Alerts and Updates
Federal Circuit Alert
December 2005
Federal Circuit Elaborates on Role of Hatch-Waxman Statute in Preliminary Injunction Analysis
Pfizer, Inc., et al. v. Teva Pharmaceuticals USA, Inc. et al., No. 05-1331
In this November 22, 2005 decision, the Federal Circuit affirmed a New Jersey District Court's grant of a preliminary injunction enjoining defendants Teva Pharmaceuticals USA, Inc., Ranbaxy Pharmaceuticals, Inc. and Ranbaxy Laboratories Limited from infringing U.S. Patent No. 4,743,450 ("the '450 Patent"). The Federal Circuit ruled that the district court correctly found irreparable harm to the patent owner in the absence of the preliminary injunction. Further, the Federal Circuit held that the plaintiff did not abandon its right to a preliminary injunction by failing to file suit against the defendant within the statutory period for filing suit triggered by receipt of the defendant's non-infringement certification as part of its Abbreviated New Drug Application ("ANDA") filing.
The '450 Patent is directed to pharmaceutical compositions containing angiotensin converting enzyme ("ACE") inhibitors and their methods of manufacture. These drugs are used to treat hypertension, commonly known as high blood pressure. Many ACE inhibitors are susceptible to degradation over time, reducing the life of the drug. The '450 Patent addresses several causes of this degradation phenomenon. The Warner-Lambert Company, LLC owns the '450 Patent and markets the resulting ACE inhibitor formulation as Accupril®.
On January 15, 1999, Teva sought approval from the FDA to market a generic version of Accupril® by filing an ANDA application under the Hatch-Waxman amendments to the Food, Drug and Cosmetic Act ("the ANDA statute"). As the first company to file an ANDA for the generic version of Accupril®, Teva was entitled to 180-day generic market exclusivity. As required by the ANDA statute, Teva simultaneously filed its certification asserting that the '450 Patent was invalid under Sections 102 and 103 of the Patent Statute. Warner-Lambert responded to this filing by suing Teva for infringement of the '450 Patent under 35 U.S.C. §271(e) (2) (A) although the resolution of that case was not at issue in this appeal to the Federal Circuit.
On December 22, 2002, Ranbaxy applied to the FDA to market its own generic version of Accupril® by filing a separate ANDA and certifying that its product would not infringe the '450 Patent. Ranbaxy also sent Warner-Lambert a certification explaining that it believed its product would not infringe the '450 Patent based upon a claim construction issued by the district court in the Warner-Lambert infringement suit against Teva. Of particular note, Warner-Lambert did not file suit against Ranbaxy for patent infringement within 45 days of receiving Ranbaxy's certification letter, which is required under the ANDA statute in order to trigger a 30-month stay of approval of Ranbaxy's ANDA.
On August 26, 2004, Ranbaxy and Teva entered into a distribution and supply agreement. Later, on December 15, 2004, Teva relinquished its 180-day generic market exclusivity, allowing for final FDA approval of Ranbaxy's ANDA. The following day, Teva began marketing Ranbaxy's product. In response to these events, Pfizer, Inc., the corporate parent of Warner-Lambert, and Warner-Lambert sued Ranbaxy and Teva on January 28, 2005 for infringement of the '450 Patent. Warner-Lambert subsequently filed a motion for a preliminary injunction, which was granted by the district court on March 29, 2005. Ranbaxy and Teva appealed the grant of this preliminary injunction to the Federal Circuit.
In determining whether to grant a preliminary injunction, the Federal Circuit reiterated the long-standing law that a court must consider whether the patent owner has shown: (1) a reasonable likelihood of success on the merits; (2) the prospect of irreparable harm to the patent owner in the absence of the injunction; (3) that this harm would exceed harm to the alleged infringer when subjected to the injunction; and (4) that granting the injunction is in the public interest.
