United States Court of Appeals for the Federal Circuit
2007-1300
ABBOTT LABORATORIES,
Plaintiff-Appellee,
v.
SANDOZ, INC.,
Defendant-Appellant.
Ted G. Dane, Munger, Tolles & Olson LLP, of Los Angeles, California, argued for
plaintiff-appellee. With him on the brief were Jeffrey I. Weinberger; and Jennifer L.
Polse, Jason Rantanen, and Genevieve A. Cox, of San Francisco, California. Of
counsel was Andrew W. Song, of Los Angeles, California.
Scott B. Feder, Lord, Bissell & Brook LLP, of Chicago, Illinois, argued for
defendant-appellant. With him on the brief were Keith D. Parr, Hugh S. Balsam, and
Kevin M. Nelson. Of counsel on the brief was Shashank Upadhye, Sandoz, Inc., of
Princeton, New Jersey. Of counsel were David B. Abramowitz, Myoka M. Kim, and
James T. Peterka, of Lord, Bissell & Brook LLP, of Chicago, Illinois.
Jeffrey L. Light, Patients Not Patents, Inc., of Washington, DC, for amicus curiae
Patients Not Patents, Inc.
Gregory A. Castanias, Jones Day, of Washington, DC, for amicus curiae United
Inventors Association. With him on the brief was Christopher S. Perry.
Appealed from: United States District Court for the Northern District of Illinois
Judge David H. Coar
United States Court of Appeals for the Federal Circuit
2007-1300
ABBOTT LABORATORIES,
Plaintiff-Appellee,
v.
SANDOZ, INC.,
Defendant-Appellant.
Appeal from the United States District Court for the Northern District of Illinois in case no.
05-CV-5373, Judge David H. Coar.
__________________________
DECIDED: October 21, 2008
__________________________
Before NEWMAN, Circuit Judge, ARCHER, Senior Circuit Judge, and GAJARSA, Circuit
Judge.
Opinion for the court filed by Circuit Judge NEWMAN, in which Circuit Judge ARCHER
concurs in the judgment and joins except as to Parts I and VI. Dissenting opinion filed by
Circuit Judge GAJARSA.
This appeal is from the grant of a preliminary injunction, pending final resolution of
the several challenges raised by Sandoz, Inc. to the validity, enforceability, and
infringement of the Abbott Laboratories patents in suit. 1 We conclude that abuse of
1
Abbott Laboratories v. Sandoz, Inc., 500 F. Supp. 2d 807 (N.D. Ill. 2007)
(grant of preliminary injunction); 500 F. Supp. 2d 846 (N.D. Ill. 2007) (denial of stay pending
appeal); 529 F. Supp. 2d 893 (N.D. Ill. 2007) (grant and denial of various motions for
summary judgment).
discretion has not been shown in the district court's decision to grant the injunction
pendente lite. That decision is affirmed.
BACKGROUND
This suit concerns two Abbott Laboratories patents on extended release formulations
of the antibiotic drug clarithromycin, sold by Abbott with the brand name Biaxin7XL. The
patent on clarithromycin itself expired in 2005; only extended release formulations are at
issue. The purpose of the extended release formulation is to extend the period of drug
effectiveness after ingestion and thereby to reduce the requisite frequency of dosage.
Sandoz filed an Abbreviated New Drug Application (ANDA) for its extended release
formulation of clarithromycin; the Food and Drug Administration approved the ANDA on
August 25, 2005, and on September 16, 2005 Abbott filed suit in the United States District
Court for the Northern District of Illinois, charging Sandoz with infringement of United States
Patent No. 6,010,718 (the '718 patent) and Patent No. 6,551,616 (the '616 patent). Abbott
also charged infringement of Patent No. 6,872,407, but has withdrawn this patent from suit.
The '718 patent claims an extended release pharmaceutical composition comprising
an erythromycin derivative and a pharmaceutically acceptable polymer, whereby after
ingestion certain specified parameters of drug bioavailability are met. Claims 1, 4, and 6 of
the '718 patent are in suit:
1. A pharmaceutical composition for extended release of an erythromycin
derivative in the gastrointestinal environment, comprising an erythromycin
derivative and from about 5 to about 50% by weight of a pharmaceutically
acceptable polymer, so that when ingested orally, the composition induces
statistically significantly lower mean fluctuation index in the plasma than an
immediate release composition of the erythromycin derivative while
maintaining bioavailability substantially equivalent to that of the immediate
release composition of the erythromycin derivative.
2007-1300 2
4. A pharmaceutical composition for extended release of an erythromycin
derivative in the gastrointestinal environment, comprising an erythromycin
derivative and from about 5 to about 50% by weight of a pharmaceutically
acceptable polymer, so that upon oral ingestion, maximum peak
concentrations of the erythromycin derivative are lower than those produced
by an immediate release pharmaceutical composition, and area under the
concentration-time curve and the minimum plasma concentrations are
substantially equivalent to that of the immediate release pharmaceutical
composition.
6. An extended release pharmaceutical composition comprising an
erythromycin derivative and a pharmaceutically acceptable polymer, the
composition having an improved taste profile as compared to the immediate
release formulation.
The '616 patent is a continuation-in-part of the '718 patent, with claims directed to the
method of reducing gastrointestinal side effects. Claim 2 is in suit, shown with claim 1 from
which it depends:
1. A method of reducing gastrointestinal adverse side effects comprising
administering an effective amount of extended release pharmaceutical
composition comprising an erythromycin derivative and a pharmaceutically
acceptable polymer.
2. The method according to claim 1, wherein the erythromycin derivative is
clarithromycin.
In response to the charge of infringement Sandoz presented the defenses of invalidity
based on anticipation and obviousness, unenforceability based on inequitable conduct, and
noninfringement. This appeal is from the district court’s grant of Abbott’s motion for a
preliminary injunction, preserving the status quo during the pendency of this litigation.
Sandoz challenges the district court’s rulings on all issues.
2007-1300 3
I
VALIDITY ISSUES
The district court reviewed the factors relevant to the grant or denial of a preliminary
injunction, viz., (1) likelihood of success on the merits of the underlying litigation, (2)
whether irreparable harm is likely if the injunction is not granted, (3) the balance of
hardships as between the litigants, and (4) factors of the public interest. See Oakley, Inc.
v. Sunglass Hut Int'l, 316 F.3d 1331, 1338-39 (Fed. Cir. 2003); H.H. Robertson Co. v.
United Steel Deck, Inc., 820 F.2d 384, 387-88 (Fed. Cir. 1987). At the stage of the
preliminary injunction, before the issues of fact and law have been fully explored and finally
resolved, "[t]he purpose of a preliminary injunction is merely to preserve the relative
positions of the parties until a trial on the merits can be held." University of Texas v.
Camenisch, 451 U.S. 390, 395 (1981).
On appellate review of the grant of a preliminary injunction, the question "is simply
whether the issuance of the injunction constituted an abuse of discretion." Doran v. Salem
Inn, 422 U.S. 922, 932 (1975). "It is well settled that the granting of a temporary injunction,
pending final hearing, is within the sound discretion of the trial court; and that, upon appeal,
an order granting such an injunction will not be disturbed unless contrary to some rule of
equity, or the result of improvident exercise of judicial discretion." Deckert v. Independence
Shares Corp., 311 U.S. 282, 290 (1940). Abuse of discretion is established "by showing
that the court made a clear error of judgment in weighing relevant factors or exercised its
discretion based upon an error of law or clearly erroneous factual findings." Novo Nordisk
of North America, Inc. v. Genentech, Inc., 77 F.3d 1364, 1367 (Fed. Cir. 1996). See Cybor
Corp. v. FAS Technologies, Inc., 138 F.3d 1448, 1460 (Fed. Cir. 1998) (en banc) (“A district
2007-1300 4
court abuses its discretion when its decision is based on clearly erroneous findings of fact,
is based on erroneous interpretations of the law, or is clearly unreasonable, arbitrary or
fanciful.”).
Sandoz assigns legal error to the district court's rulings that Abbott is likely to prevail
on the issues of validity, infringement, and inequitable conduct, and states that the district
court abused its discretion in balancing the equities and granting the injunction.
Anticipation
"Anticipation" in patent usage means that the claimed invention was previously
known and described in a printed publication, explicitly or inherently. Anticipation is
established by documentary evidence, and requires that every claim element and limitation
is set forth in a single prior art reference, in the same form and order as in the claim. See
In re Omeprazole Patent Litigation, 483 F.3d 1367, 1373 (Fed. Cir. 2007); Continental Can
Co. v. Monsanto Co., 948 F.2d 1264, 1267 (Fed. Cir. 1991). An anticipating reference
must enable that which it is asserted to anticipate. Omeprazole, 483 F.3d at 1378 (“To
‘anticipate,’ the identical subject matter must not only be previously known, but the
knowledge must be sufficiently enabling to place the information in the possession of the
public.”); Elan Pharmaceuticals, Inc. v. Mayo Found. for Medical Educ. & Research, 346
F.3d 1051, 1054 (Fed. Cir. 2003) (same).
Sandoz argued that the '718 patent is anticipated by European Patent Publication
No. 0,280,571 B1 (the '571 Publication), which describes "a sustained release matrix
formulation in tablet form comprising from 0.1% by weight to 90% by weight of an
antimicrobial agent selected from . . . erythromycin . . . from 5% by weight to 29% by weight
2007-1300 5
of a hydrophilic polymer, and from 0.5% by weight to 25% by weight of an acrylic polymer .
. . ." The '571 Publication states that hydrophilic polymers such as hydroxypropylmethyl
cellulose (HPMC) can be used to form a hydrophilic matrix which "respond[s] to increases
in pH with a corresponding increase in the permeability of the dosage form." Sandoz
argued in the district court that although the '571 Publication does not mention
clarithromycin or the specific pharmacokinetic limitations in the '718 patent claims, the '571
Publication anticipates the '718 claims because clarithromycin is an erythromycin derivative
and the claimed pharmacokinetic limitations are inherent in the extended release
compositions of the '571 Publication. Sandoz also argued that enablement of the
compositions in the ‘571 Publication must be presumed, because the compositions in the
'718 patent are presumed to be enabled and, according to Sandoz, are identical.
Abbott responded that the '571 Publication cannot “anticipate” because it does not
show the elements of the claims of issue; it does not mention clarithromycin, it does not
disclose the pharmacokinetic criteria stated in the '718 claims, and it does not enable these
limitations, either expressly or inherently. Abbott argued that significant experimentation
would be required to ascertain the applicability of any release agent from the large number
of release agents mentioned in the '571 Publication, particularly as applied to a different
biological product having different dissolution and metabolic characteristics. Thus Abbott
argued that the legal criteria of "anticipation" are not met by the '571 Publication.
The district court found that Sandoz did not present evidence sufficient to support its
argument that "the '571 Publication's teachings would enable Abbott to create an extended
release of an erythromycin derivative drug simply based on the structural limitations."
Abbott, 500 F. Supp.2d at 840. The district court observed that the '571 Publication "does
2007-1300 6
not offer any in vivo dissolution data" nor state "the pharmacokinetic profile of its own
formulations." Id. The court concluded that Sandoz would not be likely to succeed in
establishing anticipation by this reference. We discern no clear error in this conclusion, for
the '571 Publication neither describes the product of the ‘718 claims nor enables the
pharmacokinetic properties that are set forth in the '718 claims. See Elan Pharmaceuticals,
346 F.3d at 1057 (an anticipating reference must disclose every element of the claims, and
place a person of ordinary skill in possession of the claimed invention).
Obviousness
Sandoz also argued that the claims of the '781 and '616 patents are invalid on the
ground of obviousness, in view of the combination of the '571 Publication with PCT
Application WO 95/30422 (the PCT or '422 Application) and United States Patent No.
5,705,190 (the '190 patent).
In determining, for preliminary injunction purposes, the likelihood that patent
invalidity would be established at trial, the district court evaluates the factual and legal
arguments in light of the presumptions and burdens that will inhere at trial, viz., that "[a]
patent shall be presumed valid. . . . The burden of establishing invalidity of a patent or any
claim thereof shall rest on the party asserting such invalidity." 35 U.S.C. '282. This burden
"exists at every stage of the litigation." Canon Computer Systems, Inc. v. Nu-Kote Int'l,
Inc., 134 F.3d 1085, 1088 (Fed. Cir. 1998); see Sanofi-Synthelabo v. Apotex, Inc., 470 F.3d
1368, 1374 (Fed. Cir. 2006) (taking into account the applicable presumptions and burdens
in reviewing the grant of a preliminary injunction). Sandoz on this appeal relies on the
Supreme Court's decision in KSR International Co. v. Teleflex, Inc., ___ U.S. ___, 127 S.
2007-1300 7
Ct. 1727 (2007), Sandoz arguing that the law of obviousness has been significantly
changed, and that the district court did not give adequate recognition to the changed law.
The district court had issued its initial decision granting the preliminary injunction shortly
before the Court’s decision in KSR. The court then requested supplemental briefing and
argument, and issued a further opinion discussing the issues in light of KSR and continuing
to conclude that Abbott was likely to prevail on the merits of the question of obviousness.
In its initial decision the district court discussed the references in detail. The court
explained that the PCT Application, entitled "Controlled-Release Dosage Forms of
Azithromycin," describes “[a] dosage form for oral administration comprising azithromycin
and a pharmaceutically acceptable carrier, which releases not more than about 10% of its
incorporated azithromycin into a mammal's stomach, and which releases not more than an
additional 10% during the first 15 minutes after entering said mammal's duodenum," and
exhibits decreased gastrointestinal side effects. The district court explained that the PCT
Application shows hydroxypropylmethylcellulose (HPMC) and other polymers as “a
hydrophilic polymer sufficient to provide a useful degree of control over the azithromycin
dissolution," and contains in vitro data showing the amount and timing of dissolution of
azithromycin in various conditions and sustained dosage forms.
Sandoz argued that these teachings should be combined with those of the ‘571
Publication and the '190 patent entitled "Controlled Release Formulation for Poorly Soluble
Basic Drugs," which describes a "controlled release solid pharmaceutical composition
adapted for oral administration comprising: a therapeutically effective amount of at least
one basic drug having a water solubility of less than 1 part per 30 parts water . . . wherein
the basic drug is a macrolide" and as the release agent a water-soluble alginate salt. The
2007-1300 8
‘190 patent names the macrolides erythromycin, clarithromycin, dirithromycin, azithromycin,
roxithromycin, and ABT-229 for use with the alginate salt release agent. Sandoz argued
that the subject matter of the ‘718 patent would have been obvious in view of the '571
Publication showing extended release formulations of erythromycin derivatives, in
combination with the controlled release formulations and pharmacokinetic properties of
azithromycin in the PCT Application, and the modified release alginate salt formulation of
clarithromycin in the '190 patent. Sandoz argued that a person of ordinary skill in this field
would have desired to improve the administration of clarithromycin by finding an extended
release formulation having optimum release and biological properties, and would have
selected and tested the HPMC from the '571 Publication, in view of the formulation of
azithromycin with HPMC in the PCT Application and the '190 patent’s use of an alginate
salt to modify the release of clarithromycin. Sandoz stressed that the PCT Application
states the known principle of using controlled release formulations to reduce the dosing
frequency for short half-life compounds. Sandoz argued that no more than routine
experimentation was needed to find a controlled release formulation that would meet the
pharmacokinetic requirements stated in the '718 claims.
