Smithkline Beecham Corp. v. Apotex Corp.

• Decision Date: 23 April 2004
• Docket Number: No. 03-1313.,No. 03-1285.,03-1285.,03-1313.
• Citation: 365 F.3d 1306
• Parties: SMITHKLINE BEECHAM CORPORATION and Beecham Group, P.L.C., Plaintiffs-Appellants, v. APOTEX CORP., Apotex, INC., and Torpharm, Inc., Defendants-Cross Appellants.
• Court: U.S. Court of Appeals — Federal Circuit

365 F.3d 1306

SMITHKLINE BEECHAM CORPORATION and Beecham Group, P.L.C., Plaintiffs-Appellants, v. APOTEX CORP., Apotex, INC., and Torpharm, Inc., Defendants-Cross Appellants.

No. 03-1285.

No. 03-1313.

United States Court of Appeals, Federal Circuit.

April 23, 2004.

COPYRIGHT MATERIAL OMITTED

Ford F. Farabow, Jr., Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P., of Washington, DC, argued for plaintiffs-appellants. With him on the brief were Robert D. Bajefsky, Howard W. Levine, Scott J. Popma, Jennifer S. Swan, Aaron M. Raphael.

Deanne M. Mazzochi, Lord, Bissell & Brock, of Chicago, Illinois, argued for defendants-cross-appellants. With her on the brief were Hugh L. Moore, Keith D. Parr, Hugh S. Balsam, and Kevin M. Nelson. Of counsel were Paul J. Molino, Scott B. Feder, and William A. Rakoczy.

Before RADER, BRYSON, and GAJARSA, Circuit Judges.

RADER, Circuit Judge.

Following a bench trial, the United States District Court for the Northern District of Illinois determined that the paroxetine hydrochloride anhydrate product produced by Apotex Corp., Apotex, Inc., and TorPharm, Inc. (collectively Apotex) will not infringe claim 1 of U.S. Patent No. 4,721,723 owned by SmithKline Beecham Corp. and Beecham Group, P.L.C. (collectively SmithKline). SmithKline Beecham Corp. v. Apotex Corp., 247 F.Supp.2d 1011, 1052 (N.D.Ill.2003). Claim 1 of the '723 patent recites, in its entirety, "Crystalline paroxetine hydrochloride hemihydrate." Upon this court's revision of the trial court's erroneous claim construction, Apotex's product will infringe this claim. Nonetheless because the public use bar of 35 U.S.C. § 102(b) renders claim 1 of the '723 patent invalid, this court affirms the district court's judgment in favor of Apotex.

I.

In the late 1970s, a British company called Ferrosan invented a new class of compounds, including a compound that became known as paroxetine. See U.S. Patent No. 4,007,196. The '196 patent claims paroxetine and its salts and discloses their antidepressant properties. Ferrosan eventually developed a process to produce the crystalline hydrochloride salt of paroxetine, or paroxetine hydrochloride (PHC). In 1980, Ferrosan licensed the '196 patent and its other PHC-related technology to SmithKline. SmithKline began manufacturing PHC in its Harlow plant in England.

In March 1985, a chemist in SmithKline's Worthing, England laboratory, Alan Curzons, created a new crystalline form of PHC while attempting to improve PHC production. Curzons' test results established that the new product was the hemihydrous form of PHC (PHC hemihydrate), while Ferrosan's original form was anhydrous PHC (PHC anhydrate). PHC anhydrate comprises crystals of PHC without bound water molecules. PHC hemihydrate comprises PHC crystals with one bound water molecule for every two PHC molecules. PHC hemihydrate proved more stable and thus more easily packaged and preserved.

Further review of the SmithKline samples showed that the Harlow plant had unwittingly made PHC hemihydrate as early as December 1984. In May 1985, SmithKline began double-blind clinical tests in the United States to determine the safety and efficacy of PHC hemihydrate capsules to treat depression symptoms. In these clinical tests, the doctors and patients were aware of the drug being tested, but were not aware which patients were taking a placebo and which were taking the actual drug.

SmithKline filed a patent application in the British Patent Office on October 25, 1985 relating to "crystalline paroxetine hydrochloride, its preparation and its uses as a therapeutic agent." The British application identified the invention as both the hemihydrate and the anhydrate form of PHC, as well as mixtures that contain a major portion of either form. One year later, on October 23, 1986, SmithKline filed a U.S. application claiming priority to the British application that issued as the '723 patent in 1988. The '723 patent does not claim PHC anhydrate and does not claim mixtures of the two PHC forms. The only claim at issue in this case is claim 1, which reads, "Crystalline paroxetine hydrochloride hemihydrate."

