`C. Substantial Evidence Supports the PTAB’s Underlying
`Factual Findings
`“As part of the obviousness inquiry, we consider
`whether a PHOSITA would have been motivated to
`combine the prior art to achieve the claimed inven-
`tion . . . .” In re Warsaw Orthopedic, Inc., 832 F.3d 1327,
`1333 (Fed. Cir. 2016) (internal quotation marks, brackets,
`and citation omitted). “The answer[] to th[at] question[]
`require[s] producing factual findings that we review for
`substantial evidence.” Id. (citations omitted). Novartis
`contends that substantial evidence does not support
`several of the PTAB’s factual findings regarding the
`motivation to combine Enz and Sasaki. See Appellants’
`Br. 39–45, 48–52, 56–60, 62–65. We disagree.
`Before we address Novartis’s motivation to combine
`concerns, we first must understand what Enz and Sasaki
`disclose. The PTAB found that Enz discloses a transder-
`mal patch containing rivastigmine and an acrylic poly-
`mer. See Noven II, 2015 WL 5782081, at *7–10; see also
`J.A. 588–610. The PTAB also found Sasaki teaches that
`(1) “the therapeutic effect of a” compound combined with
`acrylic polymer “tends to be greatly reduced due to the
`breakdown and dissipation of the drug when . . . stored for
`a long time”; and (2) if an antioxidant is added to the
`combination, “the drug will be stably present without
`breaking down.” Noven II, 2015 WL 5782081, at *8
`(internal quotation marks and citations omitted); see J.A.
`634–37. Novartis does not challenge these findings. See
`generally Appellants’ Br.
`Turning to its motivation to combine arguments, No-
`vartis argues that the record contains no evidence that a
`PHOSITA “would have been motivated to add an antioxi-
`dant” to rivastigmine “absent evidence of oxidative degra-
`dation.” Id. at 40. First, Novartis avers that the record
`
`Sandoz Inc. IPR2016-00318
`Sandoz v. Eli Lilly, Exhibit 1138-0009
`
`

`

`10
`
`
`
` NOVARTIS AG v. NOVEN PHARM. INC.
`
`shows a PHOSITA “would only have added an antioxidant
`when required to address a known oxidative degradation
`problem” detected during testing. Id. Novartis ignores
`the PTAB’s findings as to the PHOSITA’s skill in the art.
`The PTAB found that a PHOSITA would have, inter alia,
`“had knowledge of organic chemistry and been able to
`analyze and recognize certain characteristics of a com-
`pound based on its chemical structure.” Noven II, 2015
`WL 5782081, at *7. The PTAB further found that “the
`ability to predict reactivity based on functional group
`properties is a foundation of organic chemistry, and a
`[PHOSITA] would have understood that the presence of
`particular functional groups in a molecule has conse-
`quences,” such as degradation. Id. (citations omitted).
`Ample record evidence from scholarly sources supports
`the PTAB’s findings. See Robert T. Morrison & Robert N.
`Boyd, Organic Chemistry 167 (6th ed. 1992) (J.A. 2892)
`(providing that “[t]he atom or group of atoms that defines
`the structure of a particular family of organic compounds
`and, at the same time, determines their properties is
`called the functional group” (italics and bold omitted)); see
`also J. Guillory & R. Poust, Chemical Kinetics and Drug
`Stability, in Modern Pharmaceutics 181 (Gilbert S. Bank-
`er & Christopher T. Rhodes eds., 3d ed. 1996) (J.A. 1846)
`(providing that “it is possible to anticipate the potential
`mode(s) of degradation that drug molecules will likely
`undergo” through “the application of functional group
`chemistry”). The expert testimony of Dr. Schöneich
`corroborates the content of these sources. See J.A. 1350–
`52. Thus, substantial evidence supports the PTAB’s
`finding that a PHOSITA would not have waited to add an
`antioxidant until discovering degradation during testing,
`but would have assessed a compound’s structure in ad-
`vance of testing to determine whether an antioxidant
`should be added.
`Second, Novartis alleges that Sasaki “does not men-
`tion rivastigmine” or otherwise disclose that rivastigmine
`
`Sandoz Inc. IPR2016-00318
`Sandoz v. Eli Lilly, Exhibit 1138-0010
`
`

