Altaire Pharmaceuticals, Inc. v. Paragon Bioteck, Inc.
Decided: May 2, 2018
Case Summary by Frederick Hadidi
In 2011, Altaire and Paragon entered into an agreement to pursue FDA approval for one of Altaire’s new eye drugs. Under this agreement, Paragon would be
responsible for preparing a new drug application, and Altaire would perform the required chemistry and testing; upon FDA approval, the agreement gave Paragon the right to manufacture the drug. Certain components of Altaire’s drug include “chiral” molecules—molecules with identical chemical formulas, but with mirror image (left- and right-handed) chemical structures. With chiral molecules, typically only the right- or left-handed version produces a desired effect.
After Paragon submitted the application, the FDA recommended that Paragon consider adding a “chiral purity” test—a test that measures the relative amounts (in percentages) of the left- and right-handed forms of the chiral molecules in the drug. Altaire performed two types of chiral purity tests on two lots of its drug (lots #11578 and #11582); these were a commonly used “optical rotation” test, and another proprietary “high-performance liquid chromatography” (HPLC) test that Altaire gave the designation “TMQC-247.” Altaire provided these test results to Paragon, which passed them on to the FDA. Based in part on these test results, the FDA approved the drug in March 2013.
In November 2013, Paragon filed a patent application that Altaire believed to cover the drug it had created and supplied to Paragon. This application later issued as US patent 8,859,623.
The next year Altaire filed suit against Paragon, alleging that Paragon’s patent application breached nondisclosure provisions in the Altaire/Paragon agreement; two years after this (and after the patent issued), Altaire filed another suit seeking a declaration of invalidity for the ‘623 patent.
Altaire also petitioned for Post Grant Review of the ‘623 patent, alleging that certain claim limitations—including those related to temperature and chiral purity—were disclosed in the prior art lots #11578 and #11582 that Altaire had manufactured and tested, and that Paragon had relied on in its communications with the FDA.
After PGR was granted, Paragon challenged the testing associated with lots #11578 and #11582 as failing to meet the requirements of 37 CFR §42.65(b), which says that parties “rel[ying] on a technical test or data from such a test” must “provide an affidavit explaining: (1) [w]hy the test or data is being used; (2) [h]ow the test was performed and the data was generated; (3) [h]ow the data is used to determine a value; (4) [h]ow the test is regarded in the relevant art; and (5) [a]ny other information necessary for the [PTAB] to evaluate the test and data.” Paragon also challenged Altaire’s declarations regarding the lots and the tests it had performed because the declarant—Altaire’s CEO—failed to qualify as an expert.
The PTAB agreed with Paragon and dismissed Altaire’s petition, concluding that Altaire failed to timely qualify its CEO as an expert, and therefore gave no weight to the test results that Paragon had previously relied upon in its submissions to the FDA.
On appeal to the United States Court of Appeals for the Federal Circuit (Federal Circuit), Paragon filed a motion to dismiss, arguing that Altaire lacks Article III standing because it is not currently engaged in any activities that could infringe the ‘623 patent. Two of the Federal Circuit judges disagreed, concluding that because the agreement with Paragon prevents Altaire from manufacturing products, Altaire has suffered a “concrete” harm and is affected in a “personal and individual way.” Judge Schall would have dismissed the appeal, arguing that Altaire’s alleged injury is too speculative to support standing in this case because it is unclear when (if ever) Altaire would manufacture the drug.
Turning next to the merits of the appeal, the majority said that by rejecting Altaire’s test data—which allegedly disclosed several limitations of the ‘623 patent’s claims—and its CEO’s testimony regarding that test data, the PTAB had abused its discretion.
Regarding the testimony of Altaire’s CEO, the majority noted that §42.65(b) does not require an affidavit relating to a technical test or data to be submitted by an expert; it can also be submitted by a person “versed in the technology,” which Altaire’s CEO—who had decades of industry experience—clearly was.
And regarding Altaire’s allegedly invalidating underlying test data, the majority said that because Paragon had relied on that same data in its submissions to the FDA, the PTAB’s refusal to consider that data was an abuse of discretion. The majority then remanded the case to the PTAB with the instruction to reconsider Altaire’s obviousness arguments in view of the previously rejected test data and affidavits.