418 F.3d 1326 (Fed. Cir. 2005), 04-1506, Warner-Lambert Co. v. Teva Pharmaceuticals USA, Inc.

Docket Nº:04-1506.
Citation:418 F.3d 1326
Party Name:75 U.S.P.Q.2d 1865 WARNER-LAMBERT COMPANY, Plaintiff-Appellee, and Schwarz Pharma, Inc. and Schwarz Pharma AG, Plaintiffs-Appellees, v. TEVA PHARMACEUTICALS USA, Inc., Defendant-Appellant.
Case Date:August 11, 2005
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit
 
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418 F.3d 1326 (Fed. Cir. 2005)

75 U.S.P.Q.2d 1865

WARNER-LAMBERT COMPANY, Plaintiff-Appellee,

and

Schwarz Pharma, Inc. and Schwarz Pharma AG, Plaintiffs-Appellees,

v.

TEVA PHARMACEUTICALS USA, Inc., Defendant-Appellant.

No. 04-1506.

United States Court of Appeals, Federal Circuit.

Aug. 11, 2005

Page 1327

[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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Joseph M. O'Malley, Jr., Fitzpatrick, Cella, Harper & Scinto, of New York, New York, argued for plaintiff-appellee, Warner-Lambert Company. With him on the brief were Bruce M. Wexler, Herbert W. Rea, Joshua I. Rothman and Andrew M. Grodin.

Brian M. Poissant, Jones Day, of New York, New York, for plaintiffs-appellees, Schwarz Pharma AG, et al. With him on the brief were Francis D. Cerrito and Daniel L. Malone.

Henry C. Dinger, Goodwin Procter LLP, of Boston, Massachusetts, argued for defendant-appellant. With him on the brief were David M. Hashmall, Mark I. Koffsky and Dominique T. Hussey, of New York, New York. Of counsel was Kenneth A. Cohen, of Boston, Massachusetts.

Before SCHALL, LINN, and PROST, Circuit Judges.

SCHALL, Circuit Judge.

Teva Pharmaceuticals USA, Inc. ("Teva") appeals from the final judgment of the United States District Court for the District of New Jersey that (1) U.S. Patent No. 4,743,450 ("the '450 patent") owned by Warner-Lambert Company ("Warner-Lambert") was not invalid by reason of non-enablement; (2) Teva infringes the '450 patent; and (3) the '450 patent is not unenforceable by reason of inequitable conduct. Warner-Lambert Co. v. Teva Pharm. USA, Inc.,

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No. 99-922 (D.N.J. July 15, 2004) (" Final Judgment"); Warner-Lambert Co. v. Teva Pharm. USA, Inc., No. 99-922, 2004 WL 1498162 (D.N.J. June 29, 2004) (" Bench Trial Opinion"); Warner-Lambert Co. v. Teva Pharm. USA, Inc., 289 F.Supp.2d 515 (D.N.J.2003) (" Summary Judgment"). The court granted summary judgment on the enablement and infringement issues. Its ruling on the inequitable conduct issue followed a bench trial. We see no error in the court's ruling that the '450 patent is not unenforceable by reason of inequitable conduct. We conclude, however, that because there are genuine issues of material fact, the court erred in granting summary judgment in favor of Warner-Lambert on the issues of enablement and infringement. We thus affirm-in-part and reverse-in-part and remand the case to the district court for further proceedings.

BACKGROUND

I.

The '450 patent relates to angiotension converting enzyme ("ACE") inhibitors and their methods of manufacture. ACE inhibitors comprise a class of chemical compounds that have antihypertensive properties and are consequently useful in pharmaceuticals aimed at treating hypertension. There are numerous types of ACE inhibitors--such as enalapril, quinapril, and captopril, to name a few--and different hypertension drugs incorporate different ACE inhibitors. The first drug to use an ACE inhibitor reached the market in the early 1980s. It was developed using the ACE inhibitor known as captopril. The drug was expensive, however, and exhibited adverse side effects. Pharmaceutical companies consequently continued searching for other suitable ACE inhibitor formulations that did not have the same side effects as the captopril formulation.

Merck & Co. ("Merck") and Warner-Lambert were two of these companies. Their efforts to develop a suitable hypertension drug using an ACE inhibitor form the backdrop of this case.

A.

Merck directed its research efforts to drug formulations incorporating the ACE inhibitor known as enalapril. In its pure form, enalapril is a stable compound. However, Merck quickly discovered that enalapril becomes unstable when combined with various excipients commonly used in drug formulations. 1 In particular, Merck found that enalapril suffered from two forms of degradation, cyclization and hydrolysis. Although initially unsure of the particular reaction mechanism, the Merck scientists determined that the cyclization was caused by some type of intra-molecular nucleophilic attack, which resulted in the enalapril compound converting into an unusable byproduct known as diketopiperazine. Degradation by hydrolysis occurred when water reacted with the ACE inhibitor's ester side chain.

