United States Court of Appeals
for the Federal Circuit
__________________________
UNIGENE LABORATORIES, INC. AND
UPSHER-SMITH LABORATORIES, INC.,
Plaintiffs-Appellees,
v.
APOTEX, INC. AND APOTEX CORP.,
Defendants-Appellants.
__________________________
2010-1006
__________________________
Appeal from the United States District Court for the
Southern District of New York in case no. 06-CV-5571,
Judge Robert P. Patterson, Jr.
___________________________
Decided: August 25, 2011
___________________________
BRUCE C. HAAS, Fitzpatrick, Cella, Harper & Scinto, of
New York, New York, argued for plaintiffs-appellees.
With him on the brief was STEVEN C. KLINE.
MANNY D. POKOTILOW, Caesar, Rivise, Bernstein,
Cohen & Pokotilow, Ltd., of Philadelphia, Pennsylvania,
argued for defendants-appellants. With him on the brief
were ROBERT S. SILVER, JAMES J. KOZUCH and MARC B.
BASSLER. Of counsel was WILLIAM JOSEPH CASTILLO.
__________________________
UNIGENE LABS v. APOTEX 2
Before RADER, Chief Judge, MOORE, and O’MALLEY
Circuit Judges.
RADER, Chief Judge.
The United States District Court for the Southern
District of New York heard a dispute between Apotex, Inc.
and Apotex Corp. (“Apotex”), the appellants, and Unigene
Laboratories, Inc. and Upsher-Smith Laboratories, Inc.
(collectively, “Unigene”), the appellees, over claim 19 of
U.S. Patent No. RE40,812E (“’812E patent”). On cross-
motions for summary judgment, the district court granted
Unigene’s motion that the patent would not have been
obvious at the time of invention. Unigene Labs., Inc.,v.
Apotex, Inc. (“Summary Judgment Opinion”), No. 06-CV-
5571, Dkt. No. 175, slip op. at 28-29 (S.D.N.Y. Aug. 31,
2009). The trial court also denied Apotex‘s motion to
breach the attorney-client privilege under the crime-fraud
exception. Unigene Labs., Inc.,v. Apotex, Inc. (“Crime-
Fraud Opinion”), No. 06-CV-5571, Dkt. No. 89, slip op. at
18 (S.D.N.Y. Feb. 4, 2008). In addition, the district court
determined that Apotex had waived several counter-
claims. Unigene Labs., Inc.,v. Apotex, Inc. (“Counterclaim
Opinion”), No. 06-CV-5571, 2010 WL 2730471 (S.D.N.Y.
July 7, 2010). Because the district court correctly decided
all of these motions, this court affirms.
I.
Unigene owns the ’812E patent through assignment
from inventor Dr. William Stern (“Stern”). The ’812E
patent is a reissue of U.S. Patent No. 6,440,392 (“’392
patent”). The reissue occurred on June 30, 2009, while
this case was before the district court.
Covered by the ’812E patent, Fortical® is an Food and
Drug Administration (“FDA”) approved pharmaceutical
nasal spray with the active ingredient salmon calcitonin
3 UNIGENE LABS v. APOTEX
(“salmon calcitonin” or “calcitonin”). Unigene filed for
FDA approval under 21 U.S.C. § 355(b)(2) and now holds
the New Drug Application (“NDA”) for Fortical®. Uni-
gene’s NDA claims Miacalcin® as its reference drug,
meaning that for FDA approval, Unigene had to prove
that Fortical® was a bioequivalent of Miacalcin®. Upsher-
Smith is the exclusive patent licensee, with rights to
market and sell Fortical® in the United States. Fortical®
treats, among other things, postmenopausal osteoporosis.
Fortical® is a bioequivalent of Novartis International
AG’s Miacalcin® calcitonin nasal spray. Miacalcin® has
been marketed since 1995, before the ’812E patent’s
February 4, 2000 priority date. Unigene developed Forti-
cal® as an alternative to Miacalcin®.
