The US Court of Appeals for the Federal Circuit reversed a Patent Trial and Appeal Board (PTAB) obviousness decision, finding the decision was infected by an erroneous claim construction that failed to consider the purpose of the claimed invention. Kaken Pharmaceutical Co., LTD v. Iancu, Case No. 18-2232 (Fed. Cir. Mar. 13 2020)(Taranto, J.).

Kaken owns a patent claiming a method for topically treating fungal infections in nails. Fungal infections of the nail plate and nail bed are notoriously difficult to treat because topical treatments cannot penetrate the thick keratin in the nail plate. The patent describes an effective topical treatment with an antifungal, KP-103, having good permeability, retention capacity and activity in the nail plate. The patent specification notes that topical treatments known in the prior art were largely ineffective at penetrating the nail plate and treating onychomycosis.

Acrux Limited successfully sought inter partes review (IPR) against the patent. During the proceeding, Kaken argued that the phrase “treating a subject having onychomycosis” means “treating the infection at least where it primarily resides in the keratinized nail plate and underlying nail bed.” The PTAB rejected Kaken’s construction as too narrow, concluding that “the express definition of onychomycosis includes superficial mycosis, which in turn is expressly defined as a disease that lies in the skin or visible mucosa.” The PTAB also found significant that the express definition of “nail includes the tissue or skin around the nail plate, nail bed, and nail matrix.” The PTAB therefore concluded that the “treating onychomycosis” includes treating “superficial mycosis that involves disease of the skin or visible mucosa.” Applying that construction, the PTAB found the patent claims obvious. Kaken appealed.

On appeal, Kaken’s primary argument was that the PTAB’s construction of the phrase “treating a subject having onychomycosis” ignores the core innovation of the patent, which is a topical treatment that can easily penetrate the tough keratin in the nail plate.

The Federal Circuit agreed with the PTAB that the term “onychomycosis” has two basic features: (1) it is a disease of the “nail”; and (2) it is a type of superficial mycosis. The Court, however, did not agree that this compelled the PTAB’s finding that “onychomycosis” reasonably is understood to involve invasion of any part of what is defined as the “nail,” including parts other than the nail plate or nail bed, such as skin. The Court found that this inference by the PTAB was unwarranted. For example, a statement that a particular disease invades the body would not imply that it can invade any part of the body. Further, just because onychomycosis is a type of superficial mycosis, and superficial mycosis includes infections of the skin or visible mucosa, this in no way excludes onychomycosis from being limited to the nail.

The Federal Circuit also found that other parts of the specification supported Kaken’s construction—that “treating a subject having onychomycosis” was limited to “treating the infection at least where it primarily resides in the keratinized nail plate and underlying nail bed.” In particular, the stated purpose of the patent relevant to the claims at issue was to provide a topical treatment for onychomycosis that was capable of permeating the thick keratin in the nail plate—something that the prior art topical treatments were largely ineffective at doing.

The Federal Circuit further found “decisive” support for Kaken’s construction in the prosecution history. In response to a double-patenting rejection by the Patent Office, Kaken limited the claims from treating “mycosis” to treating “onychomycosis” and noted in its reply that the “[t]reatment of onychomycosis significantly differs from the general treatment of mycoses . . . [because] it is a condition that specifically affects the nail plate.” Kaken further argued that the “present invention shows the unexpected ability of an azolyamine derivate to penetrate nail and be retained by the nail.” The Examiner subsequently withdrew the rejection, crediting Kaken’s arguments in its Reasons for Allowance. The Court concluded that this exchange would leave a skilled artisan with no reasonable uncertainty about the scope of the claim language here: “a plate-penetrating treatment of an infection inside or under the nail plate.”

Accordingly, the Federal Circuit reversed the obviousness decision because it was “infected by the erroneous claim construction” and remanded the matter to the PTAB.