Sandoz applied similar arguments to the claims of the '616 patent, stating that the
PCT Application teaches that control of azithromycin release reduces gastrointestinal side
effects, and that the '190 patent shows the interchangeability of azithromycin and
clarithromycin in the formulation using an alginate salt. Sandoz argued that this
combination of references renders obvious a clarithromycin formulation with reduced
gastrointestinal side effects as claimed in the ’616 patent. In its supplemental argument
based on KSR, Sandoz argued that Abbott merely “pursue[d] known options” for both the
2007-1300 9
‘718 and ‘616 patents, based on the Court’s exposition that: “When there is a design need
or market pressure to solve a problem and there are a finite number of identified,
predictable solutions, a person of ordinary skill has good reason to pursue the known
options within his or her technical grasp.” KSR, 127 S. Ct. at 1742.
In the district court Abbott disputed the premises presented by Sandoz, challenged
the analysis of the content and significance of the references, and argued that KSR did not
hold, as Sandoz proposed, that the recognition of a problem of itself renders the solution
obvious. Abbott argued that more is needed than recognizing the problem, as this court
discussed in Cardiac Pacemakers, Inc. v. St. Jude Medical, Inc., 381 F.3d 1371, 1377
(Fed. Cir. 2004) (“Recognition of a need does not render obvious the achievement that
meets that need. . . . Recognition of an unsolved problem does not render the solution
obvious.”) Abbott pointed out that the Court qualified its discussion by explaining that the
“problem” should have “a finite number of identified, predictable solutions,” KSR, 127 S. Ct.
at 1742, to expose its eventual solution to unpatentability as “obvious to try.” Id. Abbott
stressed the difference between new biological compositions whose performance and
effectiveness in combination cannot be confidently predicted but must be made and
evaluated, and new mechanical combinations of known elements each of which predictably
performs its known function in the combination.
Abbott stressed that its choice of extended release components is not shown or
suggested by the prior art to produce the pharmacokinetic properties of Abbott’s claims.
The Court recognized in Dennison Mfg. Co. v. Panduit Corp., 475 U.S. 809 (1986) that the
district court is not to rely on hindsight, and that “in addressing the question of obviousness
a judge must not pick and choose isolated elements from the prior art and combine them so
2007-1300 10
as to yield the invention in question if such a combination would not have been obvious at
the time of the invention.” 475 U.S. at 810. In Graham v. John Deere Co., 383 U.S. 1
(1966) the Court recognized that the obviousness inquiry must “guard against slipping into
use of hindsight and to resist the temptation to read into the prior art the teachings of the
invention in issue.” Id. at 36.
Abbott agreed that the basic principles of pharmacokinetics were known, but argued
that the limitations in the '718 claims, whereby the bioavailability of the product was
characterized, were not shown as achieved in any reference or any combination of
references. Abbott pointed out that the PCT Application is directed specifically to
azithromycin and shows “scores” of possible formulations, all using in vitro data, and does
not contemplate metabolite activity in vivo as is manifested for chlorithromycin. Abbott
stated that “the ‘422 publication discloses more than a dozen possible classes of delivery
devices,” Abbott Brief at 42, that “the ’422 publication merely provides in vitro dissolution
data for a subset of its disclosed compositions,” and that the formulation in the PCT
Application “did not even have equivalent bioavailability as IR [immediate release]
azithromycin.” Id. at 41.
Abbott described in the ‘718 and ‘616 specifications that the '190 patent reference
presents "Cmax values [that] are not statistically significantly different from those of the IR
formulation." '718 patent, col. 2, lines 11-12; ‘616 patent, col. 2, lines 13-14 (referring to
Ser. No. 08/574,877, the '190 patent). Abbott stated that Sandoz concedes that the '190
patent does not describe pharmacokinetic limitations based on clarithromycin plasma
concentrations, and that neither the PCT Application nor the '190 patent discloses the
pharmacokinetic limitations and properties set forth in the '718 and ‘616 claims, and that
2007-1300 11
neither the PCT Application nor any other reference provides guidance as to which
formulation would provide the pharmacokinetic characteristics required by the ‘718 claims.
Thus Abbott argued in the district court that a skilled artisan would not have known
the effect of substituting clarithromycin for azithromycin in any specific formulation that
might be selected from the PCT Application, for it is undisputed that there are significant
differences among erythromycin derivatives. Abbott presented evidence to the district court
that azithromycin and clarithromycin exhibit different properties in four biological processes
of relevance to oral drug administration: absorption, distribution, metabolism, and excretion.
These differences were tabulated by Abbott’s expert, Professor Stanley S. Davis, as
follows:
Azithromycin Clarithromycin
Absolute Bioavailability About 34% from 600 mg dose About 50% from 250 mg
dose
Pharmacokinetics Linear Non-linear
Active Metabolite None reported in the 14-hydroxy clarithromycin
Physicians Desk Reference
Metabolism Metabolites possess little or no Extensively metabolized to
activity an active metabolite
Elimination Half Life About 70 hours 3-4 hours for 250 mg IR dose
(14-OH metabolite, 5-6
hours)
First Pass Effect Not significant Extensive
Volume of Distribution Large-2200 litre 250 litre
2007-1300 12
Supplemental Declaration of Dr. Davis, February 7, 2007. The parties do not dispute that
the PCT Application describes only in vitro data, and that in vitro data are not predictably
transferable to in vivo conditions. Dr. Davis testified that "it simply isn't the case that in vitro
controlled release data will automatically correlate with the pharmacokinetic parameters in
vivo, and in fact, for many of the formulations of the ‘422 application, they affirmatively do
not so correlate." Id.
The district court concluded that a person of ordinary skill in this field would not have
predicted which formulation, that might be selected from the prior art, would provide the
required pharmacokinetics. The district court referred to the dissimilarities in the
pharmacokinetic properties for azithromycin as shown in the PCT Application, considered
the content of the '190 patent, and concluded that the bioavailability of the formulations
claimed in the '718 patent were not predictable from these references. The court referred
to the testimony of another Abbott expert, Dr. Daniel Weiner, that "the '190 patent does not
disclose any clarithromycin-specific PK [pharmacokinetic] data" or "any DFL [degree of
fluctuation] 2 values at all.” Declaration of Daniel Weiner, Ph.D., January 9, 2007. Dr.
Weiner explained that the pK values reported in the '190 patent are based on total antibiotic
activity, which consists of the combined concentrations of clarithromycin and its active
metabolite, while the pharmacokinetic elements of the '718 patent relate specifically to
clarithromycin plasma concentrations. Dr. Weiner concluded, and the district court agreed,
that a skilled artisan would not have had a reasonable expectation of producing effective
2
The variation between maximum and minimum concentration is measured
by the degree of fluctuation, called "DFL", calculated as (Cmax – Cmin)/Cavg , with Cavg the
average concentration over a dosing interval. Appx. 463 &28.
2007-1300 13
compositions based on the mention of clarithromycin along with azithromycin in the '190
patent, because of their different mechanisms of antibiotic activity and the effect of this
activity on pharmacokinetic behavior.
The district court observed that the in vivo azithromycin controlled release
formulations in the PCT Application have less total bioavailability than their immediate
release counterparts, supporting Abbott’s argument that the behavior of differing biological
systems, even when structurally similar, is not predictable. See Alza Corp. v. Mylan
Laboratories, 464 F.3d 1286, 1297 (Fed. Cir. 2006) ("Alza's evidence of in vitro dissolution
rates is irrelevant absent evidence demonstrating that the in vitro system is a good model
of actual in vivo behavior."). The district court concluded that the in vivo extended release
properties claimed in the '718 patent are sufficiently dissimilar to or unpredictable from the
in vitro controlled release data for azithromycin in the PCT Application that a person of
ordinary skill in the field of the invention would not have had the degree of confidence of
success in transferring the PCT Application's azithromycin formulation to the different
metabolic and solubility systems of clarithromycin as would render the '718 claimed
invention unpatentable on the ground of obviousness.
In reaching these conclusions, the district court relied on the Federal Circuit’s
decision on the same patents in Abbott Laboratories v. Andrx Pharmaceuticals, Inc., 473
F.3d 1196 (Fed. Cir. 2007) (herein "Andrx"). This court, sustaining the district court’s grant
of a preliminary injunction, had concluded that obviousness was not likely to be established,
reversing this court’s prior ruling reversing the grant of a preliminary injunction in Abbott
Laboratories v. Andrx Pharmaceuticals, Inc., 452 F.3d 1331 (Fed. Cir. 2006) (herein
2007-1300 14
"Teva"). Sandoz argued to the district court that the Federal Circuit's ruling in Andrx is
incorrect, and on this appeal Sandoz urges us to reject Andrx and reinstate Teva.
In Teva a panel of this court held that the claims of the ‘718 patent were likely to be
held not infringed. This court also stated that there was a substantial likelihood that claim 4
of the '718 patent would be held invalid for obviousness based on the PCT Application
together with the '190 patent. This court held that the preliminary injunction should be
denied, although the panel cautioned that its ruling "in no way resolves the ultimate
question of invalidity." Teva, 452 F.3d at 1347. In Andrx a later panel of this court, on an
enlarged record, rejected the invalidity ruling in Teva and held that the '718 claims were
likely to withstand the attack on validity. Andrx, 473 F.3d at 1203-07.
Reviewing this history as applied to Sandoz’ arguments herein, the district court
explained that this court in Teva had not been made aware of the differences between the
pharmacokinetic criteria described in the '190 patent and those of the '718 patent. The
district court explained that the pharmacokinetic data in the '190 patent were based on
measurements of total antibiotic activity in the body, which includes both clarithromycin and
its active metabolite formed after ingestion, whereas the data in the '718 patent are specific
to clarithromycin alone. The court found that “Abbott has shown . . . that the PK profile of
the clarithromycin-metabolite data of the ‘190 patent formulation was not the same as the
PK profile of the clarithromycin-only data utilized by the ‘718 patent,” Abbott, 500 F.
Supp.2d at 841.
Sandoz argued, in its supplemental briefing in the district court after the KSR
decision, that this court's decision in Andrx does not survive scrutiny under the principles
set forth in KSR, and stressed that application of KSR renders it "obvious to try" the various
2007-1300 15
release agents in the PCT Application, such that any successful composition would be
unpatentable, whether or not the results were predictable. Sandoz argued that the '190
patent shows that clarithromycin and azithromycin have similarities as well as differences,
and that it would be obvious to experiment to determine which formulations were effective
in view of these differences and similarities. Sandoz stressed that the Abbott scientists had
knowledge of the prior art including the PCT Application, and that they developed the
Abbott formulation in only one month of research effort. Sandoz quoted the Court's
admonition in KSR that a court "can take account of the inferences and creative steps that
a person of ordinary skill in the art would employ," 127 S. Ct. at 1741, and that "[t]he
combination of familiar elements according to known methods is likely to be obvious when it
does no more than yield predictable results." Id. at 1739.
The district court, applying KSR, reconsidered its prior determination and framed the
question as "whether an ordinary person skilled in the art would have seen a benefit to
combining an erythromycin derivative with a polymer with the same PK [pharmacokinetic]
limitations as embodied in claims 1 and 4 of the '718 patent given the state of the
pharmaceutical industry at the time." Abbott, 500 F. Supp.2d at 851. The court concluded:
"Based upon what evidence and argument Sandoz offered, the answer was and remains
no." Id. The district court explained that “this Court’s preliminary factual findings . . . found
that Sandoz had not produced evidence indicating that the PK limitations were disclosed in
the prior art or were inherent to the structural limitations of the prior art compositions.” Id.
at 852. The district court observed that "[t]he KSR opinion only focused on the Federal
Circuit's strict use of the TSM [teaching, suggestion, motivation] test in performing the
obviousness analysis; it did not mention or affect the requirement that each and every claim
2007-1300 16
limitation be found present in the combination of the prior art references before the analysis
proceeds." Id. at 852.
We agree that the obviousness of selection of components, when there is no
prediction in the prior art as to the results obtainable from a selected component, differs
from the issue in KSR, where the Court provided guidance that "a court must ask whether
the improvement is more than the predictable use of prior art elements according to their
established functions." 127 S. Ct. at 1740. The Court explained the conditions in which
"obvious to try" may negate patentability, depending on the relation of the prior art teaching
to the later-developed technology. The Court explained that when the problem is known,
the possible approaches to solving the problem are known and finite, and the solution is
predictable through use of a known option, then the pursuit of the known option may be
obvious even absent a “teaching, suggestion, or motivation” concerning that option. Then,
“if this leads to the anticipated success, it is likely the product not of innovation but of
ordinary skill and common sense.” 127 S. Ct. at 1742.
Abbott argued that the "known options" in the prior art were not "finite, identified, and
predictable," the words of KSR, and are identified only with hindsight knowledge of Abbott’s
new formulation and its pharmacokinetic properties. Abbott pointed to the discussion in the
PCT Application of over a dozen possible drug delivery modes, including matrix systems,
membrane-moderated or reservoir systems, osmotic pumps, coated hydrogel tablets and
multiparticulates, sustained release compositions with delayed-release layers, pH-
dependent coated tablets, bursting osmotic core devices, bursting coated swelling core
devices, pH-triggered bursting osmotic core devices, pH-triggered bursting coated swelling
core devices, enzyme-triggered supported liquid membrane devices, bacterially degradable
2007-1300 17
coating devices, and swelling plug devices, all classes of controlled release for drug
delivery systems, each containing sub-classes and variations. PCT App. at 8-38. The
expert witnesses pointed out the difficulties in predicting the behavior of any composition in
any specific biological system.
The evaluation of the choices made by a skilled scientist, when such choices lead to
the desired result, is a challenge to judicial understanding of how technical advance is
achieved in the particular field of science or technology. Such understanding is critical to
judicial implementation of the national policy embodied in the patent statute. In Publication
of Tomlinson, 363 F.2d 928 (CCPA 1966) our predecessor court discussed the role of
"obvious to try" in scientific and technologic research and in patentability:
Slight reflection suggests, we think, that there is usually an element of
"obviousness to try" in any research endeavor, that is not undertaken with
complete blindness but rather with some semblance of a chance of success,
and that patentability determinations based on that as the test would not only
be contrary to statute but result in a marked deterioration of the entire patent
system as an incentive to invest in those efforts and attempts which go by the
name of "research."
Id. at 931. The Court in KSR did not create a presumption that all experimentation in fields
where there is already a background of useful knowledge is "obvious to try," without
considering the nature of the science or technology. The methodology of science and the
advance of technology are founded on the investigator’s educated application of what is
known, to intelligent exploration of what is not known. Each case must be decided in its
particular context, including the characteristics of the science or technology, its state of
advance, the nature of the known choices, the specificity or generality of the prior art, and
the predictability of results in the area of interest.
2007-1300 18
The district court discussed the differences between the pharmacokinetic properties
shown in the '190 patent reference and the properties in the '718 patent claims, the
differences in the chemical and biological properties of azithromycin and clarithromycin, the
differences between in vitro and in vivo data, and the differences between azithromycin and
clarithromycin. For example, Abbott’s expert Dr. Davis stated that “the absorption of
clarithromycin is affected by a phenomenon know as the ‘first pass effect’ which does not
occur for azithromycin,” and that azithromycin’s “metabolism occurs only post-absorption.”