Both Miacalcin® and Fortical® use salmon calcitonin
at a concentration of 2,200 I.U./mL as their active ingre-
dient. Salmon calcitonin is a natural polypeptide hor-
mone. Calcitonins help regulate calcium ions in the blood
and therefore address calcium-related conditions like
osteoporosis. To be effective, polypeptides, like salmon
calcitonin, must reach the bloodstream. Delivery to the
bloodstream, however, is not easy because calcitonins are
readily degraded by bodily fluids, are relatively unstable
in pharmaceutical compositions, and are poorly absorbed
through tissues. Miacalcin® and Fortical® are both nasal
sprays.
Fortical® and Miacalcin® have different formulations.
For instance, Miacalcin® also contains 8.5 mg of sodium
chloride, which acts as a tonicity agent; nitrogen, which
acts as a sparging agent; hydrochloric acid, which acts as
a pH adjuster; and purified water, which acts as a carrier.
Of particular importance to this appeal, Miacalcin®
contains 0.10 mg of benzalkonium chloride (“BZK”) which
functions as a preservative, absorption enhancer, and
UNIGENE LABS v. APOTEX 4
surfactant. In contrast, Fortical® contains 20 mM of
citric acid, which functions as an absorption enhancer and
stabilizer/buffer; polyoxyethylene(2) sorbitan monooleate
(“polysorbate 80”), which acts as a surfactant; and
phenylethyl alcohol and benzyl alcohol, which serve as
preservatives.
Apotex, a Canadian pharmaceutical company, filed
Abbreviated New Drug Application (“ANDA”) No. 078200
with the FDA on June 1, 2006. Apotex’s ANDA certified
under 21 U.S.C. § 355(j)(2)(A)(vii)(IV) (“paragraph IV
certification”) intends to make, use, offer to sell, sell,
and/or import a generic version of Unigene’s Fortical®
product before the expiration of the ’812E patent. Be-
cause a paragraph IV certification is an act of infringe-
ment under 35 U.S.C. § 271(e)(2), see also Glaxo Group
Ltd. v. Apotex, Inc., 376 F.3d 1339, 1351 (Fed. Cir. 2004),
Unigene lodged a Complaint for infringement in the
district court. The only asserted claim in the litigation is
claim 19. Claim 19 reads:
A liquid pharmaceutical composition for
nasal administration comprising about
2,200 MRC units of salmon calcitonin,
about 20 mM citric acid, about 0.2%
phenylethyl alcohol, about 0.5% benzyl al-
cohol, and about 0.1% polyoxyethylene(2)
sorbitan monooleate
’812E patent col.18 ll.1-5.
Apotex’s original Answer of September 20, 2006 con-
tained numerous affirmative defenses. In addition to
allegations of invalidity under 35 U.S.C. §§ 101, 102, 103,
and 112, Apotex alleged noninfringement and inequitable
conduct. The inequitable conduct assertions cited the
failure to disclose an allegedly material piece of prior art
and making allegedly misleading statements during
5 UNIGENE LABS v. APOTEX
patent prosecution. Apotex filed an Amended Answer on
May 8, 2007 with two more inequitable conduct allega-
tions, one based on an error in Table 3 of the ’392 patent
and another based on the failure to disclose a piece of
prior art.
In September 2007, during fact discovery, Apotex
moved to breach Unigene’s attorney-client privilege under
the crime-fraud exception. In support of these allega-
tions, Apotex referred to Unigene’s alleged failure to
disclose U.S. Patent No. 5,912,014 (“’014 patent”) to the
U.S. Patent and Trademark Office (“Patent Office”) and to
errors in Table 3 of the ’392 patent, the same conduct
upon which Apotex premised some of its inequitable
conduct claims at issue in this appeal.
The prior art ’014 patent, with Dr. Stern as a co-
inventor, carries the title “Oral Salmon Calcitonin Phar-
maceutical Products.” The ’014 patent claims enteric-
coated solid pharmaceutical formulations of salmon
calcitonin, administered orally. The ’014 patent discloses
a solid oral tablet that the specification touts as a more
convenient and comfortable dosage method for patients.
The ’014 patent teaches an oral formulation that resists
degradation during the digestion process to keep the
salmon calcitonin active. The ’014 patent discloses ex-
periments measuring the effects of citric acid on buffer
pH, bioavailability of salmon calcitonin, and absorption of
salmon calcitonin in the presence of enhancers. These
experiments injected 0.5 mL of liquid formulation contain-
ing citric acid, taurodeoxycholic acid, mannitol, and
calcitonin into the exposed duodenum of anesthetized
rats. The experiments showed an increase in calcitonin’s
bioavailability when the amount of citric acid was in-
creased and noted that bioavailabilty was “minor” in the
presence of enhancers when compared to citric acid alone.