`

`NOVARTIS AG v. NOVEN PHARM. INC.
`
`11
`
`is susceptible to oxidative degradation and that the PTAB
`reached the opposite conclusion by failing to read that
`reference as a whole. Appellants’ Br. 48. To support its
`position, Novartis cites the testimony of its expert, Dr.
`Klibanov, and contends that the PTAB “wrongly dis-
`missed this evidence of the art . . . .” Id. at 49. Novartis’s
`argument fails for two reasons. First, Novartis predicates
`its argument on the belief that the prior art must express-
`ly disclose a motivation to combine; however, a “motiva-
`tion to combine the relevant prior art teachings does not
`have to be found explicitly in the prior art.” In re Kahn,
`441 F.3d 977, 987 (Fed. Cir. 2006) (citation omitted).
`Second, the PTAB addressed Dr. Klibanov’s testimony
`and found that it was not relevant because it did not
`address transdermal devices with acrylic polymer. See
`Noven II, 2015 WL 5782081, at *11. Novartis’s argument
`asks us to reweigh the evidence and give greater weight
`to Dr. Klibanov’s testimony than did the PTAB, which we
`may not do. See, e.g., Warsaw, 832 F.3d at 1333 (explain-
`ing that the court “may not reweigh . . . evidence on
`appeal” (citation omitted)).
`Finally, Novartis contends that substantial evidence
`does not support the PTAB’s finding that a PHOSITA
`would have predicted that “rivastigmine has the potential
`to oxidatively degrade based on its [chemical] structure.”
`Appellants’ Br. 60 (capitalization omitted). In support of
`its position, Novartis again cites the testimony of Dr.
`Klibanov, who purportedly testified that the chemical
`structure of a compound cannot alone inform whether
`that compound is susceptible to oxidative degradation.
`See id. at 64–65. Novartis’s final argument fails for the
`same reasons as its first two arguments: it ignores the
`PTAB’s findings as to the skill in the art possessed by a
`PHOSITA, and substantial evidence supports the PTAB’s
`finding that a PHOSITA would have predicted that ri-
`vastigmine has the potential to oxidatively degrade based
`on its chemical structure. See J.A. 1350–51, 1846, 2892.
`
`Sandoz Inc. IPR2016-00318
`Sandoz v. Eli Lilly, Exhibit 1138-0011
`
`

`

`12
`
`
`
` NOVARTIS AG v. NOVEN PHARM. INC.
`
`Novartis asks us to give greater weight to the testimony
`of Dr. Klibanov than did the PTAB, which we may not do.
`See Warsaw, 832 F.3d at 1333.
`CONCLUSION
`The PTAB found the Asserted Claims unpatentable as
`obvious for additional reasons not discussed above. See
`Noven I, 2015 WL 5782080, at *23; Noven II, 2015 WL
`5782081, at *23. However, because we affirm the PTAB’s
`conclusions that the Asserted Claims would have been
`unpatentable as obvious on the grounds discussed, we
`need not address the alternative grounds of unpatentabil-
`ity. See In re Gleave, 560 F.3d 1331, 1338 (Fed. Cir. 2009)
`(declining to address alternative grounds of unpatentabil-
`ity when the court upholds one such ground). Therefore,
`for the foregoing reasons, the Final Written Decisions of
`the U.S. Patent and Trademark Office’s Patent Trial and
`Appeal Board are
`
`AFFIRMED
`
`Sandoz Inc. IPR2016-00318
`Sandoz v. Eli Lilly, Exhibit 1138-0012
`
`