Dr. Davis also stated that “the half-life for azithromycin is about 70 hours, whereas that for
clarithromycin is about 3-4 hours at low IR doses.” First-pass metabolism was explained as
meaning that a significant amount of the drug is metabolized and converted into another
compound before it enters the circulation; Dr. Davis stated that a person of skill in this field,
having this knowledge, would not have assumed that the two drugs would exhibit similar
behavior if placed in the same formulation. The district court concluded that it was not
predictable, from the in vitro behavior of azithromycin, how any specific clarithromycin
extended release formulation would perform in vivo.
Sandoz presented other arguments, for example, that the FDA regulations state the
requirements for approval of extended release formulations, thereby rendering obvious a
formulation that meets these requirements. However, knowledge of the goal does not
render its achievement obvious. The district court appropriately applied the KSR standard
of whether the patents in suit represented an "identified, predictable solution" and
"anticipated success," the words of KSR, to the problem of producing extended release
formulations having the pharmacokinetic properties in the claims.
On the record of the preliminary injunction proceedings, and considering this court's
2007-1300 19
ruling in Andrx and the guidance of the Court in KSR, we do not discern reversible error in
the district court's ruling that Abbott is likely to prevail on the issues of patent validity based
on anticipation and obviousness.
II
INEQUITABLE CONDUCT
Sandoz also argued that the '718 and '616 patents are unenforceable due to
Abbott’s “inequitable conduct” in the Patent and Trademark Office. Sandoz stated that
Abbott submitted a false declaration to the PTO, and also that Abbott withheld from the
examiner the results of certain tests after the patent applications were filed and that were
inconsistent with information in the patent applications. The district court found that there
was no intent to deceive the examiner, and that the criticized activity did not constitute
inequitable conduct.
The evidentiary standard for determining whether there was inequitable conduct in
obtaining a patent that is otherwise valid was set forth by this court, sitting en banc for the
purpose, in Kingsdown Medical Consultants, Ltd. v. Hollister Inc., 863 F.2d 867 (Fed. Cir.
1988). The court explained that "[t]o be guilty of inequitable conduct, one must have
intended to act inequitably," and held: "Inequitable conduct resides in failure to disclose
material information, or submission of false material information, with an intent to deceive,
and those two elements, materiality and intent, must be proven by clear and convincing
evidence." Id. at 872. Mistake or negligence, even gross negligence, does not support a
ruling of inequitable conduct. The court held:
We adopt the view that a finding that particular conduct amounts to “gross
negligence” does not of itself justify an inference of intent to deceive; the
involved conduct, viewed in light of all the evidence, including evidence
2007-1300 20
indicative of good faith, must indicate sufficient culpability to require a finding
of intent to deceive.
Id. at 876. When both materiality and deceptive intent have been established the district
court determines, in the court’s discretion, whether inequitable conduct has occurred;
appellate review is on this basis. See id. at 876 (“As an equitable issue, inequitable
conduct is committed to the discretion of the trial court and is reviewed by this court under
an abuse of discretion standard. We, accordingly, will not simply substitute our judgment
for that of the trial court in relation to inequitable conduct.”).
The ‘718 patent
Sandoz first challenges the district court’s findings with respect to a declaration by
an inventor, Dr. Linda Gustavson, comparing the products of the pending '718 application
with the products in a prior art Abbott patent, U.S. Patent No. 4,808,411, directed to a
pediatric clarithromycin suspension that is administered twice daily. Dr. Gustavson
submitted data to the PTO comparing the ‘718 and the ‘411 formulations, and stated that
“the ER [extended release] formulation as claimed, is supported by the above results,
namely, Cmax of clarithromycin in plasma is statistically significantly lower than that for IR
[immediate release] formulation given twice daily.” The declaration also stated that “AUC is
maintained over 24 hours; and Cmin is substantially equivalent to that of the IR
suspension”. 3 However, in this litigation Dr. Gustavson testified that she had not analyzed
statistical significance, and that "it could not definitively be concluded from the data that the
difference between the ER Cmax and the Cmax for a twice-a-day dosed suspension would
2007-1300 21
have been statistically significantly different." Based on this admission, Sandoz argued that
the Gustavson submission to the PTO was a material misrepresentation, that intent to
deceive is presumed, and that inequitable conduct was thereby established.
Abbott did not dispute that Dr. Gustavson did not analyze statistical significance, but
argued that it was not material to patentability and that a reasonable examiner would not
have found otherwise. Abbott pointed out that the actual data were before the PTO, and
that the results did show a numerically lower Cmax value. Sandoz pointed out to the district
court that Abbott’s patent attorney argued nonobviousness to the PTO based on the
Gustavson declaration, and Abbott responded that the declaration correctly stated that the
pharmacokinetic properties of the product in the '411 patent are markedly different from
those of the product of the '718 patent. We have been directed to no evidence of deceptive
intent, or “bad faith or intentional misconduct”, in the words of PTO Rule 56; on this appeal
Sandoz repeats that deceptive intent should be inferred from the misstatement.
The district court cited Impax Labs., Inc. v. Aventis Pharm., Inc., 468 F.3d 1366,
1374 (Fed. Cir. 2006) for its summary that a ruling of inequitable conduct requires clear and
convincing evidence that the applicant while prosecuting the patent “(1) made an affirmative
misrepresentation of material fact, failed to disclose material information, or submitted false
material information, and (2) intended to deceive the [PTO].” In determining materiality, the
district court applied the standard that “[u]ndisclosed information is material if it satisfies 37
C.F.R. '1.56 and if there is a substantial likelihood that a reasonable examiner would have
3
The AUC is a calculation of the “area under a curve” when drug concentration
is plotted over time, and is a measure of bioavailability of the drug. Cmin is the minimum rug
concentration over a dosing interval.
2007-1300 22
considered the undisclosed information important in deciding whether to allow the patent to
issue.” Although the Federal Circuit has not always been consistent in defining “materiality”
in accordance with the PTO Rules, the principles are consistently directed to deceptive
actions by patent applicants. In Digital Control, Inc. v. Charles Machine Works, 437 F.3d
1309 (Fed. Cir. 2006) the court observed that four separate tests have been applied for
materiality.
The district court, applying the tests of materiality to the Gustavson statement about
statistical significance, stated that it was "obviously troublesome that Gustavson made her
assertion without having actually performed the statistical test." The district court
concluded that the Gustavson statement was not material to patentability, "despite the fact
that it satisfies the definition of 'material' provided by 37 C.F.R. '1.56(b)." The court stated
that:
Since 1) no claim of the '718 patent requires the extended release
formulation to have a statistically significant lower Cmax than the immediate
release formulation; 2) the data in fact shows the Cmax of the extended
release formulation to be lower (albeit not statistically significantly lower) than
the Cmax of the immediate release formulation; and 3) the extended release
formulation was in fact pharmacokinetically different from the immediate
release suspension formulation, it is more likely than not that the PTO would
not have found the “statistically significantly lower” statement to be important.
500 F.Supp.2d at 822. Relevant is the ruling in Regents of the Univ. of Cal. v. Eli Lilly &
Co., 119 F.3d 1559, 1570 (Fed. Cir. 1997) (that “Information is material if a reasonable
examiner would have considered it important to the patentability of a claim”).
The district court also found that there was no evidence of intent to deceive the
examiner. The court rejected Sandoz's argument that deceptive intent is inferred from
materiality alone, for precedent requires independent proof of deceptive intent. See
2007-1300 23
Kingsdown, 863 F.2d at 872 (intent to deceive the examiner into granting the patent is a
separate and essential element of inequitable conduct in the PTO); Baker Oil Tools, Inc. v.
Geo Vann, Inc., 828 F.2d 1558, 1565 (Fed. Cir. 1987) ("The material facts upon which a
holding of inequitable conduct rests relate to both the intent of the actor and the materiality
of the information."). Weighing the materiality of the statement and the absence of
evidence of intent to deceive, we do not discern an abuse of discretion in the district court's
conclusion that inequitable conduct was not established by the statement concerning
statistical significance.
Sandoz next challenged the fact that Abbott did not provide to the patent examiner
the results of some clinical tests conducted after the '718 patent application was filed, that
were reported to the FDA and included on the Biaxin® XL product label. The test results
relate to taste perversion 4 results in a later clinical trial, and a study comparing
clarithromycin with azithromycin. Sandoz stated that Abbott should have provided the
patent examiners with these results and the product label, which report tests wherein the
immediate release formulation has a lower incidence of taste perversion than the extended
release formulation, contrary to the information in the '718 patent. Sandoz argued that the
inventors knew or should have known of this discrepancy, and thus that intent to deceive is
established. Abbott responded that the challenged taste tests were from dosages that
were not directly comparable, and that they did not change the correctness of the data in
the patent application. Abbott presented the expert testimony of Dr. Davis that "the
4
"Taste perversion" is defined in the '718 patent as "the perception of a bitter
metallic taste normally associated with erythromycin derivatives, particularly, with
clarithromycin." Col 3, lines 53-55.
2007-1300 24
comparison between the taste perversion incidence rate for Biaxin7 IR and Biaxin7 XL in
the label does not relate to the invention disclosed and claimed in the '407 patent, which is
for a reduction in taste perversion for the same total dose.” Supplemental Declaration of
Professor Stanley S. Davis, February 7, 2007(emphases in original).
The district court concluded that the taste results met the materiality criteria of Rule
56 but that a reasonable examiner would not consider the information important in deciding
whether to grant the patent. The court explained that a reasonable examiner would
compare data at comparable dosages, and that the data were not comparable. Although
Abbott and Sandoz argued about whether the inventors knew or should have known of this
discrepancy between this taste data from the Phase III clinical trial, and the taste data in
the patent application, the district court observed that there was no evidence of deliberate
withholding of this information in order to deceive the patent examiner. "Intent to deceive
can not be inferred solely from the fact that information was not disclosed; there must be a
factual basis for a finding of deceptive intent." Hebert v. Lisle Corp., 99 F.3d 1109, 1115,
1116 (Fed. Cir. 1996) ("To establish inequitable conduct the information that is known to
the applicant and not provided to the PTO must be both material to patentability, and
withheld in order to deceive or mislead the examiner."); Molins PLC v. Textron, Inc., 48
F.3d 1172, 1181 (Fed. Cir. 1995) ("While intent to deceive the PTO may be found as a
matter of inference from circumstantial evidence, circumstantial evidence cannot indicate
merely gross negligence.").
Materiality is not evidence of intent, which must be established as a separate factual
element of a discretionary ruling of inequitable conduct. The district court finding that the
2007-1300 25
factual premises of both materiality and intent to deceive were not established in
connection with the taste data, did not abuse its discretion in declining to find inequitable
conduct on this ground.
Finally, Sandoz criticized Abbott's failure to provide the PTO with a study designated
W98-268, done after the patent application was filed, which compared the pharmacokinetic
values of clarithromycin upon administration under various conditions. The district court
described the issue as: “Abbott claimed that the mean DFL values for a modified release
version of clarithromycin claimed by a prior patent, the ‘190 patent, were substantially equal
to the mean DFL values for the immediate release version of clarithromycin” but “[t]he final
report of Study W98-268 states that the modified release formulation exhibited a statistically
significantly lower mean DFL than that for the immediate release formulation.” 500 F.
Supp.2d at 823. Sandoz stated that Abbott committed inequitable conduct by failing to
disclose these results to the PTO.
Dr. Weiner stated in his January 9 Declaration that “the ‘190 patent does not
disclose any clarithromycin-specific PK data,” and “the ‘190 patent does not disclose any
DFL values at all,” and explained that ”subsequent studies conducted by Abbott indicate
that the commercial embodiment of the invention of the ‘190 patent does not have a
statistically significantly lower DFL than the IR formulation. . . . Before the present litigation,
Abbott had conducted five crossover studies in which the pharmacokinetic parameters for
clarithromycin (i.e., clarithromycin specifically, not clarithromycin combined with its
metabolite) were measured for both the MR [modified release] and IR formulations: W95-
914, W95-195, W95-197, W98-268 [the study that Sandoz accuses Abbott of withholding],
and TAI-99-001.” The mean DFL values in Table VII in the ‘718 patent are
2007-1300 26
based on Study W95-195. See Supplemental Declaration of Dr. Ronald Sawchuk,
February 7, 2007 (“Table VII reflects data from a multiple dose study involving MR
formulation and an IR formulation that was conducted in Germany in 1995. See Ex. 12,
Study W95-195.”). The studies conducted before the '718 patent application was filed
showed the data reported in the specification.
Many details were explained to the district court, as to all the studies, their context,
and their relationship. The district court found that "contrary to Sandoz's assertion, Study
W98-268 does not demonstrate that the prior art MR formulation has the same PK
properties as that claimed for the ER formulation. Therefore, Study W98-268 is not
material to the patentability of the '718 patent." Abbott, 500 F. Supp.2d at 824. The district
court found that the '718 patent "speaks of the PK relationship of extended release and
immediate release formulations, not of modified release and immediate release
formulations. . . . [and] there is no evidence showing the DFL of the ER formulation to be
anything but consistently statistically significantly lower than the DFL of the IR formulation."
Id. The district court found that the W98-268 study was not material under either Rule 56
or the reasonable examiner standard. Clear error has not been shown in this finding.
On the preliminary injunction record, the district court did not abuse its discretion in
ruling that Sandoz was not likely to succeed in establishing inequitable conduct in Abbott’s
prosecution of the '718 patent application. We agree with the district court that the scales
do not "tilt towards finding inequitable conduct." Id. at 829.
The ‘616 patent
2007-1300 27
Sandoz argued that inequitable conduct as to the taste perversion claim in the ‘718
patent taints the ‘616 patent because a taste perversion claim was included in the '616
application when it was filed, although that claim was cancelled before any PTO
examination on the merits. The district court declined to hold the '616 patent unenforceable
based on a withdrawn claim, citing 37 C.F.R. §1.56(a):
Rule 56(a). The duty to disclose information exists with respect to each
pending claim until the claim is cancelled or withdrawn from consideration, or
the application becomes abandoned. Information material to the patentability
of a claim that is cancelled or withdrawn from consideration need not be
submitted if the information is not material to the patentability of any claim
remaining under consideration in the application.
The district court deemed it "wholly inequitable to hold a patent to be invalid for fraudulent
conduct in the prosecution of a claim that was withdrawn before actual prosecution had
even begun." Abbott, 500 F. Supp.2d at 829. This court held in Scripps Clinic & Research
Found. v. Genentech, Inc., 927 F.2d 1565, 1583 (Fed. Cir. 1991) that "[a] reference that is
material only to withdrawn claims can not be the basis of a holding of inequitable conduct."
Rule 56 is in accord.
Sandoz also argued as to the '616 patent that Abbott did not report to the PTO the
results of clinical trials conducted before the continuation in-part ‘616 application was filed.