UNIGENE LABS v. APOTEX 6
Table 3 of the ’392 patent, reproduced below, shows
the effect of citric acid concentration on the stability of
salmon calcitonin stored at 50°C. Table 3 shows the
percentage of calcitonin in formulations with different
amounts of citric acid over fifteen days. As published ’392
patent, Table 3 had two errors, indicated by the strike-
through lines:
J.A. at 31. The error on the top axis, characterized as
clearly typographical in nature by the district court,
labels a column “20 mM” instead of “25 mM.” Second, the
point of Apotex’s allegations, a data point on the table
reads 20 percent instead of the 52 percent actually meas-
ured. The column containing the second error shows that
a salmon calcitonin solution with 100 mM of citric acid
degrades over time, as the percentages of recovered
calcitonin decrease from 100 percent to 52 percent over
time. Whether the 15 day measurement is 20 percent or
52 percent, the recovery is still below the 66 percent
recovered after 9 days.
The record indicates that Dr. Stern immediately in-
formed the Patent Office when he became aware of the
errors in Table 3. Specifically, Dr. Stern submitted a
declaration on September 7, 2007, explaining an “inadver-
tent error during automated data analysis.” He explained
7 UNIGENE LABS v. APOTEX
further that the error did not affect the trend of salmon
calcitonin reduction.
The district court declined to find that these errors or
non-disclosures were sufficient to pierce the attorney-
client privilege. The district court found the ’014 patent
to be either immaterial to the ’392 patent or cumulative to
the other cited references. Crime-Fraud Opinion, at 11.
While both the ’014 patent and ’392 patent related to
pharmaceutical formulations of salmon calcitonin, the
district court found that the ’392 patent’s formulations
were “considerably different” than formulations in the
’014 patent and were, therefore, immaterial. Crime-
Fraud Opinion, at 11. The district court also found that
Apotex’s proffered evidence of fraudulent intent regarding
the ’014 patent was insufficient to establish a prima facie
case of fraud. Id. at 12.
The district court also found that the errors in Table 3
of the ’392 patent were immaterial. Id. at 14-15. The
district court found the corrected version of the table
consistent with Unigene’s assertions at the Patent Office.
Id. at 16. The district court concluded that the errors
were not material with respect to patentability or common
law fraud. Id. The district court also determined that
evidence of Stern’s submission of a second declaration to
clarify errors in Table 3 lacked deceptive intent, making
that conduct insufficient to support an assertion of com-
mon law fraud. Id. at 17-18.
Unigene and Apotex cross-moved for summary judg-
ment on obviousness. The Patent Office granted reissue
of the ’392 patent on June 30, 2009, at which point the
district court granted Unigene’s motion to amend the
Complaint to replace all references to the ’392 patent with
the reissued ’812E patent. Apotex filed an Answer to
Unigene’s Amended Complaint on July 20, 2009 that
UNIGENE LABS v. APOTEX 8
included several additional counts of inequitable conduct.
Without addressing these new claims, the district court
granted Unigene summary judgment of nonobviousness
and entered judgment.
The district court found that the ’812E patent would
not have been obvious at the time of invention as a matter
of law. Summary Judgment Opinion at 29. In consider-
ing forty-plus pieces of prior art submitted by Apotex (also
considered by the Patent Office during prosecution of the
’812E patent), the district court found that no prior art
teaches using 20 mM citric acid to achieve “both shelf
stability and enhanced bioavailability” in a nasal salmon
calcitonin formulation. Summary Judgment Opinion at
15.
The district court also found that it would not have
been obvious to a person of ordinary skill in the art to
modify Miacalcin® to reach the formulation of claim 19.