The defendants first challenged the district court's finding that Warner-Lambert was likely to succeed on the merits. Specifically, the defendants challenged the district court's finding that infringement was likely. At issue with respect to this prong of the preliminary injunction test was whether "saccharides" as used in the patent claims encompasses polysaccharides. For several reasons, the Federal Circuit affirmed the district court's claim construction that saccharides includes polysaccharides and concluded that Warner-Lambert had met its burden with respect to showing that it was likely to succeed on the merits of the infringement case.
Even though the Federal Circuit affirmed the district court's finding that literal infringement was likely, the court proceeded to consider infringement under the doctrine of equivalents based on the recognition that the claim construction was based on the record available at the preliminary injunction stage and that it might evolve. Consequently, the Federal Circuit revisited the disclosure-dedication rule, which provides that alternatives disclosed in the patent, but not claimed, cannot be recaptured using the doctrine of equivalents. The Federal Circuit elaborated on this rule by stating that the "public notice function of patents suggests that before unclaimed subject matter is deemed to have been dedicated to the public, that unclaimed subject matter must have been identified by the patentee as an alternative to a claim limitation." Based on this standard and the record before the Court, the Federal Circuit held that the patentee did not dedicate to the public the alleged equivalent in question.
The defendants also argued that the district court clearly erred in finding irreparable harm to the patent owner in the absence of the injunction. The district court presumed irreparable harm based on its finding that Warner-Lambert would likely succeed on the merits. Before the Federal Circuit, Ranbaxy made several arguments regarding the irreparable harm prong, including arguing that Warner-Lambert "should not be excused" for its decision not to bring suit within the 45-day statutory period of receiving Ranbaxy's non-infringement certification letter, which would have triggered the 30-month stay of FDA approval of Ranbaxy's ANDA.
The Federal Circuit found that Ranbaxy failed to rebut this presumption of irreparable harm where the patent owner established a strong showing of likely infringement of a valid and enforceable patent. With respect to whether Warner-Lambert should have brought suit within the 45 day period provided under the ANDA statute, the Federal Circuit found that there is no requirement that a patent owner take advantage of the "statutory carrot of a 30-month stay" of approval of Ranbaxy's ANDA provided by the ANDA statute, and "certainly no statutory stick for choosing not to." Further, the Federal Circuit noted that Teva was the first party to file an ANDA and therefore held exclusive generic rights. Therefore, there was no immediate need for Warner-Lambert to sue Ranbaxy. Still further, Warner-Lambert filed suit against Ranbaxy within two months of the launch of Ranbaxy's infringing formulation, supporting the district court's conclusion that Warner-Lambert did not unduly delay bringing suit against Ranbaxy. For these reasons, Ranbaxy did not meet its burden in rebutting the presumption of irreparable harm.
With respect to the third prong of the preliminary injunction analysis, that the irreparable harm to Warner-Lambert would exceed the harm to Ranbaxy, the court held that the district court did not abuse its discretion, stating, "Simply put, an alleged infringer's loss of market share and customer relationships, without more, does not rise to the level necessary to overcome the loss of exclusivity experienced by a patent owner due to infringing conduct."
Finally, with respect to whether the preliminary injunction was in the public interest, Ranbaxy argued that the statutory framework under which Ranbaxy filed its ANDA favored denial of the preliminary injunction because it makes low-cost generic drugs available to the public and increases competition. The Federal Circuit found that the district court did not abuse its discretion in rejecting this argument, finding that the ANDA framework does not further its competitive purposes by "entirely eliminating the exclusionary rights conveyed by pharmaceutical patents. Nor does the statutory framework encourage or excuse infringement of valid pharmaceutical patents."
For the full opinion, see: http://fedcir.gov/opinions/05-1331.pdf
District Court's Conception Analysis Misapplied Law of Appreciation
Invitrogen Corp. v. Clontech Laboratories, Inc., Nos. 04-1039, 04-1040
In a November 18, 2005 decision, the Federal Circuit overturned a finding of invalidity of several patents under 35 U.S.C. §102(g) (2) by the Maryland District Court, finding that the district court misapplied the "law of appreciation" when determining the date of conception by the alleged first inventor and ignored genuine issues of fact in granting partial summary judgment in favor of the defendant, Clontech Laboratories, Inc.