Sandoz’ expert Dr. Marcello Pagano, in his Declaration dated January 25, 2007, stated: “I
have reviewed the bronchitis and sinusitis studies [and] the claims of the ‘616 patent for a
method of reducing gastrointestinal adverse side effects are not supported by the data from
those two clinical studies.” The results of these studies were provided to the FDA, but not
to the PTO. Dr. Pagano stated: “Since neither the sinusitis nor the bronchitis studies
produced favorable results to support a claimed reduction in gastrointestinal adverse side
2007-1300 28
effects, Abbott had to manipulate its data and report the number of discontinuations due to
gastrointestinal adverse side effects to the PTO . . .” The district court found that the
information from these clinical trials was not material to patentability, stating that: "it is clear
from both Table VI and Table VIII [of the '616 patent] that some data demonstrating no
change in the subcategories of GI adverse side effects of abdominal pain, constipation,
diarrhea, dyspepsia, flatulence and nausea were in fact disclosed to the PTO." Abbott, 500
F. Supp.2d at 828. These findings have not been shown to be clearly erroneous.
There was no evidence of intent to deceive with respect to the results of these
clinical trials. Materiality, even if found, does not establish intent. This is not a case of new
information that affects the fundamental invention; this is a case of challenging every action
or inaction of the “conduct” of patent solicitation, although patentability is unaffected. The
purpose of Kingsdown was to bring patent practice into the mainstream of the law and
administrative practice. The law severely punishes fraudulent practices, and the patent
practice includes recognition that the inventor usually knows more about the field than does
the “expert” patent examiner. However, routine actions that do not affect patentability and
that are devoid of fraudulent intent are not subject to a different standard than other
inquiries into fraudulent procurement. The Administrative Procedure Act governs patent
examination, see Dickinson v. Zurko, 527 US 150 (1999), and actions of patent examiners
are reviewed with recognition of examiner expertise so well as recognition of the
occasionally imperfect examination process. “It was to mitigate the ‘plague’ whereby every
patentee’s imperfections were promoted to ‘inequitable conduct’ that this court reaffirmed
that both materiality and culpable intent must be established.” Allied Colloids, Inc. v.
American Cyanamid Co., 64 F.3d 1570, 1578 (Fed. Cir. 1995).
2007-1300 29
We conclude that the district court did not abuse its discretion in holding that the '718
and '616 patents were not likely to be held unenforceable based on inequitable conduct in
obtaining the patents.
III
INFRINGEMENT
The first step in most infringement suits is the procedure called ‘claim construction,”
where the scope of the claim is defined by the court. At the preliminary injunction stage the
district court’s claim construction is reviewed, as for other legal issues, for the likelihood of
correctness of the ruling. This likelihood is based on the underlying facts as found at this
stage of the proceedings, recognizing that "the burdens at the preliminary injunction stage
track the burdens at trial." Gonzales v. O Centro Espirita Beneficente Uniao do Vegetal,
546 U.S. 418, 429 (2006).
For the patents here in suit, the issue of infringement was resolved, at this preliminary
injunction stage, as a matter of claim construction. The dispositive question was whether
the term "pharmaceutically acceptable polymer" is limited to the polymers named in the
specification, or can include other pharmaceutically acceptable polymers. If so limited, it is
likely that there would not be literal infringement; if not so limited, then literal infringement
would be possible. (Infringement under the doctrine of equivalents was not addressed by
the district court, although Sandoz argues the issue “in an abundance of caution.”).
The meaning and scope of "pharmaceutically acceptable polymer" as used in these
patents has been litigated in other cases, none of which had been finally decided, but some
of which had been appealed to the Federal Circuit based on the grant of a preliminary
injunction. The district court now construed "pharmaceutically acceptable polymer" in
2007-1300 30
accordance with the construction by the Federal Circuit in Andrx, supra. Sandoz argues on
this appeal that the correct construction is that of the Federal Circuit’s earlier decision in
Teva, supra. Sandoz argues that because Teva was the earlier ruling, it could not be
overturned by the later Andrx panel, citing Newell Cos., Inc. v. Kenney Mfg. Co., 864 F.2d
757, 765 (Fed. Cir. 1988) ("Where there is a direct conflict [between Federal Circuit panels],
the precedential decision is the first.").
Abbott responds that the decision in Andrx was properly followed by this district
court, for in Teva the "construction" of "pharmaceutically acceptable polymer" was not at
issue, and this court's comment thereon was dictum. The court in Andrx recognized the
non-binding nature of that comment in Teva. Indeed, the district court in Teva had stated
that "[a]t this early stage of the proceedings, the parties have raised no issue as to claim
construction". Abbott Laboratories v. Andrx Pharmaceuticals, Inc., No. 05 C 1490, 2005
WL 1323435, at *3, *4 (N.D. Ill. June 03, 2005) (Teva conceding literal infringement but
challenging validity).
The panel in Andrx decided the questions now raised by Sandoz concerning the
“construction” of "pharmaceutically acceptable polymer" and the pharmacokinetic
requirements in the claims. The Andrx panel also explained its departure from the panel
decision in Teva. The district court herein, applying Andrx, held that a person of ordinary
skill in this field would interpret "pharmaceutically acceptable polymer" in terms of the
following description in the '718 specification:
"Pharmaceutically acceptable" as used herein, means those compounds,
which are, within the scope of sound medical judgment, suitable for use in
contact with the tissues of humans and lower animals without undue toxicity,
irritation, allergic response, and the like, in keeping with a reasonable
2007-1300 31
benefit/risk ratio, and effective for their intended use in the chemotherapy and
prophylaxis of antimicrobial infections.
'718 patent, col. 3 lines 40-47. The district court referred to the '718 specification's listing of
pharmaceutically acceptable polymers, but applied the Andrx ruling that the polymers are
not limited to those that are named in the following paragraph:
The pharmaceutically acceptable polymer is a water-soluble hydrophilic
polymer selected from the group consisting of polyvinylpyrrolidine,
hydroxypropyl cellulose, hydroxypropyl methyl cellulose, methyl cellulose,
vinyl acetate/crotonic acid copolymers, methacrylic acid copolymers, maleic
anhydride/methyl vinyl ether copolymers and derivatives and mixtures
thereof.
‘718 patent, col. 3 line 65 to col. 4 line 4. The district court construed "pharmaceutically
acceptable polymer" as:
[A]ny polymer, which within the scope of sound medical judgment is suitable
for use in pharmaceutical compositions for use in contact with the tissues of
humans and lower animals without undue toxicity, irritation, allergic response,
and the like, in keeping with a reasonable benefit/risk ratio, and effective for
their intended use in the chemotherapy and prophylaxis of antimicrobial
infections, and is capable of forming a matrix to extend drug release into the
bloodstream. Such a "pharmaceutically acceptable polymer" must constitute
5 to 50% by weight of the product.
Abbott, 500 F. Supp.2d at 834. The district court, following Andrx, held that the
usage "from the group consisting of" in the specification is not exclusive, as it would
be in a Markush-form claim, and did not negate the broader description that is also
contained in the specification, as quoted above.
This aspect was debated in the district court, and again on this appeal. Sandoz
argues that since "pharmaceutically acceptable polymer" is limited by the specification to
water-soluble hydrophilic polymers, and that since the listed methacrylic acid copolymers
are known to include water-insoluble as well as water-soluble polymers, the term
2007-1300 32
"pharmaceutically acceptable polymer" must be construed to mean that the formulation
cannot include any water-insoluble methacrylic acid or other polymer. The district court,
receiving this argument, reasoned that "the existence of water-insoluble polymers from the
specifically-mentioned methacrylic acid co-polymer subset actually militates towards a
broader construction urged by Abbott that would encompass water-insoluble methacrylic
acid co-polymers." Abbott, 500 F. Supp.2d at 834. Sandoz argues that this reasoning is
flawed, and that this court in Andrx erred in rejecting this argument. However, we are not
persuaded that the Andrx panel's ruling warrants rejection on this argument, for we agree
with the district court that the fact that some methacrylic acid copolymers are water-
insoluble does not require limiting "pharmaceutically acceptable polymer" to the named
polymers.
We conclude that the district court’s claim construction, which is that of Andrx, is
correct, and that the district court properly declined to follow Teva. Sandoz’ argument that
Teva was the correct construction and should be revived by the Federal Circuit is hard to
square with Sandoz’ statement to the district court that “a very important point to make here
is Sandoz does not rely on the Federal Circuit opinion in the Teva case. . . . Sandoz agrees
with Abbott.” Statement at the February 12, 2007 preliminary injunction hearing, transcript
at A11085.
Sandoz further argues that the district court erred by using the word "matrix" in its
definition of “pharmaceutically acceptable polymer,” quoted above, pointing out that this
word does not appear in the claims or specification. However, claim construction often
calls upon words other than those of the patent, lest the claim simply define itself. “Claim
construction” is for the purpose of explaining and defining terms in the claims, and usually
2007-1300 33
requires use of words other than the words that are being defined. See Multiform
Desiccants, Inc. v. Medzam, Ltd., 133 F.3d 1473, 1477 (Fed. Cir. 1998) (claims are
construed as an aid to the decision-maker, by restating the claims in non-technical terms).
Abbott's expert Dr. Davis had used the word “matrix” in his explanation of the
technology of extended release. He explained that a “pharmaceutically acceptable
polymer. . . alone or in combination with other polymers, is capable of forming a matrix
when mixed with the drug to control and extend drug release into the GI tract and thence to
the bloodstream." Declaration of Professor Davis, January 10, 2007. Sandoz does not
dispute that this explanation comports with the description in the specification. Also, Abbott
cites several scientific publications that use the word "matrix" in this context, and Sandoz
does not argue that the word has a different meaning from that with which it was used by
the district court. There is no ground for discarding the district court's claim construction
based on the word “matrix.”
Sandoz also argued that the claims must be construed so that the "pharmaceutically
acceptable polymer" is the only release agent in the composition, argued that the presence
of any other agent that affects release of the drug removes the composition from the scope
of the ‘718 claims. Abbott pointed out that the claims use the conventional signal
"comprising," which means that other ingredients may be present in the composition, in
addition to those explicitly set forth. See CIAS, Inc. v. Alliance Gaming Corp., 504 F.3d
1356, 1360 (Fed. Cir. 2007) ("In the patent claim context the term 'comprising' is well
understood to mean 'including but not limited to'."); Georgia-Pacific Corp. v. United States
Gypsum Co., 195 F.3d 1322, 1327-28 (Fed. Cir. 1999) ("'comprising' . . . is inclusive or
open-ended and does not exclude additional unrecited elements or method steps").
2007-1300 34
Sandoz argues that the district court's claim construction is incorrect because it
ignores the distinction between "pharmaceutically acceptable polymers" and
"pharmaceutically acceptable excipients." We discern no support for this challenge. Abbott
points out that the distinction between “polymer” and “excipient” lies in its role in the
composition, as the patent states: "The compositions of the invention further comprise
pharmaceutically acceptable excipients and/or fillers and extenders, such as lactose . . .".
'718 patent, col. 4, lines 21-23. We discern no flawed judicial understanding of the term
“excipient.”
Sandoz also argued that the components of its accused formulation are merely
“excipients” in that they do not extend the release of the clarithromycin, while Abbott
pointed out that Sandoz described its product to the FDA as "extended release." Sandoz
stated that the extension of release for its product is achieved not by the polymer that is
present in its composition, but by other components. The district court considered the
arguments concerning the role of the maltodextrin and the silicified microcrystalline
cellulose in the Sandoz product. The court discussed the evidence of release rates and
amounts released, including the information in Sandoz' approved ANDA, the comparative
data presented by both sides, and various technical articles provided by both sides on the
physical and chemical characteristics of the components of the Sandoz formulation. The
court found that “Abbott has demonstrated a substantial likelihood that maltodextrin is a
polymer that alone or in combination with other polymers, is capable of forming a matrix to
extend drug release." Abbott, 500 F. Supp.2d at 837.
Sandoz argues that the district court erred in its evaluation of the evidence, stating
that Abbott did not show by direct testing that any of the polymers in the Sandoz product
2007-1300 35
actually extends the release of clarithromycin. Sandoz argues that the district court erred in
finding unpersuasive certain laboratory tests conducted by Sandoz to show that
maltodextrin has no significant impact on the dissolution rate of clarithromycin. Abbott
responds that the district court did not err, and that Sandoz must be deemed to have
admitted that maltodextrin and silicified microcrystalline cellulose are polymers that, alone
or in combination with other components, are capable of extending drug release. Abbott
pointed out to the district court that the developer of the Sandoz formulation, Dr. Nirmal
Mulye, in his patent application (US 2004/0224017 A1) entitled "Process for Preparing
Sustained Release Tablets," stated that "the present inventor has found that the addition of
maltodextrin in effective amounts provides the desired release profile," that “maltodextrin
also tends to slow down the release of a medicament in a controlled release formulation[,]”
and that “the maltodextrin used in the present invention is to counteract the accelerated
rate of release of the drug . . .” We have not been directed to clear error in the district
court’s findings on this question.
Sandoz raises additional arguments, some discussed by the district court, and some
newly presented on this appeal. All have been considered. We conclude that the district
court’s findings and rulings at this stage of the proceedings have not been shown to
constitute reversible error. The ruling that Abbott had shown a reasonable likelihood of
proving infringement is sustained.
IV
THE EQUITABLE FACTORS
Sandoz states that the district court incorrectly resolved and weighed the equitable
factors relevant to the grant of a preliminary injunction. Sandoz states that the factors of
2007-1300 36
irreparable harm, the balance of harms, and the public interest, all weigh in its favor, and
outweigh any finding that Abbott is likely to prevail on the issues of validity or enforceability
and infringement. The district court considered these factors, and explained its reasoning
in exercising its discretion to grant the preliminary injunction.
Irreparable Harm
Sandoz argued that any harm to Abbott is not irreparable, for damages are available
for infringement, if the eventual final judgment is adverse to Sandoz. Sandoz pointed out
that the generic producers Teva and Ranbaxy are already in this market, by settlement with
Abbott, such that any price erosion due to generic competition is already occurring. The
district court considered these relationships, and concluded that they do not negate the
market share and revenue loss upon Sandoz’ entry while the litigation proceeds.
Precedent supports this conclusion. See, e.g., Purdue Pharma L.P. v. Boehringer
Ingelheim GmbH, 237 F.3d 1359, 1368 (Fed. Cir. 2001) (likelihood of price erosion and loss
of market position are evidence of irreparable harm); Bio-Technology Gen. Corp. v.
Genentech, Inc., 80 F.3d 1553, 1566 (Fed. Cir. 1996) (loss of revenue, goodwill, and
research and development support constitute irreparable harm); Polymer Technologies,
Inc. v. Bridwell, 103 F.3d 970, 975-76 (Fed. Cir. 1996) (loss of market opportunities cannot
be quantified or adequately compensated, and is evidence of irreparable harm).
The Balance of Hardships
The district court discussed and weighed the hardships argued by both parties, and
found that the balance of hardships tipped in favor of Abbott. The court found that
preserving the status quo preserves the current market structure, recognizing that Abbott
2007-1300 37
has licensed other generic producers. The district court concluded that "Abbott will lose
much more if this Court did not enjoin Sandoz's infringing conduct than if the Court enjoins
Sandoz and it is subsequently found that the '718 patent is invalid or unenforceable."
Abbott, 500 F. Supp.2d at 845.
We agree that the fact that a patentee has licensed others under its patents does not
mean that unlicensed infringement must also be permitted while the patents are litigated.
Precedent illustrates that when the patentee is simply interested in obtaining licenses,
without itself engaging in commerce, equity may add weight to permitting infringing activity
to continue during litigation, on the premise that the patentee is readily made whole if
infringement is found. In this case the district court received Abbott’s argument that it could
not be made whole if it prevails in this litigation, for the added erosion of markets,
customers, and prices, is rarely reversible. See Sanofi-Synthelabo, 470 F.3d at 1383
(rejecting hardship claim of generic challenger whose “harms were almost entirely
preventable’ and were the result of its own calculated risk to launch its product pre-
judgment”).
Clear error has not been shown in the district court’s finding that the harm to Sandoz
of delay in entering this market while this case is litigated, is outweighed by the harm to
Abbott in view of the likelihood that Abbott will succeed in sustaining the validity and
enforceability of its patents.