The record shows that a person of ordinary skill was an
individual with a masters degree in chemistry, pharma-
ceutical chemistry, biochemistry, or a similar field with at
least eight years of practical experience in pharmaceutical
liquid dosage form development, or an individual with a
Ph.D. in the same fields with at least four years of practi-
cal experience in pharmaceutical liquid dosage form
development. Specifically, the district court determined
first that BZK serves as an absorption enhancer, a pre-
servative, and a surfactant in Miacalcin®. Then, the
court relied on expert testimony to conclude that a person
of ordinary skill would have been motivated to find other
FDA-approved compounds that serve as both absorption
enhancers and preservatives of calcitonin. Further, the
district court found that the prior art taught alternative
methods of improving bioavailability and absorption of
calcitonin.
9 UNIGENE LABS v. APOTEX
In response to the court’s summary judgment rulings,
Apotex moved for reconsideration in light of its counter-
claims of inequitable conduct. The district court granted
Apotex’s motion to consider its counterclaims. Nonethe-
less the district court re-entered judgment for Unigene.
The district court held that all of Apotex’s defenses and
counterclaims, those asserted in 2006-07 and those Apo-
tex sought to add in 2009, had been conceded, waived,
barred, abandoned, or improperly raised. Apotex appeals
the district court’s rejection of the three added inequitable
conduct counterclaims (“Count XII, Count XIII, and Count
XIV”). This court has jurisdiction under 35 U.S.C. §
1295(a)(1).
II.
This court applies its own law to review a district
court’s application of the crime-fraud exception to the
attorney-client privilege. In re Spalding Sports World-
wide, Inc., 203 F.3d 800 (Fed. Cir. 2000). This court
reviews a district court’s determination of material pro-
tected by the attorney-client privilege for an abuse of
discretion. Apotex Corp. v. Merck & Co., 507 F.3d 1357,
1362 (Fed. Cir. 2007).
A party must establish Walker-Process fraud, also
known as common law fraud, to successfully pierce the
attorney-client privilege under the crime-fraud exception.
See Walker-Process Equip., Inc. v. Food Mach. & Chem.
Corp., 382 U.S. 172, 177 (1965). A finding of common law
fraud in the patent context “must be based on independ-
ent and clear evidence of deceptive intent together with a
clear showing of reliance.” Spalding, 203 F.3d at 803; see
Nobelpharma AB v. Implant Innovations, Inc., 141 F.3d
1059, 1070 (Fed. Cir. 1998) (holding that both fraudulent
misrepresentations and omissions can support a finding of
common law fraud). Such independent and clear evidence
UNIGENE LABS v. APOTEX 10
must establish a prima facie case of fraud, which is “gen-
erally held not to exist” unless the accusing party can
show:
(1) a representation of material fact, (2)
the falsity of that representation, (3) the
intent to deceive or, at least, a state of
mind so reckless as to the consequences
that it is held to the equivalent of intent
(scienter), (4) a justifiable reliance upon
the misrepresentation by the party de-
ceived which induces him to act thereon,
and (5) injury to the party deceived as a
result of his reliance on the misrepresen-
tation
Spalding Sports, 203 F.3d at 807 (citing Nobelpharma,
141 F.3d at 1069-70). This court need only examine
Apotex’s proffered evidence of intent to uphold the district
court’s refusal to invoke the crime-fraud exception.
The record does not show clear evidence of intent for
either of the alleged fraudulent acts by Unigene. As noted
by the district court, the record contains only an essen-
tially “unsupported allegation” that Dr. Stern intention-
ally left the ’014 patent off of the initial information
disclosure statement of the ’392 patent. Crime-Fraud
Opinion, at 12. The second allegation of fraud rests on a
similarly flimsy foundation.
In the first place, the typographical error in Table 3 of
the ’392 patent, corrected on reissue, does not call for the
extreme remedy of piercing the attorney-client privilege.
The district court found the “evidence tend[ed] to prove
that this error was an honest mistake, though perhaps a
careless one.” Id. at 16. Indeed, Dr. Stern submitted a
declaration during the reissue proceedings to explain the
error in Table 3. Further, as the trial court found, the
11 UNIGENE LABS v. APOTEX
error itself did not alter the arguments made by Unigene
to the PTO. Accordingly, the district court concluded that
the record did not show any evidence of intent to deceive
the Patent Office. Id. at 18.
The district court did not abuse its discretion in these
findings on the crime-fraud exception to the attorney-
client privilege. This court need not reach the district
court’s materiality determinations because the record is
devoid of sufficient intent evidence.
