Burroughs Wellcome Co. v. Barr Laboratories, Inc.

• Decision Date: 22 November 1994
• Docket Number: Nos. 93-1503,s. 93-1503
• Parties: BURROUGHS WELLCOME CO., Plaintiff-Appellee, v. BARR LABORATORIES, INC., Defendant-Appellant, and Novopharm, Inc. and Novopharm, Ltd., Defendants-Appellants. to 93-1505.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1223

40 F.3d 1223

32 U.S.P.Q.2d 1915

BURROUGHS WELLCOME CO., Plaintiff-Appellee, v. BARR LABORATORIES, INC., Defendant-Appellant, and Novopharm, Inc. and Novopharm, Ltd., Defendants-Appellants.

Nos. 93-1503 to 93-1505.

United States Court of Appeals, Federal Circuit.

Nov. 22, 1994.

Rehearing Denied Dec. 15, 1994.

E. Anthony Figg, Rothwell, Figg, Ernst & Kurz, Washington, DC, argued for plaintiff-appellee. With him on the brief were Steven Lieberman and Joseph A. Hynds. Of counsel was Mark A. Ash. Also on the brief were Thomas F. Curnin, Laura Mezey, Daniel L. Cantor and Michael B. Weiss, Cahill, Gordon & Reindel, New York City. Of counsel were Paul A. Holcombe, Jr. and Susan S. Dunn, Burroughs Wellcome Co., Research Triangle Park, NC.

Dan K. Webb, Winston & Strawn, Chicago, IL, argued for defendant-appellant. With him on the brief were Eric L. Hirschhorn, George C. Lombardi, James F. Hurst and Monique M. Vasilchik. Also on the brief were Myron Cohen and Michael C. Stuart, Cohen, Pontani, Lieberman & Pavane, New York City. Robert F. Green, Leydig, Voit & Mayer, Ltd., Chicago, IL, argued for defendants-appellants. With him on the brief were Bruce M. Gagala, Richard M. Johnson and Regina M. Anderson. Of counsel was Jeffrey S. Ward, Chicago, IL.

Before MAYER, LOURIE, and SCHALL, Circuit Judges.

MAYER, Circuit Judge.

Barr Laboratories, Inc., Novopharm, Inc., and Novopharm, Ltd., appeal the order of the United States District Court for the Eastern District of North Carolina, Burroughs Wellcome Co. v. Barr Lab., Inc., 828 F.Supp. 1208 (E.D.N.C.1993), granting the motion of Burroughs Wellcome Co. for judgment as a matter of law that six United States patents were not invalid and were infringed. We affirm in part, vacate in part, and remand.

Background

Burroughs Wellcome Co. is the owner of six United States patents that cover various preparations of 3'-azidothymidine (AZT) and methods for using that drug in the treatment of persons infected with the human immunodeficiency virus (HIV). ¹ Each of these patents names the same five inventors--Janet Rideout, David Barry, Sandra Lehrman, Martha St. Clair, and Phillip Furman (Burroughs Wellcome inventors)--all of whom were employed by Burroughs Wellcome at the time the inventions were alleged to have been conceived. The defendants-appellants concede that all five are properly named as inventors on the patents.

Burroughs Wellcome's patents arise from the same parent application filed on September 17, 1985. ² Five of the patents relate to the use of AZT to treat patients infected with HIV or who have acquired immunodeficiency syndrome (AIDS). ³ The other patent, the '750 patent, covers a method of using AZT to increase the T-lymphocyte count of persons infected with HIV. ⁴

In the early 1980s, scientists began to see patients with symptoms of an unknown disease of the immune system, now known as AIDS. The disease attacks and destroys certain white blood cells known as CD4 T-lymphocytes or T-cells, which form an important component of the body's immune system. The level of destruction eventually becomes so great that the immune system is no longer able to mount an effective response to infections that pose little threat to a healthy person.

In mid-1984, scientists discovered that AIDS was caused by a retrovirus, known as HTLV III or, more commonly today, HIV. After the identification of HIV, Burroughs Wellcome began to search for a cure, screening compounds for antiretroviral activity using two murine (or mouse) retroviruses, the Friend leukemia virus and the Harvey sarcoma virus.

At about this time, scientists at the National Institutes of Health (NIH), led by Samuel Broder, were looking for effective AIDS therapies as well. Unlike Burroughs Wellcome, Broder and his colleagues used live HIV, and were able to develop a test that could demonstrate a compound's effectiveness against HIV in humans using a unique line of T-cell clones (the ATH8 cell line). The NIH scientists began to seek compounds from private pharmaceutical companies for screening in their cell line. After Burroughs Wellcome contacted Broder in the fall of 1984, he agreed to accept compounds from Burroughs Wellcome under code for testing against live HIV.