The Public Interest
Sandoz argues that the public interest favors the availability of less expensive forms
of successful medicines. The district court considered this argument, and stated:
2007-1300 38
The Court recognizes the public interest in competition in the pharmaceutical
market. It also recognizes, however, the public interest in creating beneficial
and useful products and the cost involved in that process. To the extent that
this Court has found a substantial likelihood that the ‘718 patent is valid and
enforceable, there can be no serious argument that public interest is not best
served by enforcing it.
500 F. Supp.2d at 846. The district court appreciated that the public interest includes
consideration of whether, by shifting market benefits to the infringer while litigation is
pending for patents that are likely to withstand the attack, the incentive for discovery and
development of new products is adversely affected. The statutory period of exclusivity
reflects the congressional balance of interests, and warrants weight in considering the
public interest. In Sanofi-Synthelabo, 470 F.3d at 1383, this court referred to the significant
“public interest in encouraging investment in drug development and protecting the
exclusionary rights conveyed in valid pharmaceutical patents.” As the Court explained in
Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470 (1974): “The patent laws promote this
progress by offering a right of exclusion for a limited period as an incentive to inventors to
risk the often enormous costs in terms of time, research, and development.” Id. at 480.
Sandoz states that the Court’s recent decision in eBay Inc. v. MercExchange, L.L.C.,
547 U.S. 388 (2006) negates any presumption of entitlement to an injunction upon a finding
of likelihood that a patent will be sustained and found infringed. The district court did not
apply such a presumption, but fully considered all of the legal and equitable factors. At the
preliminary injunction stage, the legal and equitable factors may be of different weight when
the patentee is itself engaged in commerce, as contrasted with a patentee that is seeking to
license its patent to others. We need not resolve this aspect for all possible situations, for
as between Abbott and Sandoz the district court objectively weighed the legal probabilities
2007-1300 39
and the equities, and exercised its discretionary judgment as to the entirety of the cause.
We have been shown no basis for believing that the district court abused its discretion.
V
THE INJUNCTION BOND
Sandoz also appeals the amount of the injunction bond, which the district court set
at $40 million. Sandoz provides no substance for appellate review of the amount of the
bond, simply stating in its brief that it "presented [to the district court] at least colorable
evidence that its losses from the injunction and recall would be $200 million," but not
describing the evidence or arguing its merits. Sandoz simply states that its proposed
number should have been accepted, in the event that the $40 million is later shown to be
inadequate.
This aspect has not been presented in reviewable substance. On this appeal, abuse
of discretion has been shown in the district court’s setting of the terms of the injunction.
See Russell v. Farley, 105 U.S. 433, 441 (1881) (the court's discretion in setting the terms
of an injunction is rooted in equity).
VI
THE ISSUE OF CONFLICTING PRECEDENT
The district court found the likelihood that the patentee would succeed on the merits
and that the equities favored the patentee, and exercised its discretion to enjoin
infringement during the litigation. The dissent states that the district court applied the
incorrect standard, and that if the infringer “raises a substantial question concerning either
infringement or validity,” diss. op. at 2, it is an abuse of discretion to enjoin infringement
pendente lite. The dissent quotes with approval a past panel statement that “In resisting a
2007-1300 40
preliminary injunction, however, one need not make out a case of actual validity.
Vulnerability is the issue at the preliminary injunction stages, while validity is the issue at
trial.” Id. Indeed, this court’s precedent makes this statement, in direct conflict with other,
earlier statements that the standard is not vulnerability, but likelihood of success on the
merits.
In response to the arguments expounded in the dissenting opinion, I summarize the
law governing the grant of a preliminary injunction. The criteria relied on in the dissent are
not the criteria of any other circuit, nor of the Supreme Court. The correct standard is not
whether a substantial question has been raised, but whether the patentee is likely to
succeed on the merits, upon application of the standards of proof that will prevail at trial.
The question is not whether the patent is vulnerable; the question is who is likely to prevail
in the end, considered with equitable factors that relate to whether the status quo should or
should not be preserved while the trial is ongoing. The presentation of sufficient evidence
to show the likelihood of prevailing on the merits is quite different from the presentation of
substantial evidence to show vulnerability.
Thus the evidence that favors the patent must be considered in deciding a motion for
a preliminary injunction, as well as the evidence against the patent. The trial court then
decides which side is likely ultimately to prevail. The dissent presents only the case against
the patent, apparently on the theory that this is all that is needed to raise a “substantial
question”.
Indeed, a showing of a substantial question concerning validity or infringement can
serve to avert judgment on the pleadings, or to avoid the grant of summary judgment, but it
is not the same as showing likelihood of eventual success on the merits. The dissent
2007-1300 41
recognizes that it is not the same and that it “requires less proof”, but errs in stating that this
is sufficient to defeat the grant of a preliminary injunction. Precedent is clear that the
standard is the likelihood of success of the plaintiff at trial, with recognition of the
presumptions and burdens. See, e.g., Gillette Co. v. Energizer Holdings, Inc., 405 F.3d
1367, 1370 (Fed.Cir.2005); Ranbaxy Pharmaceuticals., Inc. v. Apotex, Inc., 350 F.3d 1235,
1239 (Fed.Cir.2003); Reebok Int’l Ltd. v. J. Baker, Inc., 32 F.3d 1552, 1555 (Fed. Cir.
1994); Smith Int’l, Inc. v. Hughes Tool Co., 718 F.2d 1573, 1579 (Fed.Cir.1983).
Supreme Court precedent, every regional circuit, and controlling Federal Circuit
precedent, apply to the preliminary injunction the combination of criteria that includes
likelihood of success on the merits and equitable considerations. No other court has held
that when the attacker has presented a “substantial question” on its side of the dispute –
that is, more than a scintilla but less than a preponderance of evidence in support of its side
– no injunction pendente lite is available. Further, equitable factors are of particular
significance at the preliminary stage, where the question is whether to change the position
of the parties during the litigation. See Camenisch, 451 U.S. at 395 (the preliminary
injunction preserves the position of the parties during the litigation). The dissent does not
mention the equitable factors that were considered by the district court, as required by
precedent; the dissent simply states that the injunction must be denied if the attacker has
raised a substantial question.
Supreme Court precedent is clear in stating that the same burdens and standards of
proof apply in deciding the merits for preliminary injunction purposes, as in deciding the
same questions upon full litigation. See, e.g., Gonzales, 546 U.S. at 429 (placing the
burdens of proof for showing likelihood of success at the preliminary injunction stage). The
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Court explained in Amoco Production Co. v. Village of Gambell, AK, 480 U.S. 531, 546 n.2
(1987) that: “The standard for a preliminary injunction is essentially the same as for a
permanent injunction with the exception that the plaintiff must show a likelihood of success
on the merits rather than actual success.”
There is no reason why patent cases require unique treatment. See eBay Inc. v.
MercExchange, L.L.C., 547 U.S. 388. 394 (2006) (“[T]he decision whether to grant or deny
injunctive relief rests within the equitable discretion of the district courts, and that such
discretion must be exercised consistent with traditional principles of equity, in patent
disputes no less than in other cases governed by such standards.”). The general criterion
of likelihood of success on the merits, in the context of the equities of the particular case,
are uniform throughout the regional circuits. All are consistent with the rulings of the
Supreme Court, and, although the words vary, all refer to the likelihood of the eventual
outcome, not whether a substantial question has been raised. In brief sampling, starting
with the First Circuit, the court summarized the standard in Wine and Spirits Retailers, Inc.
v. Rhode Island, 418 F.3d 36 (1st Cir. 2005):
The sine qua non of this four-part inquiry is likelihood of
success on the merits: if the moving party cannot demonstrate
that he is likely to succeed in his quest, the remaining factors
become matter of idle curiosity.
Id. at 46 (citation omitted). The referenced “four-part inquiry” is “(1) the likelihood of
success on the merits; (2) the potential for irreparable harm [to the movant] if the injunction
is denied; (3) the balance of relevant impositions, i.e., the hardship to the nonmovant if
enjoined as contrasted with the hardship to the movant if no injunction issues; and (4) the
effect (if any) of the court's ruling on the public interest.” Id. (alteration in original) (citations
2007-1300 43
omitted).
The Second Circuit also applies the standard four factors. I cite a case that
emphasized the equitable considerations; in Laureyssens v. Idea Group, Inc., 964 F.2d
131, 135-36 (2nd Cir. 1992) (emphasis in original) the court stated: “A party seeking a
preliminary injunction must establish (1) irreparable injury and (2) a likelihood of success on
the merits or a sufficiently serious question going to the merits and a balance of hardships
tipping decidedly in the moving party's favor.”
The Third Circuit also stated that the district court must consider four factors: “[A] the
likelihood that the applicant will prevail on the merits at final hearing; [B] the extent to which
the plaintiffs are being irreparably harmed by the conduct complained of; [C] the extent to
which the defendants will suffer irreparable harm if the preliminary injunction is issued; and
[D] the public interest.” Opticians Ass’n of Am. v. Independent Opticians of Am., 920 F.2d
187, 191-92 (3rd Cir.1990) (alterations in original) (citation omitted). In Eli Lilly & Co. v.
Premo Pharmaceutical Laboratories, Inc., 630 F.2d 120 (3rd Cir. 1980) the court explained
that when analyzing a preliminary injunction:
the moving party must generally show (1) a reasonable
probability of eventual success in the litigation and (2) that the
movant will be irreparably injured pendente lite if relief is not
granted. . . . Moreover, while the burden rests upon the moving
party to make these two requisite showings, the district court
“should take into account, when they are relevant, (3) the
possibility of harm to other interested persons from the grant or
denial of the injunction, and (4) the public interest.” . . . While
these factors structure the inquiry, however, no one aspect will
necessarily determine its outcome. Rather, proper judgment
entails a ‘delicate balancing’ of all elements. On the basis of
the data before it, the district court must attempt to minimize
the probable harm to legally protected interests between the
time that the motion for a preliminary injunction is filed and the
time of the final hearing.
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Id. at 136. Indeed, rulings of the Federal Circuit, along with requiring this “reasonable
probability of eventual success,” have recognized the “’delicate balancing’ of all elements.”
See H.H. Robertson Co. v. United Steel Deck, Inc., 820 F.2d 384, 387-88 (Fed. Cir. 1987).
Similarly in the Fourth Circuit the inquiry is: “1) Has the petitioner made a strong
showing that it is likely to prevail upon the merits? 2) Has the petitioner shown that without
such relief it will suffer irreparable injury? 3) Would the issuance of the injunction
substantially harm other interested parties? 4) Wherein lies the public interest?”
Blackwelder Furniture Co. of Statesville, Inc. v. Seiling Mfg. Co., 550 F.2d 189, 193 (4th
Cir. 1977) (when reviewing the grant of denial of interim injunctive relief “our review of the
lower court’s application of the law is not limited by the same ‘clearly erroneous’ rule which
restricts our review of its findings of fact under Rule 52(a)”); see First-Citizens Bank & Trust
Co. v. Camp, 432 F.2d 481, 484 (4th Cir. 1970) (applying the four-factors and reversing the
district court’s grant of a preliminary injunction).
In the Fifth Circuit the four factors are recited as “(1) a substantial likelihood that
plaintiff will prevail on the merits, (2) a substantial threat that plaintiff will suffer irreparable
injury if the injunction is not granted, (3) that the threatened injury to plaintiff outweighs the
threatened harm the injunction may do to defendant, and (4) that granting the preliminary
injunction will not disserve the public interest.” Canal Authority of State of Florida v.
Callaway, 489 F.2d 567, 573 (5th Cir. 1974). The “substantial likelihood of prevailing” is not
the same as raising a substantial question.
Again for the Sixth Circuit, the “well-established” factors are: “(1) the likelihood that
the party seeking the preliminary injunction will succeed on the merits of the claim; (2)
2007-1300 45
whether the party seeking the injunction will suffer irreparable harm without the grant of the
extraordinary relief; (3) the probability that granting the injunction will cause substantial
harm to others; and (4) whether the public interest is advanced by the issuance of the
injunction,” Six Clinics Holding Corp. II v. Cafcomp Systems, Inc., 119 F.3d 393, 399 (6th
Cir. 1997). The court recognized that “a finding that the movant has not established a
strong probability of success on the merits will not preclude a court from exercising its
discretion to issue a preliminary injunction if the movant has, at minimum, ‘show[n] serious
questions going to the merits and irreparable harm which decidedly outweighs any potential
harm to the defendant if the injunction is issued.’” Id. at 400 (alteration in original). This
ruling gave weight to the court’s discretion to preserve the status quo during the litigation,
when the equitable factors warrant such discretion.
In the Seventh Circuit:
As a threshold matter, a party seeking a preliminary injunction
must demonstrate (1) some likelihood of succeeding on the
merits, and (2) that it has “no adequate remedy at law” and will
suffer “irreparable harm” if preliminary relief is denied. If the
moving party cannot establish either of these prerequisites, a
court's inquiry is over and the injunction must be denied. If,
however, the moving party clears both thresholds, the court
must then consider: (3) the irreparable harm the non-moving
party will suffer if preliminary relief is granted, balancing that
harm against the irreparable harm to the moving party if relief
is denied; and (4) the public interest, meaning the
consequences of granting or denying the injunction to non-
parties.
Abbott Laboratories v. Mead Johnson & Co., 971 F.2d 6, 11 (7th Cir. 1992). This court has
observed that the standard for granting or denying a motion for a preliminary injunction is
not unique to patent law, and has ruled that the standard of the regional circuit should
apply, here the Seventh Circuit. See Mikohn Gaming Corp. v. Acres Gaming, Inc., 165
2007-1300 46
F.3d 891, 894 (Fed. Cir. 1998) (“The Federal Circuit has generally viewed the grant of a
preliminary injunction as a matter of procedural law not unique to the exclusive jurisdiction
of the Federal Circuit, and on appellate review has applied the procedural law of the
regional circuit in which the case was brought.”).
In the Eighth Circuit, “The relevant factors on a motion for a preliminary injunction
are: (1) the probability of success on the merits; (2) the threat of irreparable harm to the
movant; (3) the balance between this harm and the injury that granting the injunction will
inflict on other interested parties; and (4) whether the issuance of an injunction is in the
public interest.” Entergy, Arakansa, Inc. v. Nebraska, 210 F.3d 887, 898 (8th Cir. 2000). In
Shrink Missouri Government PAC v. Adams, 151 F.3d 763, 764 (8th Cir. 1998) the court
stressed that “[t]he most important of the [preliminary injunction] factors is the appellants'
likelihood of success on the merits.”
The Ninth Circuit stressed the importance of the equitable factors: “Preliminary
injunctive relief is available to a party who demonstrates either: (1) a combination of
probable success on the merits and the possibility of irreparable harm; or (2) that serious
questions are raised and the balance of hardships tips in its favor. These two formulations
represent two points on a sliding scale in which the required degree of irreparable harm
increases as the probability of success decreases.” Perfect 10, Inc. v. Amazon.com, Inc.,
487 F.3d 701, 713-14 (9th Cir. 2007).
In the Tenth Circuit, “To obtain a preliminary injunction, the moving party must
establish that (1) the moving party will suffer irreparable injury unless the injunction issues;
(2) the threatened injury to the moving party outweighs whatever damage the proposed
injunction may cause the opposing party; (3) the injunction, if issued, would not be adverse
2007-1300 47
to the public interest; and (4) there is a substantial likelihood that the moving party will
eventually prevail on the merits.” Resolution Trust Corp. v. Cruce, 972 F.2d 1195, 1199
(10th Cir. 1992) (“When a party seeking a preliminary injunction satisfies the first three
requirements, the standard for meeting the fourth ‘probability of success’ prerequisite
becomes more lenient. The movant need only show ‘questions going to the merits so
serious, substantial, difficult and doubtful, as to make them a fair ground for litigation.’”).