In 1993, after completing the necessary FDA approval process, SmithKline placed its antidepressant drug with PHC hemihydrate as the active ingredient on the market under the name Paxil®. In 1998, TorPharm, Inc., an Apotex affiliate and manufacturer of Apotex's generic antidepressant, filed an Abbreviated New Drug Application (ANDA) with the FDA, under 21 U.S.C. § 355(j), seeking approval to market its own PHC antidepressant drug. Apotex identified the active ingredient in its antidepressant as PHC anhydrate. Apotex's ANDA included a paragraph IV certification, see 21 U.S.C. § 355(j)(2)(A)(IV), that indicated Apotex intended to market the drug before the expiration of the '723 patent because its drug would not infringe that patent.

In 1998, SmithKline initiated this infringement action against Apotex under 35 U.S.C. § 271(e)(2) on the basis of Apotex's ANDA filing. SmithKline alleges that Apotex's proposed drug will infringe claim 1 of the '723 patent. SmithKline does not allege that claim 1 of the '723 patent covers PHC anhydrate. After all, PHC anhydrate — the Ferrosan discovery — is prior art for the '723 patent. SmithKline asserts that Apotex will infringe by manufacturing PHC anhydrate tablets that necessarily contain, by a conversion process discussed below, at least trace amounts of PHC hemihydrate.

The parties filed various summary judgment motions, including cross motions for summary judgment that claim 1 of the '723 patent was invalid (or valid) under 35 U.S.C. § 102(b) for an impermissible public use. The § 102(b) motions acknowledged that the clinical trials occurred more than one year before SmithKline's filing date for the '723 patent, but disputed whether those tests qualified for the experimental use negation. The district court denied Apotex's motion and granted SmithKline's motion, holding that the '723 patent was not invalid for public use under § 102(b). The district court reasoned that the clinical trials qualified as experimental uses. See SmithKline Beecham Corp. v. Apotex Corp., 286 F.Supp.2d 925, 932-38 (N.D.Ill.2001).

The district court then held a bench trial to determine the proper interpretation of claim 1 and resolve the remaining infringement and validity issues. On the question of claim construction, the district court limited claim 1 to PHC hemihydrate in commercially significant amounts. SmithKline Beecham Corp., 247 F.Supp.2d at 1030. The trial record contained uncontested testimony that a PHC anhydrate-hemihydrate mixture would need to possess a percentage of PHC hemihydrate in the "high double digits" if the hemihydrate component were to contribute any commercial value. Id. The district court grafted that commercial significance into the claim and held that Apotex's proposed PHC drug will not infringe claim 1 of the '723 patent. The district court found, as a factual matter, that Apotex's PHC anhydrate tablets will not contain detectable or commercially significant amounts of PHC anhydrate and rejected SmithKline's evidence to the contrary. Id. at 1031-39. The trial court also determined that claim 1 is not invalid.

SmithKline contested the district court's claim interpretation noting that claim 1 is clear on its face and encompasses PHC hemihydrate in any amount, however small or insignificant. In rejecting that proposed claim interpretation, the district court also opined that SmithKline's proposed construction would render claim 1 indefinite. The district court reasoned that SmithKline's interpretation would place potential infringers in the untenable position of never knowing whether their product infringes because even a single undetectable crystal of PHC hemihydrate would infringe. Id. at 1029-30.

To show that manufacture of PHC anhydrate tablets necessarily creates PHC hemihydrate, SmithKline proffered expert testimony on the so-called "seeding" or "disappearing polymorph" theory. Under this theory, Ferrosan may have originally created a crystalline compound, namely PHC anhydrate, in a relatively unstable form. As Ferrosan and its successors improved the manufacturing and testing procedures for PHC, the compound "morphed" into a more pure and stable form, namely the PHC hemihydrate discovered in SmithKline's facilities. Once this new form or polymorph exists, SmithKline's experts explained, the general environment becomes "seeded" with crystals of the new polymorph. In this seeded environment, the old polymorph converts to the new polymorph upon its inevitable contact with seeds of the new polymorph. In other words, the creation of a pure version of the old polymorph becomes extremely difficult, if not impossible; the old polymorph has effectively disappeared and been replaced by the new.

SmithKline's experts applied the disappearing polymorph theory to show that Apotex's PHC anhydrate tablets inevitably convert to hemihydrate when combined with moisture, pressure, and practically ubiquitous PHC hemihydrate seeds. The district court found that SmithKline's evidence on seeding and the disappearing polymorph theory supported the inference that Apotex's PHC anhydrate tablets will contain at least trace, or undetectable, amounts of PHC hemihydrate. Id. at 1042-43. Thus, under SmithKline's claim construction, the district court held that Apotex's PHC anhydrate drug would infringe claim 1 of the '723 patent. Id.

Alternatively, if claim 1 was construed to cover any amount of PHC hemihydrate and was, therefore, infringed, the district court purported to create a new equitable defense to infringement in favor of Apotex. Id. at 1043-45. Under this new defense, SmithKline was responsible for producing the hemihydrate, which, by virtue of SmithKline's disappearing polymorph theory, seeded the environment. Consequently, SmithKline caused the alleged infringement. The district court reasoned that Apotex should...