III.
This court reviews a district court’s denial of a party’s
motion to amend its pleadings under the law of the re-
gional circuit. Panduit Corp. v. All States Plastic Mfg.
Co., 744 F.2d 1564, 1575 (Fed. Cir. 1984). The United
States Court of Appeals for the Second Circuit reviews a
district court’s denial of a request to amend pleadings for
an abuse of discretion. Parker v. Columbia Pictures
Indus., 204 F.3d 326, 339-40 (2d Cir. 2000). Apotex
appeals the court’s refusal to add Counts XII, XIII, and
XIV to its Answer to Unigene’s Amended Complaint.
Apotex does not challenge the district court’s rulings with
respect to the allegations of inequitable conduct asserted
in its Original and First Amended Answers. The district
court’s decision was based on its determination that
Unigene’s Amended Complaint did not change the scope
of the original Complaint and therefore did not provide an
opportunity for Apotex to expand the breadth of its af-
firmative defenses or counterclaims.
The record shows that the district court acted well
within its discretion in finding that Apotex’s added coun-
terclaims were not “colorable grounds for relief.”
Blaskiewicz v. Cnty. of Suffolk, 29 F. Supp. 2d 134, 138
(E.D.N.Y. 1998) (citation omitted). The trial court is
especially well positioned to assess whether the Amended
UNIGENE LABS v. APOTEX 12
Complaint it authorized materially changed the scope of
the original Complaint. Counts XII, XIII, and XIV all
relate to inequitable conduct. The district court found
that the filing of an Amended Complaint, which merely
renamed the patent in suit post-reexamination, did not so
materially alter the proceedings as to authorize previ-
ously unasserted counterclaims. The district court found
Count XII improper because, inter alia, the new claim
provided inadequate notice to Unigene. The district court
barred Counts XIII and XIV, which mirror Apotex’s crime-
fraud allegations, based on the same fatal absence of
materiality and intent already addressed in the Crime-
Fraud Opinion. This court agrees that the record shows
insufficient evidence of fraudulent intent and erects an
insurmountable obstacle to Apotex’s new counterclaims.
Accordingly, the district court did not abuse its discretion
by denying Claims XII, XIII, and XIV.
IV.
This court reviews the district court’s grant of sum-
mary judgment without deference. Eisai Co. Ltd. v. Dr.
Reddy’s Labs., 533 F.3d 1353, 1356 (Fed. Cir. 2008).
Summary judgment is appropriate if the movant can show
both the absence of genuine issues of material fact and
entitlement to judgment as a matter of law. Fed. R. Civ.
P. 56(c). This court reviews the evidence in the light most
favorable to the party opposing the motion, with all
doubts resolved in favor of the nonmovant. Ortho-McNeil
Pharm., Inc. v. Mylan Labs., Inc., 520 F.3d 1358, 1360-61
(Fed. Cir. 2008).
Obviousness under 35 U.S.C. § 103(a) is a legal ques-
tion based on underlying factual determinations. Eisai,
533 F.3d at 1356 (citing Richardson-Vicks Inc. v. Upjohn
Co., 122 F.3d 1478, 1479 (Fed. Cir. 1997)). An obvious-
ness analysis measures the difference between the
13 UNIGENE LABS v. APOTEX
claimed invention and the prior art to determine whether
“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. Alza Corp. v. Mylan Labs., Inc.,
464 F.3d 1286, 1289 (Fed. Cir. 2006) (citing In re Kahn,
441 F.3d 977, 985 (Fed. Cir. 2006)). The factual under-
pinnings, often referred to as the Graham factors, include
1) the scope and content of the prior art; 2) the level of
ordinary skill in the art; 3) the differences between the
claimed invention and the prior art; and 4) evidence of
secondary factors, also known as objective indicia of non-
obviousness. Graham v. John Deere Co., 383 U.S. 1, 17-18
(1966).
Obviousness requires more than a mere showing that
the prior art includes separate references covering each
separate limitation in a claim under examination. KSR
Int’l Co. v. Teleflex Inc., 550 U.S. 398, 418 (2007). Rather,
obviousness requires the additional showing that a person
of ordinary skill at the time of the invention would have
selected and combined those prior art elements in the
normal course of research and development to yield the
claimed invention. Id. at 421 (describing that a person of
ordinary skill possesses “ordinary creativity, [and is] not
an automaton”); see also Bayer Schering Pharm. AG v.