In the Eleventh Circuit, “A district court may grant injunctive relief if the movant
shows (1) a substantial likelihood of success on the merits; (2) that irreparable injury will be
suffered unless the injunction issues; (3) that the threatened injury to the movant outweighs
whatever damage the proposed injunction may cause the opposing party, and (4) that if
issued the injunction would not be adverse to the public interest.” All Care Nursing Service,
Inc. v. Bethesda Memorial Hosp. Inc., 887 F.2d 1535, 1537 (11th Cir. 1989).
In the District of Columbia Circuit, “In considering whether to grant preliminary
injunctive relief, the court must consider whether: (1) the party seeking the injunction has a
substantial likelihood of success on the merits; (2) the party seeking the injunction will be
irreparably injured if relief is withheld; (3) an injunction will not substantially harm other
parties; and (4) an injunction would further the public interest.” CSX Transp. Inc. v.
Williams, 406 F.3d 667, 670 (D.C. Cir. 2005).
All of the circuits have placed the preliminary injunction in terms of the likelihood of
success on the merits and equitable factors. No circuit has held that it suffices simply to
raise a “substantial question.” Raising a substantial question achieves the threshold
requirement of the well-pleaded complaint; it does not demonstrate a likelihood of
prevailing. See Christianson v. Colt Industries Operating Corp., 486 U.S. 800, 808-809
2007-1300 48
(1988) (“A district court's federal-question jurisdiction, we recently explained, extends over
‘only those cases in which a well-pleaded complaint establishes either that federal law
creates the cause of action or that the plaintiff's right to relief necessarily depends on
resolution of a substantial question of federal law [.]’”) (citation omitted); Litecubes, LLC v.
Northern Light Products, Inc., 523 F.3d 1353, 1360 (Fed. Cir. 2008) (“Under what is known
as the ‘well-pleaded complaint rule,’ subject matter jurisdiction exists if a ‘well-pleaded
complaint establishes either that federal patent law creates the cause of action or that the
plaintiff's right to relief necessarily depends on resolution of a substantial question of
federal patent law, in that patent law is a necessary element of one of the well-pleaded
claims.’”) (citations omitted).
Federal Circuit precedent developed to match the rest of the nation. See Hybritech
Inc. v. Abbott Laboratories, 849 F.2d 1446, 1451 (Fed. Cir. 1988) (“The first factor required
to be established by a party seeking a preliminary injunction is that it stands to have a
reasonable likelihood of success on the merits when the trial court finally adjudicates the
dispute. In seeking a preliminary injunction pursuant to section 283, a patent holder must
establish a likelihood of success on the merits both with respect to validity of its patent and
with respect to infringement of its patent.”); H.H. Robertson Co., 820 F.2d at 387 (observing
that the preliminary injunction in the Third Circuit “is substantially the same standard
enunciated by this court,” and that “[t]he standards applied to the grant of a preliminary
injunction are no more nor less stringent in patent cases than in other areas of the law”);
Roper Corp. v. Litton Systems Inc., 757 F.2d 1266, 1270-73 (Fed. Cir. 1985) (reviewing
denial of a preliminary injunction by assessing likelihood of success and irreparable injury);
Pretty Punch Shoppettes, Inc. v. Hauk, 844 F.2d 782, 783 (Fed. Cir. 1988) (determining
2007-1300 49
likelihood of success on the merits); Nutrition 21 v. United States, 930 F.2d 867, 869 (Fed.
Cir. 1991) (applying the four-factor test including likelihood of success on the merits); Texas
Instruments Inc. v. Tessera, Inc., 231 F.3d 1325, 1329 (Fed. Cir. 2000) (in an ITC
proceeding, applying the traditional four-factor test including likelihood of success on the
merits); Hoop v. Hoop, 279 F.3d 1004, 1007 (Fed. Cir. 2002) (applying the traditional four
factor test including likelihood of success); Ranbaxy, 350 F.3d at 1239 (applying the four
factors of “(1) a reasonable likelihood of success on the merits; (2) irreparable harm if the
injunction were not granted; (3) the balance of the hardships and (4) the impact of the
injunction on the public interest” and holding that the showing of a reasonable likelihood of
success on the merits must be “in light of the presumptions and burdens that will inhere at
trial on the merits”).
Summary
To summarize my concern for the conflict that is here continued, I again point out
that the dissenting opinion, despite its initial recitation of the correct four-part criteria for
deciding the grant or denial of a preliminary injunction, then applies the different and
incorrect criterion of whether the defendant raised a “substantial question” that may
render the patent “vulnerable”. That standard conflicts with precedent of the Supreme
Court and all of the regional circuits, all of which require that likelihood of success on
the merits be determined and weighed along with the equitable factors. It is not the law
that raising a “substantial question” will “negate the patentee’s likelihood of success.”
Diss. op. at 3. Raising a substantial question may avoid dismissal on the pleadings,
2007-1300 50
but contrary to the view of the dissent, establishing that there is an issue for trial is not
the same as establishing the likelihood of prevailing at trial.
The district court analyzed the positions of both sides as well as the equitable
factors, decided that Abbott was likely to prevail on the merits and that the equitable
factors weighed in favor of Abbott, and exercised its discretion to grant the preliminary
injunction. The dissent states that a showing of “vulnerability” shows that the defendant
is likely to prevail on the merits; that is facially incorrect. The dissent also relies on
some recent (2008) Federal Circuit decisions; these decisions are not “clearly
established precedent,” for they cannot overcome earlier rulings of this court. Further,
until today no opinion has equated the raising of a “substantial question” with a showing
of likelihood of success on the merits. The following additional cases of the Federal
Circuit are cited to show the established law: Jeneric/Pentron, Inc. v. Dillon Co., Inc.,
205 F.3d 1377, 1380 (Fed. Cir. 2000) (“A preliminary injunction requires the movant to
show four factors . . . [and] ‘[c]entral to the movant’s burden are the likelihood of
success and irreparable harm factors.’”); Intergraph Corp. v. Intel Corp., 195 F.3d 1346,
1352 (Fed. Cir. 1999) (applying 11th Circuit law for a preliminary injunction, the criteria
are “(1) the party seeking the injunction has shown a substantial likelihood of success
on the merits, (2) there is a substantial threat of irreparable injury in absence of the
injunction, (3) the balance of harms favors the party seeking the injunction, and (4) entry
of the injunction does not disserve the public interest.”); Mentor Graphics Corp. v.
Quickturn Design Systems, Inc., 150 F.3d 1374, 1377 (Fed. Cir. 1998) (“A preliminary
injunction requires the assessment of four factors: the likelihood of movant's success on
the merits, the irreparability of harm to the movant without an injunction, the balance of
2007-1300 51
hardships between the parties, and the demands of the public interest.”); Polymer
Technologies, Inc. v. Bridwell, 103 F.3d 970, 973 (Fed. Cir. 1996) (“As the moving party,
Polymer had to establish its right to a preliminary injunction in light of four factors: (1) a
reasonable likelihood of success on the merits; (2) irreparable harm if the injunction
were not granted; (3) the balance of the hardships and (4) the impact of the injunction
on the public interest.”); Bio-Technology Gen. Corp. v. Genentech, Inc., 80 F.3d 1553,
1558 (Fed. Cir. 1996) (“As the moving party, Genentech had to establish a right to a
preliminary injunction in light of four factors: (1) a reasonable likelihood of success on
the merits; (2) irreparable harm if the injunction were not granted; (3) the balance of
hardships tipping in its favor; and (4) the impact of the injunction on the public
interest.”); Rosemount, Inc. v. Int’l Trade Comm’n, 910 F.2d 819, 821 (Fed. Cir. 1990)
(“To grant the equitable relief of an injunction prior to trial, a district court traditionally
considers and balances the factors of: (1) the movant's likelihood of success on the
merits; (2) whether or not the movant will suffer irreparable injury during the pendency
of the litigation if the preliminary injunction is not granted; (3) whether or not that injury
outweighs the harm to other parties if the preliminary injunction is issued; and (4)
whether the grant or denial of the preliminary injunction is in the public interest.”); Katz
v. Lear Siegler, Inc., 909 F.2d 1459, 1462-63 (Fed. Cir. 1990) (applying 1st Circuit law
for a preliminary injunction, the criteria are “(1) that plaintiff will suffer irreparable injury if
the injunction is not granted; (2) that such injury outweighs any harm which granting
injunctive*1463 relief would inflict on the defendant; (3) that plaintiff has exhibited a
likelihood of success on the merits; and (4) that the public interest will not be adversely
affected by the granting of the injunction.”); Cicena Ltd. v. Columbia
2007-1300 52
Telecommunications Group, 900 F.2d 1546, 1548 (Fed. Cir. 1990) (applying 2nd Circuit
law for a preliminary injunction which requires that the movant must establish “both
possible irreparable injury and either (1) a likelihood of success on the merits or (2)
sufficiently serious questions going to the merits to make them a fair ground for litigation
and a balance of hardships tipping decidedly in the movant's favor.”); Xeta, Inc. v. Atex,
Inc., 852 F.2d 1280, 1282 (Fed. Cir. 1988) (applying 1st Circuit law for a preliminary
injunction, the criteria are that “as in other causes of action, the plaintiff must show that
there is no adequate remedy at law, that the plaintiff will suffer irreparable injury absent
the requested injunction, that such irreparable injury outweighs the harm an injunction
would inflict on the defendant, that the plaintiff has shown a likelihood of success on the
merits, and that the public interest will not be adversely affected by the grant of the
requested injunction.”); Matsushita Electric Industrial Co. v. United State, 823 F.2d 505,
(Fed. Cir. 1987) (“The preliminary injunction issued by the Court of International Trade
must be upheld if that court properly found that [the movant] had shown (1) that it will be
immediately and irreparably injured; (2) that there is a likelihood of success on the
merits; (3) that the public interest would be better served by the relief requested; and (4)
that the balance of hardship on all the parties favors [the movant].”); T.J. Smith and
Nephew Ltd. v. Consol. Medical Equipment, Inc., 821 F.2d 646, 647 (Fed. Cir. 1987)
(“To obtain a preliminary injunction in a patent infringement action pursuant to 35 U.S.C.
§ 283, a party must establish a right thereto in light of four factors: (a) reasonable
likelihood of success on the merits; (b) irreparable harm; (c) a balance of hardships
tipping in its favor; and (d) that the issuance of the injunction is in the public interest.”);
S. J. Stile Associates Ltd. v. Snyder, 646 F.2d 522, 525 (CCPA 1981) (“The trial court
2007-1300 53
must be upheld if it examined the appropriate factors and properly concluded that any
one of these requisites for a preliminary injunction had not been established by the
[movant]: (1) a threat of immediate irreparable harm; (2) that the public interest would
be better served by issuing than by denying the injunction; (3) a likelihood of success on
the merits; and (4) that the balance of hardship on the parties favored [the movant].”);
Jacobsen v. Katzer, 535 F.3d 1373, 1378 (Fed. Cir. 2008) (applying 9th circuit law for
preliminary injunction in a copyright infringement claim which requires the showing of
“(1) a combination of probability of success on the merits and the possibility of
irreparable harm or (2) serious questions going to the merits where the balance of
hardships tips sharply in the moving party’s favor.”).
These rulings of the Federal Circuit accord with the principles of eBay, 547 U.S. at
394, that “the decision whether to grant or deny injunctive relief rests within the equitable
discretion of the district courts, and that such discretion must be exercised consistent with
traditional principles of equity, in patent disputes no less than in other cases governed by
such standards.” This court’s contrary opinions stand alone. If in fact this court believes
that there should be a different rule in patent cases, this court nonetheless has the rule that
in the event of conflict between panels the earlier holding prevails until overturned en banc.
Newell Companies v. Kenney Mfg. Corp., 864 F.2d 757, 765 (Fed. Cir. 1988) (“This court
has adopted the rule that prior decisions of a panel of the court are binding precedent on
subsequent panels unless and until overturned in banc. . . . Where there is a direct conflict,
the precedential decision is the first.”). If there is to be a change from this court’s prior
rulings, it must be done en banc.
As it stands, neither district courts, nor litigants, nor panels of this court, are provided
2007-1300 54
with clear guidance, or any reason to reject the stricture of eBay, 547 U.S. at 393, that
“[n]othing in the patent Act indicates that Congress intended such a departure” from “the
long tradition of equity practice”.
CONCLUSION
Abuse of discretion has not been shown in the district court’s grant of the preliminary
injunction, adhered to after additional consideration in view of the Court’s decision of KSR.
The district court's findings of fact underlying the legal and equitable considerations are
supported, and the judicial balancing of these considerations shows no abuse of discretion.
The grant of the injunction is affirmed. The case is remanded for further proceedings.5
AFFIRMED
5
Sandoz requests that we instruct that on remand this case should be
assigned to a different judge, in order to "further the interests of judicial economy". We
discern no basis for this request; it is denied.
2007-1300 55
UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT
2007-1300
ABBOTT LABORATORIES,
Plaintiff-Appellee,
v.
SANDOZ, INC.,
Defendant-Appellant.
Appeal from the United States District Court for the Northern District of Illinois in case
no. 05-CV-5373, Judge David H. Coar.
GAJARSA, Circuit Judge, dissenting.
I respectfully dissent from the court’s opinion. There is no legal basis for the
granting of a preliminary injunction, and its issuance is an abuse of discretion. Although
generally the denial or issuance of a preliminary injunction is within the broad discretion
of the district court, the decision of the district court must be reversed when it abuses its
discretion. See Cybor Corp. v. FAS Technologies, Inc., 138 F.3d 1448, 1460 (Fed. Cir.
1998) (en banc) (“A district court abuses its discretion when its decision is based on
clearly erroneous findings of fact, is based on erroneous interpretations of the law, or is
clearly unreasonable, arbitrary or fanciful.”).
“A preliminary injunction requires the movant to show four factors: (1) a
reasonable likelihood of success on the merits, (2) the prospect of irreparable harm, (3)
a balance of the parties’ hardships in favor of injunction, and (4) no potential injury to an
important public interest.” See Jeneric/Pentron, Inc. v. Dillon Co., 205 F.3d 1377, 1380
(Fed. Cir. 2000). When the district court considers the four factors, “the likelihood of
success factor plays a key role,” id., and that is the factor I will focus on in my dissent.
Because of “the extraordinary nature of the relief, the patentee carries the burden of
showing likelihood of success on the merits,” in light of the presumptions and burdens
that will inhere at trial, with respect to the patent’s validity, enforceability, and
infringement. Nutrition 21 v. United States, 930 F.2d 867, 869 (Fed. Cir. 1991)
(emphasis in original); see also Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239
F.3d 1343, 1350 (Fed. Cir. 2001). If the defendant “raises a substantial question
concerning either infringement or validity, i.e., asserts an infringement or invalidity
defense that the patentee cannot prove ‘lacks substantial merit,’ the preliminary
injunction should not issue.” Amazon.com, 239 F.3d at 1350-51. This court has
explained that:
In resisting a preliminary injunction, however, one need not make out a
case of actual invalidity. Vulnerability is the issue at the preliminary
injunction stages, while validity is the issue at trial. The showing of a
substantial question as to invalidity thus requires less proof than the clear
and convincing showing necessary to establish invalidity itself.
