Judge Hughes again calls out CAFC’s rigid Article III analysis for pharmaceutical cases
“Judge Hughes agreed that today’s decision was compelled by precedent but…found it ‘difficult to imagine a more compelling set of facts’ meeting the Supreme Court’s constitutional minimum for standing…than Incyte’s appeal.”
Today, the U.S. Court of Appeals for the Federal Circuit (CAFC) issued a precedential decision in Incyte Corp. v. Sun Pharmaceutical Industries, Ltd. dismissing Incyte’s appeal from post-grant review (PGR) proceedings at the Patent Trial and Appeal Board (PTAB) for lack of Article III standing. The Federal Circuit majority found that Incyte could not establish a sufficient injury, but Circuit Judge Todd Hughes wrote a concurrence echoing previous concerns about the appellate court’s overly rigid standard for analyzing the standing of PTAB appeals. Treatment of Hair Loss disorders with Deuterated JAK inhibitors, 10561659. The ‘659 Patent claims a method for treating alopecia using a Janus kinase inhibitor, ruxolitinib. This JAK inhibitor has a deuterium moderator, which reduces drug metabolism speed and toxic byproducts. Incyte appealed to the CAFC following the PTAB’s determination that the challenged claims of the ‘659 patent were not invalid for obviousness.
No Concrete Plans to Sell Drug at Claimed Dosage Level Destroys Incyte’s Appellate Standing
The Federal Circuit’s ruling began by noting the three components of Article III standing, a threshold jurisdictional issue. Incyte argued that its appeal satisfied the first of these components, an injury in fact suffered by the appellant, both due to its potential infringement liability under the ‘659 patent and under the competitor standing doctrine, which finds an injury in fact when government action increases competition or aids a plaintiff’s competitors.
Addressing Incyte’s potential infringement liability, the Federal Circuit first found that a supplemental declaration from the head of Incyte’s Inflammation and Autoimmune Group wasn’t timely filed. In previous CAFC rulings, the D.C. Circuit ruled that appellants had to provide evidence of standing at the “first appropriate” time if their appellate standing was not self-evident. Litigants must demonstrate good cause if they do not present evidence of Article III standing when given the opportunity. Incyte had its first opportunity to address the issue of standing in its opening brief. This did not include the supplemental declaration by its inflammation director. Incyte provided no justification for its delay, and the Federal Circuit held that the supplemental declaration inserts new theories on Incyte’s infringement liability based on dosage while failing to make standing patently obvious.
Further, the appellate court ruled that Incyte didn’t establish concrete plans for future activity creating a substantial risk of infringement. Incyte’s original declaration by its inflammation director identified Incyte’s investments in developing ruxolitinib based drugs and obtaining market acceptance. It also stated that Incyte allocated funding to develop deuterated ruxolitinib for hair loss. Federal Circuit majority found this “expression” of intent, including the allocation of “a tiny amount of funds a month before filing this appellate,” was too speculative for concrete plans to develop deuterated ruxolitinib in Sun’s claimed dosage levels. Although Incyte anticipates significant expenditures in the coming years, the Federal Circuit noted that ruxolitinib in general was not the claimed subject matter of the ‘659 patent.
Moving on to Incyte’s competitor standing doctrine arguments, the Federal Circuit noted that nonspeculative economic injury is typically found when government regulatory action results in price-lowering or sales-limiting effects on the plaintiff’s sales. In the context of patents, the government upholding specific patent claims that do not address prices or introduce competition only confers concrete injury if the challenger plans to use the claimed feature. “In other words, it is not enough to show a benefit to a competitor to establish injury in fact,” the Federal Circuit majority found, concluding that appellate case law clearly resolved the competitor standing issue and dismissing Incyte’s appeal for lack of standing.
Judge Hughes: CAFC Case Law ‘Dictates Outcome Inconsistent with Spirit of Standing’
In his concurrence, Judge Hughes agreed that today’s decision was compelled by precedent, but he wrote separately to echo concerns he previously raised about the CAFC’s standing analysis for appeals from inter partes review. Extending that view to post-grant proceedings generally, Judge Hughes argued that the appellate court’s restrictive, patent-specific standing rule “dictates an outcome inconsistent with the spirit of Article III standing.”
Judge Hughes found it “difficult to imagine a more compelling set of facts” meeting the Supreme Court’s constitutional minimum for standing from Lujan v. Defenders of Wildlife (1992) than Incyte’s appeal. Further, Judge Hughes noted that the CAFC’s case law more often finds no sufficient injury in fact in cases implicating pharmaceutical patents, including Allgenesis Biotherapeutics v. Cloudbreak Therapeutics (2023) where the patent challenger had completed Phase II clinical trials of an allegedly infringing drug.
Although Incyte was uncertain about the dosage of its final product, “unpredictability in the development of drugs in the pharmaceutical space should cut both ways,” Judge Hughes wrote. Requiring pharmaceutical companies to essentially be “on the eve of FDA approval or launch” asks more than Lujan’s standard requires of Incyte, which “clearly has a sufficient personal stake in the outcome of this appeal,” Judge Hughes argued.
Party representations in this case established that deuteration is the smallest structural change Incyte can make to ruxolitinib, and that the entire business model of Sun’s predecessor-in-interest was the deuteration of known drugs. In a separate precedential decision also issued today regarding Incyte’s U.S. Patent No. 9,662,335, the CAFC held that tthe U.S. District Court for the District of New Jersey clearly erred in finding that Incyte established irreparable harm and reverse the district court’s grant of a preliminary injunction.
Steve Brachmann
Steve Brachmann graduated from the University at Buffalo School of Law in May 2022, earning his Juris Doctor. He served as the president of the Intellectual