Barr Labs., Inc., 575 F.3d 1341, 1350 (Fed. Cir. 2009)
(Newman, J., dissenting) (“The statutory criterion is
whether the invention would have been obvious to per-
sons of ordinary skill at the time of the invention, not
whether it is sufficiently simple to appear obvious to
judges after the discovery is finally made . . . .”).
A person of ordinary skill at the time of the invention
interprets the prior art using common sense and appro-
priate perspective. KSR, 550 U.S. at 421. In KSR the
Supreme Court observed:
UNIGENE LABS v. APOTEX 14
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. If this
leads to the anticipated success, it is likely
the product not of innovation but of ordi-
nary skill and common sense.
Id. Accordingly, when design need and market pressure
may dictate a commonsensical path using a finite number
of identified predictable solutions to one of ordinary skill,
deviations from that path are likely products of innova-
tion.
This court has observed that teachings from prior art,
suggestions beyond the literal teachings of those art
references, or even motivations from the store of common
knowledge of one of ordinary skill in the art field
(“TSM”)—flexibly viewed and applied—provide the
sources of evidence that an ordinary skilled artisan might
have found and combined at the time of the invention.
Ortho-McNeil, 520 F.3d at 1364-65 (“[A] flexible TSM test
remains the primary guarantor against a non-statutory
hindsight analysis . . . .”); see also KSR, 550 U.S. at 419
(“The obviousness analysis cannot be confined by a for-
malistic conception of the words, teachings, suggestion,
and motivation, or by overemphasis on the importance of
published articles and the explicit content of issued
patents.”).
In this case, the patent claims a new composition or
formulation to deliver an FDA-approved active ingredient.
Thus, the claimed invention is not obvious if a person of
ordinary skill would not select and combine the prior art
references to reach the claimed composition or formula-
15 UNIGENE LABS v. APOTEX
tion. Eli Lilly v. Zenith Goldline Pharm., 471 F.3d 1369,
1380 (Fed. Cir. 2006) (“to establish a prima facie case of
obviousness based on a combination of elements in the
prior art, the law requires a motivation to select the
references and to combine them in the particular claimed
manner to reach the claimed invention”).
To render a claim obvious, prior art cannot be “vague”
and must collectively, although not explicitly, guide an
artisan of ordinary skill towards a particular solution.
Bayer Schering., 575 F.3d at 1347. Indeed, “most inven-
tions that are obvious were also obvious to try,” id., and a
combination is only obvious to try if a person of ordinary
skill has “a good reason to pursue the known options.”
KSR, 550 U.S. at 421. When a field is “unreduced by
direction of the prior art,” and when prior art gives “no
indication of which parameters were critical or no direc-
tion as to which of many possible choices is likely to be
successful,” an invention is not obvious to try. Bayer
Schering, 575 F.3d at 1347 (citing O’Farrell, 853 F.2d at
903); see also Ortho-McNeil, 520 F.3d at 1364 (stating the
number of options must be “small or easily traversed”).
A prima facie case of obviousness in the chemical arts
is often based on a known compound, called a “lead com-
pound,” which serves as a starting point for a person of
ordinary skill developing the claimed invention. See
Eisai, 533 F.3d at 1357. Where the patent at issue claims
a chemical compound, a lead compound is often used to
show structural similarities between the claimed com-
pound and prior art. Id. (citing Eli Lilly, 471 F.3d at
1377). In the context of a composition or formulation
patent where the patented formulation was made to
mimic a previously FDA-approved formulation, the func-
tional and pharmaceutical properties of the “lead com-
pound” can be more relevant than the actual chemical
structure (though not always mutually exclusive). Thus,
UNIGENE LABS v. APOTEX 16
the term “reference composition” is more appropriate than
“lead compound” when considering obviousness for a
chemical composition that the infringer deliberately
imitates. In this case, Miacalcin® serves as the “reference
composition” for Dr. Stern’s development of the claimed
composition. In Miacalcin®, BZK acts as a preservative,
absorption enhancer, and surfactant. Claim 19 of the
’812E patent is the result of Dr. Stern’s effort to design
around Miacalcin®. It is undisputed that “about 20 mM
citric acid” in claim 19 functions as an absorption enhan-
cer and surfactant in Fortical®.