Abbott Labs. v. Andrx Pharms., Inc., 452 F.3d 1331, 1335 (Fed. Cir. 2006) (herein
“Andrx”) (quoting Amazon.com, 239 F.3d at 1359).
The majority opinion postulates that the findings of the district court are correct.
It is error to so conclude because the district court failed to properly consider and weigh
the ample evidence produced by Sandoz that clearly established a substantial question
of invalidity and rendered the patent vulnerable to an invalidity challenge at trial.
Instead, the district court erroneously required proof of clear and convincing evidence of
2
2007-1300
invalidity at the preliminary stages of the proceedings. As I explain below, this conflicts
with our clearly established precedent.
Under our precedent, the likelihood of success factor is properly analyzed by
considering whether the alleged infringer raises a substantial question as to validity.
See, e.g., E.I. du Pont de Nemours & Co. v. MacDermid Printing Solutions, L.L.C., 525
F.3d 1353, 1358 (Fed. Cir. 2008) (“[I]f the accused infringer raises a substantial
question regarding validity, the district court should find that the patentee has not shown
a likelihood of success on the merits.” (internal quotation marks omitted)). Indeed, this
court has consistently held that an alleged infringer can negate the patentee’s likelihood
of success on the merits—and thus defeat a preliminary injunction—by raising a
substantial question as to validity. For example, in Genentech, this court explained:
In order to demonstrate that it has a likelihood of success, [the patentee]
must show that, in light of the presumptions and burdens that will inhere at
trial on the merits, (1) it will likely prove that [the alleged infringer] infringes
the [] patent and (2) its infringement claim will likely withstand [the alleged
infringer’s] challenges to the validity and enforceability of the [] patent. In
other words, if [the alleged infringer] raises a “substantial question”
concerning validity, enforceability, or infringement (i.e., asserts a defense
that [the patentee] cannot show “lacks substantial merit”) the preliminary
injunction should not issue. More specifically, with regard to [the alleged
infringer’s] validity defenses, the question on appeal is whether there is
substantial merit to [the alleged infringer’s] assertion that the [] patent
claim [is invalid].
Genentech, Inc. v. Novo Nordisk A/S, 108 F.3d 1361, 1364 (Fed. Cir. 1997). Our
subsequent cases consistently applied the law as it was explained in Genentech. See,
e.g., Tate Access Floors v. Interface Architectural Res., 279 F.3d 1357, 1365 (Fed. Cir.
2002) (“In order to demonstrate likely success on the merits, [the patentee] must show
that, in light of the presumptions and burdens applicable at trial, it will likely prove that
3
2007-1300
[the alleged infringer] infringes the asserted claims of the [] patent and that the patent
will likely withstand [the alleged infringer’s] challenges to its validity. If [the alleged
infringer] raises a substantial question concerning infringement or validity, meaning that
it asserts a defense that [the patentee] cannot prove ‘lacks substantial merit,’ the
preliminary injunction issued improperly.” (internal citations omitted; citing Genentech,
108 F.3d at 1364 and Amazon.com, 239 F.3d at 1350-51)).
Our most recent cases continue to adhere to the law as it was explained in
Genentech. See, e.g., Erico Int'l Corp. v. Vutec Corp., 516 F.3d 1350, 1352, 1354 (Fed.
Cir. 2008) (stating that “[the alleged infringer] must show a substantial question of
invalidity to avoid a showing of likelihood of success” and vacating the preliminary
injunction “[b]ecause this court finds that [the alleged infringer] has raised a substantial
question as to the validity of the patent at issue”); PHG Techs., LLC v. St. John Cos.,
469 F.3d 1361, 1365, 1369 (Fed. Cir. 2006) (explaining that “in order to defeat the
injunction on grounds of potential invalidity, [the alleged infringer], as the party bearing
the burden of proof on the issue at trial, must establish a substantial question of
invalidity” and holding the district court clearly erred in finding the patentee was likely to
succeed “because [the alleged infringer] has satisfied its burden of raising a substantial
question of invalidity”). Thus, under our clearly established precedent, when the alleged
infringer raises a substantial question regarding validity, a preliminary injunction cannot
issue because the patentee has failed to demonstrate a likelihood of success on the
merits.
While Section VI of the opinion contains a superfluity of citations, it does not state
the law relevant to this case. It is a pleasant, ambulatory, and meandering discussion;
4
2007-1300
but it is not required to decide this case, is not part of the majority opinion, and is clearly
dicta. Although Section VI discusses the relevant four-factor test and properly
emphasizes the likelihood of success factor, it ignores the way this court has
consistently analyzed whether or not a patentee has demonstrated it will likely succeed
at trial. The real question before us in this case, as our precedent clearly explains, is
whether the district court erred in finding that Sandoz had not established a substantial
question as to the obviousness of the ’718 patent. See, e.g., Genentech, 108 F.3d at
1364 (“[T]he question on appeal is whether there is substantial merit to [the alleged
infringer’s] assertion that the [] patent claim [is invalid].”). Sandoz has, in fact, raised
and substantially established that the validity of the ’718 patent is vulnerable, and on the
record before us, Abbott failed to prove the invalidity defense “lacks substantial merit.”
See Amazon.com, 239 F.3d at 1350-51 (“If [the alleged infringer] raises a substantial
question concerning either infringement or validity, i.e., asserts an infringement or
invalidity defense that the patentee cannot prove ‘lacks substantial merit,’ the
preliminary injunction should not issue.”). Thus, the district court committed reversible
error when it analyzed the likelihood of success factor and determined that Abbott had
established it would likely succeed on the merits. In light of that error, I would vacate
the preliminary injunction and remand for reconsideration and reweighing of the
injunctive factors. Moreover, various additional legal errors taint the district court’s
decision.
I.
The district court’s grant of a preliminary injunction rested on only two claims,
claims 1 and 4 of the ’718 patent. Claim 1 reads:
5
2007-1300
a pharmaceutical composition for extended release of an erythromycin
derivative in the gastrointestinal environment, comprising
an erythromycin derivative and
from about 5[%] to about 50% by weight of a pharmaceutically acceptable
polymer[ 1 ], so that when ingested orally, the composition induces
statistically significantly lower mean fluctuation index [DFL] in the plasma
than an immediate release composition of the erythromycin derivative
while maintaining bioavailability substantially equivalent to that of the
immediate release composition of the erythromycin derivative.
’718 Patent, col.11 ll.28-38. Claim 4 similarly claims an erythromycin derivative and
“from about 5[%] to about 50% by weight of a pharmaceutically acceptable polymer” but
has different PK parameters. Id. col.11 ll.48-58. Claim 2 and claim 3 are dependant
claims of claim 1. Claim 2 claims “the pharmaceutical composition of claim 1, wherein
the polymer is a hydrophilic water-soluble polymer.” Id. col.11 ll.39-40. Claim 3 claims
“the pharmaceutical composition of claim 2, wherein the polymer is selected from the
group consisting of polyvinylpyrrolidine, hydroxypropyl cellulose, hydroxypropylmethyl
cellulose, methyl cellulose, vinyl acetate/crotonic acid copolymers, methacrylic acid
copolymers, maleic anhydride/methyl vinyl ether copolymers and derivatives and
mixtures thereof.” Id. col.11 ll.41-47.
Claims 1 and 4 of the ’718 patent have three basic limitations: (a) an
erythromycin derivative; (b) 5% to 50% by weight of a pharmaceutically acceptable
1
The specification of the ’718 patent states, in a list of definitions, that
“‘pharmaceutically acceptable’ as used herein, means those compounds which are,
within the scope of sound medical judgment, suitable for use in contact with the tissues
of humans and lower animals without undue toxicity, irritation, allergic response, and the
like, in keeping with a reasonable benefit/risk ratio, and effective for their intended use
in the chemotherapy and prophylaxis of antimicrobial infections.” In my judgment the
district court’s claim construction is ambiguous as to whether the pharmaceutically
acceptable polymer must extend release or whether it can be part of a matrix in which
other components extend the release. Sandoz is correct that there needs to be some
showing that the polymer acts to extend release.
6
2007-1300
polymer; and (c) various PK parameters. In the preferred embodiment, the
erythromycin derivative is clarithromycin and the pharmaceutically acceptable polymer
is HPMC at 10% to 30% by weight of the composition. Claim 4 requires PK parameters
be such that “upon oral ingestion, maximum peak concentrations of the erythromycin
derivative are lower than those produced by an immediate release pharmaceutical
composition, and [AUC] and the minimum plasma concentration are substantially
equivalent to that of the immediate release pharmaceutical composition.” Id. col.11
ll.52-58. Claim 1 achieves similar results with slightly different parameters. For claim 1,
the composition must have a “statistically significantly lower mean fluctuation index,”
DFL, which is defined in the specification as DFL=(Cmax-Cmin/CAv), id. col.3 ll.29-30, and
substantially equivalent bioavailability, which the district court found meant that the
“[ER] AUC values must be between 80% to 125% within a 90% confidence level as
compared to the immediate release composition AUC values.” 2 Abbott Labs. v.
Sandoz, Inc., 500 F. Supp. 2d 807, 831 (N.D. Ill. 2007) (herein “Sandoz I”).
II.
Sandoz based its obviousness arguments primarily on three prior art references,
which it argues combined with common sense and the ordinary skill of the art at the
time make the ’718 patent anticipated or obvious. First, Sandoz argues that the PTC
Application WO 95/30422 (“the ’422 publication”) filed by Pfizer, discloses a controlled
release dosage form of azithromycin, which like clarithromycin is an erythromycin
derivative. 3 According to the disclosure, these controlled released compositions
2
These figures are based on FDA definitions.
3
Abbott specifically carved out azithromycin from its definition of an
erythromycin derivative in the ’718 patent. See Andrx, 452 F.3d at 1337.
7
2007-1300
operate to release the drug substantially slower than the immediate release versions to
reduce GI side effects. And, as Sandoz points out, the controlled release compositions
disclosed in the ’422 publication include a hydrophilic polymer composition of
azithromycin, with a preferred embodiment being a matrix tablet containing 15% to 35%
HPMC. Second, Sandoz noted that the ’190 patent owned by Abbott discloses and
claims controlled release compositions of clarithromycin in an (non-polymer) alginate
matrix which are administered once a day and have slowed absorption such that they
are bioequivalent with the current immediate release twice-a-day compositions and
maintain therapeutic levels at 24 hours after ingestion. Claim 14 of the ’190 patent also
claims other marolides including azithromycin. 4 Third, Sandoz argues that the ’571
4
In Andrx, this court relied primarily on the ’190 patent, as combined with
the ’422 publication to find that there was a substantial question as to the obviousness
of the ’718 patent claims. 452 F.3d at 1340-41. First, we concluded that “Teva makes
substantial arguments that the ’190 patent discloses a clarithromycin composition . . .
that arguably has the pharmacokinetic parameters required in claim 4 of the ’718
patent.” Id. at 1340. And we explained:
Because the ’190 patent explicitly discloses only clarithromycin controlled
release compositions, yet claims azithromycin compositions, . . . Abbott
has represented to the [PTO] that the differences between clarithromycin
and azithromycin were such that azithromycin could be substituted into a
controlled release clarithromycin composition by a person of ordinary skill
in the art without undue experimentation . . . . As a result, based on
Abbott’s own ’190 patent, there exists a substantial argument that a
person of ordinary skill in the art would be motivated to combine the ’422
publication, namely the use of HPMC in extended release macrolide
compositions, with the ’190 patent with a reasonable expectation of
success.
Id. at 1341. In this case, Abbott presented evidence at trial suggesting that this court
was scientifically incorrect to find that the ’190 patent disclosed compounds that
arguably had the same PK values as the asserted claims. Sandoz, based on this new
evidence, disclaimed any reliance on the scientific evidence of the ’190 patent
disclosing compounds with the same PK values as the ’718 patent. However, contrary
to the majority opinion, Sandoz can rely on Andrx’s conclusion that it would have been
obvious for a person skilled in the art to substitute clarithromycin for azithromycin in an
8
2007-1300
publication, filed by Eli Lilly, discloses sustained release formulations for antimicrobial
agents including clarithromycin, which contain an active agent, namely a hydrophilic
polymer such as HPMC, and an acrylic polymer. According to the specification, these
formulations differ from the prior art that uses just hydrophilic polymers in that they are
designed to allow a constant rate of release throughout the GI tract. In particular, the
’571 publication disclosed using from about 5% to about 29% by weight hydrophilic
polymer, and about 0.5% to about 25% by weight acrylic polymer, with the total weight
of the two polymers not exceeding 30% by weight.
In addition to challenging the validity of the ’718 patent based on the ’190 patent,
the ’422 publication and the ’571 publication, Sandoz also relies on various evidence
that the PK parameters specified in the ’718 patent were well known in the art and
would have been sought by anyone designing a controlled release formulation. Most
strikingly, the testimony of one of the inventors named on the ’718 patent, Linda
Gustavson, an Abbott employee, supports the Sandoz position. In particular,
Gustavson testified as follows:
Q: Did you tell [the formulations department] what pharmacokinetic
parameters there should be?
A: I mean, not specific numbers, but relative to the IR, yes. I told at
least Sue that what we needed was a lower Cmax, an AUC that met
FDA requirements for bioequivalence and a Cmin that was at least
comparable to the IR.
Q: And where did you get these parameters?
...
A: A few years of experience, I guess. They’re the—I mean certainly
the Cmax and AUC are very basic PK parameters determined in
virtually every study that has pharmacokinetics. Cmin [] might or
might not be important depending upon the drug you were talking
extended release formula with the anticipation of success without undue
experimentation.
9
2007-1300
about and what part of the pharmacokinetics you though might be
associated with efficacy or safety. For clarithromycin, there was
some thought that keeping the concentrations above some
minimum level might be at least in part important to maintaining
effectiveness efficacy.
Q: Would you say that these PK parameters were pretty much known
in the art?
A: Absolutely, yes.
Furthermore, Sandoz submitted references from 1983 (over a decade before the
’718 application was submitted), which explained, inter alia, that the “objectives and
possible advantages of controlled release dosage” forms included “maintain[ing]
therapeutic drug levels,” “reduc[ing] dosing frequency,” “reduc[ing] fluctuations in drug
levels,” and “reduc[ing] side effects.” And the reference explained that the “essence of
controlled drug release” was to “obtain prolonged circulating drug levels with less
fluctuation compared to conventional dosage forms, and to achieve these with less
frequent drug administration.” They also submitted references showing that HPMC was
considered the “controlled release agent of choice” in the field.
The district court, writing prior to KSR, found that, despite this Court’s decision in
Andrx to the contrary, claims 1 and 4 of the ’718 patent were not obvious (at least based
on the preliminary record). The trial court’s finding rested on the fact that, contrary to
this court’s conclusion in Andrx, new evidence established that the ’190 patent, the ’571
publication, and the WO ’422 publication did not disclose the specific PK limitations of
the ’718 patent. The court recognized that “[g]enerally, a showing that there is an
established structural relationship between a prior art composition and the claimed
composition demonstrates a prima facie case of obviousness.” Sandoz I, 500 F. Supp.