Burroughs Wellcome's Rideout selected AZT and a number of other compounds for testing in the murine screens on October 29, 1984. The tests, performed at Burroughs Wellcome facilities by St. Clair, showed that AZT had significant activity against both murine retroviruses at low concentrations. In light of these positive results, the Burroughs Wellcome inventors met on December 5, 1984, to discuss patenting the use of AZT in the treatment of AIDS. Burroughs Wellcome's patent committee thereafter recommended that the company prepare a patent application for future filing. By February 6, 1985, the company had prepared a draft application for filing in the United Kingdom. The draft disclosed using AZT to treat patients infected with HIV, and set out various pharmaceutical formulations of the compound in an effective dosage range to treat HIV infection.

Two days earlier, on February 4, 1985, Burroughs Wellcome had sent a sample of AZT, identified only as Compound S, to Broder at NIH. In an accompanying letter, Lehrman told Broder of the results of the murine retrovirus tests and asked that he screen the compound for activity against HIV in the ATH8 cell line. Another NIH scientist, Hiroaka Mitsuya, performed the test in mid-February 1985, and found that Compound S was active against HIV. Broder informed Lehrman of the results by telephone on February 20, 1985. Burroughs Wellcome filed its patent application in the United Kingdom on March 16, 1985.

After Burroughs Wellcome learned that AZT was active against HIV, it began the process of obtaining Food and Drug Administration (FDA) approval for AZT as an AIDS therapy. As a part of the clinical trials leading to FDA approval, Broder and another NIH scientist, Robert Yarchoan, conducted a Phase I human patient study which showed that treatment with AZT could result in an increase in the patient's T-cell count. Broder reported this result to Lehrman on July 23, 1985. In 1987, the FDA approved AZT for marketing by Burroughs Wellcome; Burroughs Wellcome markets the drug for treatment of HIV infection under the trademark Retrovir.

On March 19, 1991, Barr Laboratories, Inc. (Barr) sought FDA approval to manufacture and market a generic version of AZT by filing an Abbreviated New Drug Application (ANDA) pursuant to 21 U.S.C. Sec. 355(j) (1988). As part of the process, Barr certified to the FDA that Burroughs Wellcome's patents were invalid or were not infringed by the product described in its ANDA. After Barr informed Burroughs Wellcome of its action, Burroughs Wellcome commenced this case for patent infringement against Barr on May 14, 1991, alleging technical infringement of its patents under 35 U.S.C. Sec. 271(e)(2)(A) (1988).

Barr filed a counterclaim under 35 U.S.C. Sec. 256 (1988) seeking correction of the patents to list Broder and Mitsuya as coinventors. Barr admitted that its AZT product would infringe the patents, but contended that it did not because Barr had obtained a license to manufacture and sell AZT from the government, which should be deemed the owner of the interest of coinventors Broder and Mitsuya in the AZT patents. Burroughs Wellcome denied that Broder and Mitsuya were coinventors and also responded that the assertion of any rights of Broder, Mitsuya, or the government in the patents was barred by laches, estoppel, and waiver.

Thereafter, Novopharm, Ltd. filed an ANDA of its own, seeking approval to manufacture and market its generic version of AZT. Burroughs Wellcome filed infringement suits against Novopharm, Ltd. and its American subsidiary Novopharm, Inc., which were consolidated with the suit against Barr. ⁵ Like Barr, Novopharm, Ltd. admitted that its AZT product would infringe the claims of the six patents, but for the failure of Burroughs Wellcome to name the NIH scientists as coinventors of the subject matter of the patents. Although Novopharm, Inc. agreed to be bound by any injunction issued against its parent, it argued that it had not infringed the patents because it had not filed an ANDA and had no AZT product of its own. ⁶ Novopharm contended that Broder and Mitsuya should have been named as inventors on five of the patents, and contended that Broder and Yarchoan were coinventors of the '750 patent. It maintained that the patents were invalid because of the alleged nonjoinder, and because Burroughs Wellcome had omitted the coinventors with deceptive intent, the patents were unenforceable for inequitable conduct.

After more than three weeks of trial, while Burroughs Wellcome was still in the process of presenting its case, the district court granted Burroughs Wellcome's motion for judgment as a matter of law against all of the defendants, concluding that the Burroughs Wellcome inventors had conceived of the subject matter of the inventions at some time before February 6, 1985, without the assistance of Broder, Mitsuya, or Yarchoan. The court rejected the arguments of Barr and Novopharm that they should be allowed to present evidence that the Burroughs Wellcome inventors had no reasonable belief that the inventions would actually work--that AZT was in fact active against HIV--until they were told the results of the NIH testing.

The court also rejected Novopharm's argument that the Burroughs Wellcome inventors had not conceived the invention of the '750 patent--the use of AZT to increase a patient's T-cell count--before July 23, 1985, when Broder reported the results of the NIH patient study to Lehrman. The court concluded that the increase in T-cell count was an obvious phenomenon known to the inventors that would result from administration of AZT. And the district court denied Barr's renewed motion for partial summary judgment on Burroughs Wellcome's equitable...