Chapter §8.05 Derivation

• Jurisdiction: United States

§8.05 Derivation

[A] Derivation Defined

Derivation connotes that a purported inventor is not a true, original inventor because he has merely copied (derived) from another what he claims to have invented himself. A derivation challenge to a patent's validity invokes the rule of 35 U.S.C. §102(f) (pre-AIA), that one is "not entitled to a patent if 'he did not himself invent the subject matter sought to be patented.' "¹⁴²

[B] Derivation Defense in Patent Litigation

[1] Generally

Derivation arises as a defense in the federal courts when an alleged infringer challenges a patent's validity, as well as in the USPTO. In court litigation involving an issued patent, for example, alleged infringers have contended that the patents in suit are invalid on the ground of derivation under 35 U.S.C. §102(f) (2006).¹⁴³ This defense essentially asserts that the named inventor merely derived the invention of another; that is, he copied the invention of another and then falsely patented it as his own.¹⁴⁴

More specifically, to invalidate an issued patent based on derivation, a validity challenger must prove two elements: " 'both prior conception of the invention by another and communication of that conception to the patentee.' "¹⁴⁵ The standard for showing prior conception in the derivation context is the same as that in other inventorship-related disputes: a conception must encompass all limitations of a claimed invention, and must be the "definite and permanent," "specific, settled idea" defined by the patent claim at issue.¹⁴⁶

The communication of the conceived invention to the "deriver" must be enabling.¹⁴⁷ In other words, the party claiming invalidity of a patent based on derivation must establish (1) that someone other than the inventor named on the patent conceived of the same invention earlier in time, and (2) that that other person communicated his conception to the inventor named on the patent in suit in sufficient detail to allow a person of ordinary skill in the art to practice the invention.

[2] Agawam (U.S. 1868)

The foundational derivation case in U.S. patent jurisprudence is the Supreme Court's 1868 decision in Agawam Co. v. Jordan.¹⁴⁸ The patent in suit was granted to one Goulding on a machine for making yarn from wool. The patented machine revolutionized the art of making fibrous wool in the U.S. and Europe. An accused infringer challenged the patent's validity, inter alia, on the ground that Goulding was not the true inventor, but rather had derived the invention from his employee Winslow, a blacksmith who worked in Goulding's machine shop.

The Supreme Court set forth the following principles:

[W]here a person has discovered an improved principle in a machine, manufacture, or composition of matter, and employs other persons to assist him in carrying out that principle, and they, in the course of experiments arising from that employment, make valuable discoveries ancillary to the plan and preconceived design of the employer, such suggested improvements are in general to be regarded as the property of the party who discovered the original improved principle, and may be embodied in his patent as a part of his invention.

Suggestions from another, made during the progress of such experiments, in order that they may be sufficient to defeat a patent subsequently issued, must have embraced the plan of the improvement, and must have furnished such information to the person to whom the communication was made that it would have enabled an ordinary mechanic, without the exercise of any ingenuity and special skill on his part, to construct and put the improvement in successful operation.

Persons employed, as much as employers, are entitled to their own independent inventions, but where the employer has conceived the plan of an invention and is engaged in experiments to perfect it, no suggestions from an employee, not amounting to a new method or arrangement, which, in itself is a complete invention, is sufficient to deprive the employer of the exclusive property in the perfected improvement. But where the suggestions go to make up a complete and perfect machine, embracing the substance of all that is embodied in the patent subsequently issued to the party to whom the suggestions were made, the patent is invalid, because the real invention or discovery belonged to another. ¹⁴⁹

Applying these principles, the Court in Agawam rejected the derivation defense in the case before it. Although Winslow undoubtedly made some suggestions to Goulding, those suggestions were made "after the originator of the plan [Goulding] had nearly completed his great and valuable improvement, and while he was still prosecuting his experiments with the utmost diligence."¹⁵⁰ Moreover, Winslow's suggestions related to sub-elements that did not embody the entirety of the patented invention. Nor were the suggested elements significant enough to the invention as ultimately patented to render Winslow a joint inventor with Goulding.¹⁵¹

[3] Derivation Requires Proving Earlier Conception of Entire Invention as Claimed

To invalidate a patent based on a derivation theory, the validity challenger must prove, inter alia, that someone other than the named inventor earlier conceived the claimed invention, as it is claimed; i.e., that the other entity conceived all limitations of the invention as claimed. The accused infringer failed to make this showing in Cumberland Pharms. Inc. v. Mylan Inst. LLC,¹⁵² a 2017 Federal Circuit decision that rejected generic pharmaceutical manufacturer Mylan's derivation defense.