Invitrogen Corporation owns several related U.S. patents directed to a genetically modified reverse transcriptase ("RT") enzyme involved in DNA replication. In particular, the genetically modified RT inhibits RNase H activity. This is desirable since RNase H activity is known to destroy messenger RNA ("mRNA") templates in naturally occurring RT and, therefore, prevents the mRNA from serving as a template for cloning additional DNA. Thus, an RT with inhibited RNase H behavior is useful for efficiently cloning DNA.
As described and claimed in the patents, Invitrogen reduced the claimed invention to practice on January 27, 1987. Invitrogen was not, however, the first to explore this technology. Beginning in the early 1980s, scientists at Columbia University performed studies in this area. One Columbia scientist, Dr. Stephen P. Goff, performed tests in late 1984, but these tests yielded inconclusive results due in part to the technology of the day. In March 1987, Goff developed a new assay technology and applied it to his modified enzymes. It was not until this point that Goff discovered that the enzymes had substantially no RNase H activity, an essential part of the invention of Invitrogen's patents.
In December 1996, Invitrogen sued Clontech for infringement of its patents. The district court entered partial summary judgment in favor of Clontech under §102(g) (2), finding that the Columbia scientist conceived of Invitrogen's invention first and diligently reduced it to practice. Invitrogen challenged this ruling on appeal.
As a starting point for the Federal Circuit's analysis, the Court noted that conception "defines the legally operative moment of invention under §102(g)" of the Patent Statute and is the "formation in the mind of the inventor of a definite and permanent idea of the complete and operative invention, as it is hereafter to be applied in practice." With respect to a chemical compound, conception requires that the inventor "be able to define" the compound "so as to distinguish it from other materials, and to describe how to obtain it." Conception requires more than "unrecognized accidental creation." Thus, "the date of conception of a prior inventor's invention is the date the inventor first appreciated the fact of what he made."
In the present case, the invalidity judgment depended on when the Columbia scientist appreciated that the modified RT enzymes inhibited RNase H behavior while facilitating DNA polymerase activity as claimed. Invitrogen argued that Goff did not conceive of the invention until March 1987, when the new in situ assay was perfected and established that the enzymes did inhibit RNase H behavior.
According to the Federal Circuit, the determination of priority "requires evidence that the inventor actually first made the invention, and that he understood his creation to have the features that, comprise the inventive subject matter at bar." The court must identify the date when the inventor's understanding reached the level needed for appreciation. This analysis requires objective corroboration of the inventor's subjective beliefs. As stated by the Federal Circuit, "it is not enough that a party adduce evidence that objective test results comport with an inventor's testimony concerning his state of mind." Rather, there must also be contemporaneous evidence that the alleged inventor timely interpreted or evaluated the results, and understood the results to show the existence of the invention.
Applying these guidelines to the present facts, the Federal Circuit found as a matter of law that the district court's conclusion could not be sustained as its appreciation analysis was inadequate. At most, the district court seemed to find it undisputed that Goff intended to create a modified RT that inhibited RNase H behavior in 1984 and sequenced the enzymes in 1986. There was no evidence that merely sequencing the mutant RT enzyme in 1986 established the properties of the corresponding enzyme. Further, the record was at best inconsistent with respect to the district court's conclusion that Goff set out to create a modified RT that inhibited RNase H behavior or recognized his invention in 1984. Rather, according to the Federal Circuit, the evidence "fit squarely within the unrecognized, accidental duplication cases" previously cited and elaborated on in the opinion. By Goff's own admission, his research was general in nature and the evidence showed that it was unknown at the time whether it was even possible to make a modified RT that inhibited RNase H behavior and Goff did not start out with a goal to create a modified RT that inhibited RNase H behavior.