Although claim 19 does not assign any particular
functionality or property to its list of components, a
person of ordinary skill, someone in the field of pharma-
ceutical liquid dosage form development, would have had
reasons—specifically, design need and market demand—
to create an FDA-approved liquid nasal composition that
delivers salmon calcitonin. See KSR, 550 U.S. at 421. In
this case, the design need is to achieve a bioequivalent
composition. The market demand is to achieve a composi-
tion that treats the same symptoms as the reference
formulation. Specifically, on February 4, 2000, someone
developing a pharmaceutical nasal liquid dosage form
with the active ingredient of salmon calcitonin would
have known that a bioequivalent of Miacalcin®, largely
determined by equivalent bioavailability of salmon calci-
tonin, would have the best chance to gain FDA approval
quickly. See 21 § C.F.R. 320.23(b) (“Two drug products
will be considered bioequivalent drug products if they are
pharmaceutical equivalents or pharmaceutical alterna-
tives whose rate and extent of absorption do not show a
significant difference when administered at the same
molar dose of the active moiety under similar experimen-
tal conditions . . . .”); id. (“Bioavailability means the rate
and extent to which the active ingredient or active moiety
17 UNIGENE LABS v. APOTEX
is absorbed from a drug product and becomes available at
the site of action.”). Creating a bioequivalent of
Miacalin® would allow approval of the new pharmaceuti-
cal liquid dosage form as an ANDA under 21 U.S.C.
§ 355(j)(2)(A)(vii) or an NDA under 21 U.S.C. § 505(b)(2)—
both enjoying the additional advantage of using the
clinical data or literature submitted in support of Miacal-
cin®. Alternatively, a composition requiring full clinical
trials to demonstrate safety and effectiveness would
require approval as an NDA under 35 U.S.C. § 505(b)(1),
a significantly longer process. This court appreciates that
the Hatch-Waxman Act encourages and rewards replica-
tion of protected compounds in some circumstances—an
activity that rarely, but can, lead to innovative products.
While claim 19 contains several excipients in addition
to salmon calcitonin, at oral argument, Unigene acknowl-
edged that “citric acid is a very important part” of claim
19’s case for inventiveness and nonobviousness. Oral
Argument at 21:48-22:00, available at
http://www.cafc.uscourts.gov/oral-argument-
recordings/2010-1006/all. While the district court found
other elements in combination were also nonobvious, this
court agrees that the inclusion of “about 20 mM citric
acid” in the composition provides the strongest case for
nonobviousness.
Apotex asserted for the first time at oral argument
that claim 19 is obvious in light of three pieces of prior
art: Miacalcin®, the Day reference, and the ’014 patent.
Id. at 4:50. As discussed above, Miacalcin® serves as the
reference composition.
On the basis of the record before this court, this court
agrees that no reasonable juror could conclude that the
’014 patent would give a person of ordinary skill sufficient
reason or motivation to use about 20 mM citric acid in a
UNIGENE LABS v. APOTEX 18
liquid nasal salmon calcitonin composition. See KSR, 550
U.S. at 421. The ’014 patent claims a solid oral dosage of
salmon calcitonin, not a liquid formulation. While the
experiments discussed in the ’014 patent found that “the
bioavailability of salmon calcitonin increased nearly 10
fold when the amount of citric acid in the formulation was
increased only 5 fold,” ’014 patent col.11 ll.33-35, a person
of ordinary skill (not Dr. Stern, a co-inventor of the ’014
patent) would not glean from the ’014 results a reason to
use about 20 mM citric acid in a nasal calcitonin formula-
tion. The ’014 patent itself describes a solid oral formula-
tion of salmon calcitonin. Although the ‘014 patent
mentions citric acid, that discussion refers to concentra-
tions of citric acid much higher than those in claim 19.
Moreover, the ’014 patent examined citric acid for
bioavailability in the context of a liquid injection into a
rat duodenum, not a human use in a liquid pharmaceuti-
cal formulation. These significant differences would not
cause a person of ordinary skill to replace BZK in Miacal-
cin® with 20 mM of citric acid in the normal course of
research and development.