The Cumberland-Mylan Hatch-Waxman lawsuit concerned the asserted technical infringement and invalidity of Cumberland's U.S. Patent No. 8,399,445 ('445 patent). The '445 patent covered Cumberland's second-generation pharmaceutical product ACETADOTE, an intravenous formulation for overdoses of acetaminophen, the well-known pain- and fever-reliever (e.g., the product TYLENOL). Overdoses leading to acetaminophen poisoning can cause acute liver failure, severe brain damage, and even death.¹⁵³

The active ingredient in ACETADOTE was acetylcysteine, the antidote for overdoses of acetaminophen. Acetylcysteine suffered from a stability problem, however; heavy metal ions, whether present in the formulation itself or found as contaminants, potentially caused the degradation of acetylcysteine when the ions catalyzed the oxidation of acetylcysteine in solution.

Cumberland's first-generation ACETADOTE product dealt with the instability problem by adding edetate disodium (EDTA or edetate) to the acetylcysteine formulation. EDTA is a common form of chelating agent, an "organic agent[] that bond[s] with and thereby sequester[s] free metal ions from solution."¹⁵⁴ By binding to the heavy metal ions, the EDTA prevented them from acting as catalysts that would oxidize acetylcysteine. Such EDTA-containing formulations had been approved in other countries, despite potential negative side effects such as allergic reactions.

The '445 patent in suit in Cumberland Pharms. concerned the Cumberland's second-generation ACETADOTE product, which was EDTA-free (and importantly, free of any other chelating agent). Mylan would ultimately contend that it was the idea of the Food and Drug Administration (FDA), not Cumberland, to make an EDTA-free product. That contention did not succeed, for the reasons explained below.

In 2002 the FDA was considering marketing approval of Cumberland's first-generation ACETADOTE product, which included EDTA (Edetate). In connection with the approval process, the FDA in December 2002 sent Cumberland a letter requesting that it "[p]rovide scientific and regulatory justification for the inclusion of Edetate as a component in the drug product." Cumberland was also directed to "provide a description of the pharmacological properties of Edetate in this drug product." In a telephone call conducted a week later, FDA representatives explained to Cumberland that the requested data should "support any justification for the inclusion of Edetate, since a non-trivial amount is included in the formulation."¹⁵⁵ These and other communications suggested (at least to Mylan) that the FDA was interested in removing EDTA from Cumberland's product.

In the subsequent Cumberland-Mylan litigation, Leo Pavliv, the sole named inventor on the '445 patent and a senior vice president of operations at Cumberland, testified that he had the idea of testing the stability of an EDTA-free acetylcysteine formulation shortly after the December 2002 exchange of letters. He told the FDA of his idea to perform the stability study in a telephone call sometime after March 2003. Pavliv also testified that at least one FDA representative approved the study and asked Pavliv to put his proposal in writing. Cumberland provided the requested proposal in a July 2003 letter, stating that "[a]s requested by FDA, upon product approval [i.e., upon FDA approval of the [first-generation] EDTA-containing formulation], Cumberland Pharmaceuticals intends to initiate studies to determine the impact on product stability of both decreasing and completely removing edetate disodium from the formulation."¹⁵⁶

The FDA in 2004 approved Cumberland's first-generation EDTA-included acetylcysteine formulation, reminding Cumberland at that time of its commitment to "evaluate the potential benefit of Edetate disodium on the stability of the drug product," with the study to "include a comparison of the current concentration of Edetate to a formulation with a lower concentration and no concentration of Edetate."¹⁵⁷

Cumberland contracted for the testing of an EDTA-free formulation with a predecessor company to Mylan, the Bioniche Pharma Group. The testing followed a protocol developed by Pavliv and approved by the FDA without change.

Cumberland in August 2005 filed a patent application that issued in 2012 as its U.S. Patent No. 8,148,356, and a divisional application thereof that issued in 2013 as Cumberland's '445 patent in suit.¹⁵⁸...