Overturning the district court's grant of partial summary judgment, the Federal Circuit concluded that there was no objective evidence of record in the form of, for example, lab notebooks and expert testimony explaining what the notebook entries meant, that showed by clear and convincing evidence that the Columbia scientist appreciated his invention before Invitrogen's January 27, 1987 invention date.
For the full opinion, see: http://fedcir.gov/opinions/04-1039.pdf
Claim Covering a System and Method for Using the System Is Invalid for Indefiniteness
IPXL Holdings, L.L.C. v. Amazon.com Inc., Nos. 05-1009, 05-1487
In a November 21, 2005 decision, the Federal Circuit addressed an issue of first impression for the Court: whether a single claim covering both an apparatus and a method of use of that apparatus is invalid. The three judge panel unanimously concluded that a claim reciting both a system and the method for using the system does not apprise a person of ordinary skill in the art of its scope and is, therefore, invalid as indefinite under 35 U.S.C. 112, ¶2.
The appellant, plaintiff IPXL Holdings, L.L.C. ("IPXL") sued Amazon.com ("Amazon") in the District Court for the Eastern District of Virginia, alleging that Amazon's "1-click system" infringed certain claims of U.S. Patent No. 6,149,055 ("the '055 Patent"). The '055 Patent, entitled "Electronic Fund Transfer or Transaction System," is directed to a computer system for executing electronic financial transactions, including electronic fund transfer systems available in automated teller machines or point of sale terminals. As the court stated, "The essence of the '055 Patent is that the system stores information previously defined by the user and displays that information to the user in a single screen, from which the user may select a transaction." The system allows a user to execute a transaction in fewer steps.
After first affirming the district court's grant of summary judgment of invalidity on the grounds that a prior art reference anticipated claims 1, 2, 9 and 15 of the '055 Patent, the Federal Circuit affirmed the finding that claim 25 was invalid on the grounds of indefiniteness under 35 U.S.C. §112, which requires that the claims of a patent "particularly point [ ] out and distinctly claim [ ] the subject matter which the applicant regards as his invention." The Federal Circuit found that claim 25 recited both the system of claim 2 and a method for using the system. The claim states:
The system of claim 2 wherein the predicted transaction information comprises both a transaction type and transaction parameters associated with that transaction type, and the user uses the input means to either change the predicted transaction information or accept the displayed transaction type and transaction parameters.
The Federal Circuit recognized that the Board of Patent Appeals and Interferences ("Board") previously addressed the issue and "made it clear that reciting both an apparatus and a method of using that apparatus renders a claim indefinite" under 35 U.S.C. 112, ¶2. See Ex Parte Lyell, 17 USPQ 2d 1548 (PBAI 1990). In particular, the Federal Circuit agreed with the Board's reasoning that the combination of two separate statutory classes of invention does not allow a manufacturer or seller of the claimed apparatus to "know from the claim whether it might also be liable for contributory infringement because a buyer or user of the apparatus later performs the claimed method of using the apparatus."
In concluding that claim 25 was indefinite and thus invalid, the Federal Circuit found that it was "unclear" whether infringement occurred when one creates a system that allows the user to change or accept the displayed transaction, or when the user actually uses the input means to change or accept the displayed transaction. Therefore, the claim "does not apprise a person of ordinary skill in the art of its scope" and is invalid.
Finally, the Federal Circuit reversed the district court's grant of attorney fees to Amazon. Finding that a claim for attorney fees under 35 U.S.C. §285 must be processed in compliance with Rule 54(d) (2) (B) of the Federal Rules of Civil Procedure, the Federal Circuit rejected Amazon's claim for attorney fees because the claim had not been filed within the 14-day rule of Rule 54 and because Amazon took no steps under Rule 6 that could have afforded the district court a basis to exercise its discretion.
For the full opinion, see: http://fedcir.gov/opinions/05-1009.pdf
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