2d at 840. See In re Dillon, 919 F.2d 688, 692 (Fed. Cir. 1990) (en banc) (“[S]tructural
10
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similarity between claimed and prior art subject matter, proved by combining references
or otherwise, where the prior art gives reason or motivation to make the claimed
compositions, creates a prima facie case of obviousness.”). Still, the court concluded
that Abbott had preliminarily rebutted this showing by showing the specific PK
properties embodied in the claims were unobvious. The trial court found that “[t]o
succeed on its obvious[ness] claim, Sandoz must produce evidence indicating that the
PK limitations were disclosed in the prior art or were at the very least inherent to the
structural limitations of the prior art compositions.” Sandoz I, 500 F. Supp. 2d at 840.
Sandoz, the court found, had not done so. Id. Moreover, the trial court found that
“because the ’190 prior art does not disclose the [specific] PK profile of the ’718 patent,
a person skilled in the art would not be motivated to look at the WO ’422 publication and
interchange clarithromycin for azithromycin.” Id. at 841.
Subsequently, the district court denied Sandoz’s motion for a stay of the
preliminary injunction pending appellate review in light of the just issued KSR opinion.
The court held that under KSR it was still necessary to “demonstrate the presence of all
claim limitations in the prior art” and that Sandoz had not produced evidence indicating
that the PK limitations were disclosed in the prior art or inherent to the structural
limitations of the prior art compositions. Abbott Labs. v. Sandoz, 500 F. Supp. 2d 846,
851-53 (N.D. Ill. 2007). According to the district court, it thus had not and did not need
to reach the TSM test (or any change in the application of this test brought on by KSR).
Id. at 853.
On appeal, there is no real dispute that the ’571 publication expressly discloses a
“sustained release matrix formulation in tablet form comprising . . . erythromycin” and
11
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containing from about 5% by weight to about 29% by weight of a hydrophilic polymer,
thus meeting all of the structural limitations of the ’718 claims. Moreover, the prior art
clearly disclosed sustained release versions of clarithromycin and creating extended
release formulations of erythromycin derivatives using polymers, preferably HPMC.
And evidence shows that the desirability of the PK parameters claimed were well known
in the art.
In light of this evidence, Sandoz raised a substantial question as to the
obviousness of the ’718 patent. The district court’s decision to the contrary constituted
an abuse of discretion. First, it was clearly error to find, as a matter of law, that since
none of the prior art references cited by Sandoz explicitly disclosed a composition that
had the PK limitations of the ’718 patent, it had failed to demonstrate “the presence of
all claim limitations in the prior art,” and therefore that the ’718 invention could not be
obvious. Contrary to the majority, this holding relies on an improperly limited view of
what types of references can be combined to show obviousness and an impermissibly
cramped view of the Supreme Court’s holding in KSR. There is no absolute
requirement that each claim limitation be disclosed in a prior art reference. See, e.g.,
Takeda Chem. Indus. v. Alphapharm Pty., Ltd., 492 F.3d 1350, 1356 (Fed. Cir. 2007)
(“We have held that structural similarity between claimed and prior art subject matter,
proved by combining references or otherwise, where the prior art gives reason or
motivation to make the claimed compositions, creates a prima facie case of
obviousness.” (emphasis added)); Tegal Corp. v. Tokyo Electron Am., Inc., 257 F.3d
1331, 1349 (Fed. Cir. 2001) (acknowledging that a claim could be obvious over a single
prior art reference that does not disclose one of the limitations in the claim). Rather, in
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all cases, the touchstone of the analysis is whether 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 to which said subject matter pertains.” 35 U.S.C. § 103; KSR Int’l
Co. v. Teleflex Inc., 127 S. Ct. 1727, 1734 (2007); see also Takeda, 492 F.3d at 1357
(explaining that “in cases involving new chemical compounds” to show a prima facie
case of obviousness one must “identify some reason that would have led a chemist to
modify a known compound in a particular manner” (emphasis added)). Thus, a given
claim limitation may be obvious over the prior art even if no single reference had
specifically disclosed that limitation. Moreover, even assuming an absolute rule that to
be obvious a claim must be a combination of elements disclosed in the prior art, that
standard was met here. As the Supreme Court reiterated in KSR, “inventions in most, if
not all, instances rely upon building blocks long since uncovered, and claimed
discoveries almost of necessity will be combinations of what, in some sense, is already
known.” 127 S. Ct. at 1741. In other words, it is the rare invention that is not a
combination of prior art elements. 5 And this is not one of such rare cases. Whether or
not the prior art disclosed compounds displaying the particular PK parameters in the
5
Given KSR’s broad understanding of nearly all or perhaps all inventions
being combinations of elements in the prior art, the parties’ dispute about whether KSR
should be limited to such inventions becomes largely irrelevant. In any event, while
KSR’s holding is directed particularly at the TSM test, it certainly appears that the Court
intended to expound principles of obviousness jurisprudence that were generally
applicable. And particularly relevant to the case at bar, this court has already applied
KSR’s teachings to the question of whether new chemical compositions are obvious in
light of the fact that chemists of ordinary skill would attempt to modify known substances
in certain ways to “obtain compounds with improved properties.” Takeda, 492 F.3d at
1356. Accordingly, I think the district court clearly erred in concluding that KSR was not
relevant to the question of obviousness here.
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’718 patent, Sandoz did provide evidence suggesting that the PK parameters disclosed
in the ’718 patent were absolutely known in the art and that the prior art established that
they were desirable in an extended release formula (and indeed, that at least the AUC
equivalence and lower Cmax were most likely essential to an extended release formula,
at least one that would be approved by the FDA). This is sufficient to show that the
claims might be a combination of elements previously known in the art. The prior art on
record disclosing the PK limitations is of course further removed from the invention than,
for example, a patent that disclosed a related drug formulation with the same PK
limitations as the ’718 patent. But while this may well make the former less likely than
the latter to make the ’718 patent claims obvious, there is nothing as a matter of law that
prevents the invention from being considered an obvious combination of the prior art
teachings contained in the current preliminary record. Cf. Aventis Pharma Deutschland
GmbH v. Lupin, Ltd., 499 F.3d 1293, 1301 (Fed. Cir. 2007) (explaining that while it is
necessary for there to be “some articulated reasoning with some rational underpinning
to support the legal conclusion of obviousness . . . such reasoning need not seek out
precise teachings directed to the specific subject matter of the challenged claim”
(internal quotation marks omitted)). 6
Second, it is not dispositive that Abbott was not absolutely certain that using the
formulations disclosed in the ’422 patent would create a formulation with the desired PK
6
See also Pfizer, Inc. v. Apotex, Inc., 480 F.3d 1348, 1362 (Fed. Cir. 2007)
(“[It] is irrelevant [to the question of obviousness] that none of the anions specifically
listed in the ’909 patent have a cyclic structure, because the motivation to make
amlodipine besylate here is gleaned not only from the prior art as a whole rather than
the ’909 patent alone, but also from the nature of the problems encountered with the
amlodipine maleate tablet formulations sought to be solved by the inventors of the ’303
patent.”).
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parameters. Even before KSR, this court’s “case law [was] clear that obviousness
cannot be avoided simply by a showing of some degree of unpredictability in the art so
long as there was a reasonable probability of success.” Pfizer, 480 F.3d at 1364. And
as the Supreme Court stated in KSR, “[w]hen there is a design need or market pressure
to solve a problem and there are a finite number of identified, predictable solutions, a
person of ordinary skill has good reason to pursue the known options within his or her
technical grasp. If this leads to the anticipated success, it is likely the product not of
innovation but of ordinary skill and common sense.” 127 S. Ct. at 1742 (“One of the
ways in which a patent’s subject matter can be proved obvious is by noting that there
existed at the time of invention a known problem for which there was an obvious
solution encompassed by the patent claims.”).
Third, the long standing precedent of this court and our predecessor, recently
highlighted and relied upon in Pfizer is that “discovery of an optimum value of a
variable” in a known process or composition is “usually obvious.” 480 F.3d at 1368
(citing In re Peterson, 315 F.3d 1325, 1330 (Fed. Cir. 2003); In re Boesch, 617 F.2d
272, 276 (CCPA 1980); In re Aller, 220 F.2d 454, 456 (CCPA 1955)). Accordingly, in
Pfizer, for example, the court found that the optimization of a pharmaceutical compound
to determine which acid salt was best was obvious, where “the prior art heavily
suggests the particular anion used to form the salt.” Id. Similarly, here, if the PK
parameters claimed were well known, and only routine experimentation by someone
skilled in the art would have been necessary, in light of the HPMC formulations
disclosed by the ’422 publication and ’571 publication, to create an ER clarithromycin-
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HPMC formulation with the claimed PK parameters, this would be sufficient to create a
prima facie case of obviousness.
Accordingly, the district court erred in concluding that the fact that the ’422
publication and ’190 patent did not disclose the PK limitations of the asserted claims
precluded a finding of obviousness. This legal error constitutes an abuse of discretion.
And contrary to the holding of the district court, Sandoz has raised a “substantial
question concerning” the obviousness of the asserted claims. On this basis, I would
reverse the decision of the district court.
III.
Sandoz also argues that several acts by Abbott during the prosecution of its
patent application constitute inequitable conduct and, thus, show that the district court
abused its discretion in not rejecting the motion for a preliminary injunction based on the
likelihood that the patents would be declared unenforceable.
The Patent Examiner initially rejected the claims of the ’718 application and
requested that Abbott show that one of its prior art compositions of clarithromycin, which
was described as an immediate release pediatric suspension formula, did not have the
same extended release properties as Abbott’s claimed invention. In response, Abbott
submitted a declaration by Linda Gustavson stating that the Cmax of the ER
clarithromycin “is statistically significantly lower than that for IR formulation given twice
daily.” J.A. 10015. Abbott now admits that this statement was incorrect—that the data
Gustavson relied on did not show a statistically significant lowering of the Cmax—but
only a non-statistically significant apparent lowering, and Gustavson herself admits that
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she never performed any statistical analysis of the data and would not have known how
to do it.
The district court found that the concededly false statement was immaterial since
all the Examiner asked was whether the two products have the same PK properties.
According to the district court, “[g]iven the accuracy of the ultimate conclusion—that the
extended release formulation was indeed different from the immediate release
suspension formulation, Gustavson’s declaration of a ‘statistically significantly lower’
Cmax is immaterial despite the fact that it satisfies the definition of ‘material’ provided by
37 C.F.R. § 1.56(b).” Sandoz I, 500 F. Supp. 2d at 822. The district court reasoned
that despite meeting the standard for materiality of § 1.56(b) a reasonable examiner
would not have considered the statement important. Moreover, the district court
emphasized that no claim of the ’718 patent requires the extended release formulation
to have a statistically significant lower Cmax than the immediate release formulation.
The Gustavson statement was material, or more to the point, there is substantial
likelihood that Sandoz would be able to so establish at the merits stage. First, contrary
to the erroneous conclusion of the district court, we have held that “all misstatements or
admissions that satisfy [37 C.F.R. § 1.56(b)] are considered material.” Monsanto Co. v.
Bayer Bioscience N.V., 514 F.3d 1229, 1237 n.11 (Fed. Cir. 2008). In addition, while no
claim element in the ’718 patent specifically states that the Cmax value must be
statistically significantly lower, it does require Cmax values that are “lower” than in the
immediate release formulation. Despite the fact that in other claim elements Abbott
uses the term “statistically significantly lower,” it is far from clear that one can establish
that the Cmax value is lower if the data does not show a statistically significant difference,
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which by definition, as ordinarily understood, means that the data cannot conclusively
establish that there is a real difference. This court previously recognized that “there is
little in the [’718] patent itself that establishes the differences (if any) between
parameters that are simply ‘lower’ rather than ‘statistically significantly lower.’” Andrx,
452 F.3d at 1339 n.4. Moreover, regardless of the claim construction, it would be
important (if not dispositive) to a reasonable examiner to know that Abbott did not have
data which showed a lower Cmax to any statistical significance over the structurally
similar prior art suspension formulas in deciding whether to allow the claim over this
prior art.
On this basis alone, the district court abused its discretion because it created
such a high bar for materiality that in essence no statement or withholding of information
would be material if it would not change the ultimate outcome of allowing the patent.
This is inconsistent with our precedent. See, e.g., Hoffmann-La Roche, Inc. v. Promega
Corp., 323 F.3d 1354, 1368 (Fed. Cir. 2003) (“The fact that the examiner did not have to
rely on the purity representations in issuing the patent is not inconsistent with a finding
of materiality. Although the inventors’ statements regarding purity were not the principal
focus of the office action response, they were clearly an important aspect of it. Under
the circumstances, a reasonable examiner would have wanted to know that the
patentability argument based on purity was unsupported by the experimental results
cited by the inventors.” (internal citation omitted)); Merck & Co. v. Danbury Pharmacal,
Inc., 873 F.2d 1418, 1421 (Fed. Cir. 1989) (rejecting a “but for” standard of materiality).
In addition, while the district court did not reach the issue of intent, the fact that
Gustavson submitted a declaration to the PTO in which she claimed to have found a
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statistically significant lowering of Cmax despite now admitting to never having done any
statistical analysis is sufficient circumstantial evidence of intent to raise a substantial
question of inequitable conduct, if not necessarily to prove inequitable conduct on the
merits.
The district court also found that the failure by Abbott to disclose a new study 7
was immaterial because Abbott simply “chose to rely on the results of several other
studies that showed differing mean DFL values” and the totality of the evidence
demonstrates that the prior art formulation did not have the “same broad PK properties
as those claimed for the ER formulation.” Sandoz I, 500 F. Supp. 2d at 824. The test is
not whether the Examiner would have refused to allow the patent to issue without the
information, but just whether it would have been “important” to her consideration. Here
the extent the PK parameters of the ER formulation differed from the clarithromycin
formulations in the prior art was the primary focus of the examiner’s concerns regarding
patentability, and Abbott’s ability to establish sufficient differences was the basis for
allowing the claims. It was not for Abbott to decide unilaterally that it preferred the
results of one set of studies that supported patentability and therefore could ignore
studies reaching the opposite result. Cf. Paragon Podiatry Lab. v. KLM Labs., 984 F.2d
7
The written description of the ’718 patent states that “The mean DFL
values for the controlled release formulation [another Abbott prior art reference
disclosing a clarithromycin formulation] and for the IR are substantially equal in
value. . . .” ’718 Patent, col.11 ll.18-19. And it explains that lower DFL values for the
ER formulation of the ’718 patent show that it provides “less variable clarithromycin
concentrations throughout the day than the IR and the sustained release compositions.”
’718 Patent, col.11 ll.25-26. These statements were correct based on three studies that
had been done prior to filing the application. However, a new study W98-268, which
Gustavson had knowledge of, and which issued while the application was pending,
found that there was a statistically significant lower DFL value for the sustained release
formulas than the IR formulas. Gustavson, however, failed to disclose the results of this
new study.
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1182, 1193 (Fed. Cir. 1993) (finding inequitable conduct for failure to disclose sales
data and noting that “where the decision of whether or not to disclose sales before the
critical date is close, the case should be resolved by disclosure, not by the applicant's
unilateral decision.”).
Accordingly, I would also vacate the preliminary injunction based on the
allegations of inequitable conduct. The evidence raises a substantial question of
unenforceability that makes the patents vulnerable to being found unenforceable at trial.
Thus, the district court erred when it concluded that Abbott had shown it would likely
succeed on the merits.
Because of the reasons stated above, I would reverse the district court on the
basis that there are substantial questions of both validity and enforceability of the ’718
patent preventing a finding of likelihood of success on the merits.
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