The Merck formulation team was most concerned with the cyclization problem because, in addition to no team member ever having confronted it prior to working with enalapril, no documentation of the problem could be found in the pertinent literature. In search of a solution to the cyclization problem, Merck's formulation team first turned to pH investigations. 2 This basically

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consisted of adjusting the pH of enalapril in solution and then determining whether there were any corresponding improvements in stability, i.e., whether the amount of degradation by cyclization decreased. The team found that cyclization decreased at higher (more basic) pH levels. For commercial viability, however, the end product had to be in a solid state. When the team tried adding appropriate pH buffers to solid enalapril, they found that the buffers did not have the same stabilizing effect.

Merck's formulation team consequently abandoned the pH studies and undertook the much more time-consuming task of figuring out how to chemically block the cyclization reaction. The team eventually hypothesized that it might be possible to block the reaction by converting enalapril, which is an acid, to its sodium salt. The leader of the team--Dr. Gerald S. Brenner--explained the hypothesis as follows:

Our feeling was that we could inhibit the cyclization by converting OH, which is a fairly good leading group[,] to a much poorer leading group, and that poor leading group would be ONA. In other words, converting enalapril, which is an acid, to its sodium salt. So that was our working hypothesis that we could inhibit cyclization by converting the acid group to an ONA group, a sodium salt.

Bench Trial Opinion, 2004 WL 1498162, at *4. Implementing this idea proved to be both complicated and time consuming, but Merck eventually devised a successful method in which sodium bicarbonate was used to convert enalapril into its sodium salt. As hypothesized, Merck found that the cyclization of enalapril was significantly reduced in its sodium salt form. 3

In total, it took Merck somewhere between three and four years to develop a stable enalapril salt. The stabilized formulation consisted of, among other things, enalapril maleate, sodium bicarbonate, and lactose. Merck obtained approval from the Food and Drug Administration ("FDA") to market this formulation on December 24, 1985. Shortly thereafter, in January of 1986, Merck began selling it as Vasotec TM.

Merck's next decision was whether to seek patent protection for its process or to maintain it as a trade secret. It appeared at this point that all of the ingredients of Vasotec TM were in the public domain. However, Merck concluded that competitors would not be able to figure out the process for making Vasotec TM from its ingredients alone--namely, the process used to stabilize enalapril against cyclization. Merck therefore chose to retain the sodium bicarbonate stabilization process as a trade secret and to forgo patent protection.

B.

Around the same time that Merck was investigating the viability of an enalapril-based drug formulation, Warner-Lambert was investigating drug formulations using the ACE inhibitor known as quinapril. Warner-Lambert's initial experiences with quinapril in many respects paralleled Merck's experiences with enalapril. In particular, the scientists at Warner-Lambert discovered that quinapril suffered from degradation by both cyclization and hydrolysis. The Warner-Lambert team

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also discovered that quinapril suffered from an additional form of oxidative degradation, marked by discoloration of the quinapril. Apparently, over time, a white quinapril tablet would discolor by changing to a pink or purple color. However, as with Merck, the Warner-Lambert scientists were most concerned with figuring out how to minimize the degradation caused by cyclization.

Warner-Lambert's quinapril formulation team, as had Merck's enalapril formulation team, initially looked to pH solutions to the cyclization problem. They did this by dissolving quinapril in solution and then adjusting the pH of the resulting solution to determine if it affected stability. The formulation team discovered that, in solution, cyclization was reduced at higher pH levels. Quinapril, like enalapril, is an acid, and so the team needed to add alkaline excipients in order to reach these higher pH levels. One of the alkaline excipients used was sodium bicarbonate. During this time, the Warner-Lambert scientists were aware of Vasotec TM and had even conducted some pH tests on it. In fact, a Warner-Lambert memorandum dated May 7, 1986, stated that Vasotec TM had a pH of 6.5 in solution and that it was obtained through the inclusion of sodium bicarbonate. However, the Warner-Lambert scientists soon learned the same thing with respect to quinapril as the Merck scientists had learned earlier with respect to enalapril--namely, that while pH adjustments worked to stabilize the ACE inhibitor in solution, the stability did not carry over to the solid form. Therefore, sometime around May of 1986, the Warner-Lambert formulation team abandoned pH adjustment studies and began looking for other solutions to the cyclization stability problem.

This led Warner-Lambert into the second stage of its cyclization investigation. However, unlike the Merck team, the Warner-Lambert team did not open an investigation at this time into the reaction pathway of the cyclization degradation process. Instead, the...

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