To a person of ordinary skill in the art, citric acid,
even at about 20 mM concentrations, would not be an
obvious substitute for BZK’s functions as an absorption
enhancer and as a surfactant because citric acid has a
vague role in even the closest prior art. See Eli Lilly, 471
F.3d at 1380. U.S. Patent No. 5,124,315 (“’315 patent”)
describes liquid pharmaceutical compositions for nasal
administration containing a polypeptide as an active
ingredient. Example 5 of the ’315 patent uses 20.5 mM of
citric acid in a liquid nasal formulation containing salmon
calcitonin as its active ingredient. ’315 patent col.3 l.43.
The ’315 patent makes clear however that “citric acid was
not used as an absorption enhancing agent, but it is
19 UNIGENE LABS v. APOTEX
merely the acidic component of the buffer.” Id. at col.4
ll.18-23.
In fact, the ’315 patent teaches away from using about
20 mM citric acid as an absorption enhancing agent or
stabilizing agent in a liquid formulation with a salmon
calcitonin active ingredient. The ’315 patent discusses
U.S. Patent No. 4,476,116 (“’116 patent”), directed toward
nasal compositions having enhanced peptide absorption.
The ’116 patent lists over fifty examples, including citric
acid, of pharmaceutically acceptable chelating agents to
serve as absorption agents. ’116 patent col.11 l.1. Both
parties agree that the ’315 patent reports that the com-
pounds listed in the ’116 patent yielded “discouraging”
test results, and that “only ammonium tartrate is a
satisfactory stabilizing agent for liquid nasal compositions
containing polypeptides as active ingredient [sic].” ’315
patent col.2 ll.13-16, 19-21. One of ordinary skill in the
art reading the ’315 and ’116 patents would have consid-
ered about 20 mM citric acid undesirable in a liquid nasal
formulation containing salmon calcitonin.
The Day reference, a publication about pharmaceuti-
cal preformulation and formulation, lists benzyl alcohol
and phenylethyl alcohol as two of nine listed preserva-
tives on a table of “Excipients used in aqueous nasal
products.” J.A. at 11397. BZK is one of the nine listed
preservatives in Day, along with benzethonium chloride,
chlorobutanol, methylparaben, phenylmercuric acetate,
propylparaben, and thimerosal. Citric acid is not included
in the list of preservatives, but appears instead as a pH
adjuster or buffer. The Day reference also lists polysor-
bate 20 and 80 as one of three surfactants used as excipi-
ents in aqueous nasal products. With reference to this
prior art, there is no evidence to support the conclusion
that a person of ordinary skill would expect a combination
of citric acid, benzyl alcohol, phenylethyl alcohol, and
UNIGENE LABS v. APOTEX 20
polysorbate 80 to contain a buffer, pH adjuster, preserva-
tive, and surfactant, but no absorption enhancer or ex-
cipient to promote bioavailability.
Thus, the “about 20.0 mM citric acid” limitation alone
supports the district court’s grant of summary judgment
of nonobviousness. When used as an absorption enhancer
in the ’116 patent, citric acid was one of over fifty options.
See KSR, 550 U.S. at 421. Further, when the prior art
used citric acid at about 20 mM, as in the ’315 patent, it
was used only as a buffer. There is no genuine dispute of
material fact that a person of ordinary skill attempting to
make a liquid composition to deliver salmon calcitonin
into a human body through nasal administration, would
not have considered using about 20 mM citric acid with
the narrowly claimed amounts of benzyl alcohol,
phenylethyl alcohol, and polysorbate 80, because the
formulation would not be expected to perform properly to
meet the specificity of a pharmaceutical use. Thus, even
accepting that there was a design need and market pres-
sure to develop a pharmaceutical formulation that is
bioequivalent to Miacalcin®, there is no evidence in the
record that claim 19 would be an obvious solution to those
motivations.
V.
Accordingly, this court affirms the district court’s
grant of summary judgment of nonobviousness in favor of
Unigene, affirms the district court’s denial of summary
judgment of obviousness, affirms the district court’s
denial of Apotex’s crime-fraud motion, and affirms the
district court’s dismissal of Apotex’s new claims and
defenses.
AFFIRMED
Each party shall bear its own costs.