Medichem, S.A. v. Rolabo, S.L.

• Decision Date: 03 February 2006
• Docket Number: No. 05-1179.,No. 05-1248.,05-1179.,05-1248.
• Citation: 437 F.3d 1157
• Parties: MEDICHEM, S.A., Plaintiff-Appellee, v. ROLABO, S.L., Defendant-Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1157

437 F.3d 1157

MEDICHEM, S.A., Plaintiff-Appellee, v. ROLABO, S.L., Defendant-Appellant.

No. 05-1179.

No. 05-1248.

United States Court of Appeals, Federal Circuit.

February 3, 2006.

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John G. Taylor, Frommer Lawrence & Haug LLP, of New York, New York, argued for plaintiff-appellee. With him on the brief were Barry S. White and James K. Stronski.

Thomas P. Heneghan, Michael Best & Friedrich LLP, of Madison, Wisconsin, argued for defendant-appellant. With him on the brief were Jeffrey S. Ward and Charlene L. Yager.

Before SCHALL, GAJARSA, DYK, Circuit Judges.

GAJARSA, Circuit Judge.

This is the second round of a protracted litigation to establish priority of invention between Stampa et al.'s U.S. Patent No. 6,084,100 ("the '100 patent"), assigned to Medichem, S.A. ("Medichem"), and Jackson's U.S. Patent No. 6,093,827 ("the '827 patent"), assigned to Rolabo, S.L. ("Rolabo"). In the first round appealed to this court, we remanded to the district court, requiring it to establish an interference-in-fact under 35 U.S.C. § 291 before determining priority. Medichem, S.A. v. Rolabo, S.L., 353 F.3d 928 (Fed.Cir.2003) ("Medichem II"). Rolabo now appeals from the judgment on remand, in which the United States District Court for the Southern District of New York found the existence of an interference-in-fact and awarded priority of invention to Medichem. See Medichem, S.A. v. Rolabo, S.L., Memorandum Order, No. 01 Civ. 3087, 2004 WL 2674632 (S.D.N.Y. Nov.22, 2004) ("Medichem III"). For the reasons discussed below, we affirm the judgment of the district court on the proper establishment of the interfering subject matter and on the finding of the existence of an interference-in-fact. We reverse, however, the district court's award of priority to Medichem, based on the insufficiency of the evidence that Medichem introduced at trial to corroborate the testimony of its inventors regarding reduction to practice of the invention.

BACKGROUND

A. The Patents

Medichem and Rolabo are both pharmaceutical manufacturers based in Barcelona, Spain. Rolabo's '827 patent and Medichem's '100 patent both claim a process for making loratadine from two precursor chemicals via a chemical reaction known as the McMurry reaction. Loratadine is the active ingredient in the allergy medication Claritin®. McMurry reactions involve the coupling of two starting materials in the presence of low-valent titanium. In general, McMurry reactions can lead to two types of products, diols and alkenes; loratadine, the desired end product of this reaction, is an alkene. McMurry reactions can be optimized for alkene production by adjusting various reaction parameters, such as the temperature and length of the reaction in this case, and also by adding additional reactants. The only significant difference between the processes claimed by Medichem¹ and Rolabo² is that Medichem's process requires the reaction to be carried out in the presence of a type of chemical known as a tertiary amine.³ In contrast, the Rolabo process permits by not excluding, but does not require, the presence of a tertiary amine. Conceptually, therefore, the Medichem invention, which requires a tertiary amine, is a species within the genus of the Rolabo invention.

B. Proceedings to Date

Medichem brought an action under 35 U.S.C. § 291, alleging an interference-in-fact between the '100 and '827 patents, claiming priority of invention, and seeking invalidation of Rolabo's patent under 35 U.S.C. § 102(g). Transcript of Verdict at 653-67, Medichem, S.A. v. Rolabo, S.L., No. 01 Civ. 03087, 2002 U.S. Dist. LEXIS 27086 (S.D.N.Y May 8, 2002) ("Medichem I"). Because Rolabo was the party with the earlier effective filing date, Medichem sought to establish priority by proving an actual reduction to practice that was even earlier.⁴ After a bench trial, the district court found that there was no interference-in-fact between the claimed inventions, but it nonetheless awarded priority to Medichem. Id.

On appeal, this court vacated the priority holding, opining that because the existence of an interference-in-fact is a jurisdictional requirement under 35 U.S.C. § 291, it was therefore a precondition to the district court's consideration of the priority issue. Medichem II, 353 F.3d at 935-36. We explained that the first step in an interference analysis is for the court to determine whether an interference exists under 35 U.S.C. § 291 by asking whether the "patents . . . have the same or substantially the same subject matter in similar form as that required by the PTO pursuant to 35 U.S.C. § 135." Id. at 934 (internal quotations omitted). In order to make this determination, we use the "two-way" test which states that two patents interfere only if (1) invention A either anticipates or renders obvious invention B, where Party A's claimed invention is presumed to be prior art vis-à-vis Party B and (2) vice versa. Id. (citing Eli Lilly & Co. v. Bd. of Regents of the Univ. of Wash., 334 F.3d 1264, 1268 (Fed.Cir.2003)).

In Medichem II, we held that Medichem's claims to the "species" would clearly anticipate Rolabo's genus claim if the Medichem patent were assumed to be prior art. Id. at 934-35. Thus, we held that the first prong of the two-way test was clearly satisfied. Id. at 935. However, we remanded to the district court for a determination of whether the second prong was also satisfied—namely, whether Rolabo's genus claim, if prior art, would either anticipate or render obvious Medichem's species claim. Id. at 935. We explained that "[a]s the '827 patent contains genus claims and the '100 patent contains species claims, an arrangement that assumes that the '827 patent is prior art does not necessarily anticipate or make obvious the narrower claims of the '100 patent." Id.

On remand, the district court held that "assuming arguendo [pursuant to the two-way test] the priority of the '827 patent, claims 1 and 17 of the '827 patent clearly anticipate and render obvious the adding of a tertiary amine, as in the '100 patent." Medichem III, 2004 WL 2674632 at *7. Although the court went on to explain its holding on obviousness grounds, it was silent about the reasons underlying its apparent determination that Rolabo's genus claims would also anticipate Medichem's species claim. Instead, it improperly recharacterized our remand instructions as "reduc[ing] to the question of whether it would be `obvious' to add tertiary amine to a McMurry reaction to make loratadine."⁵ Id. (emphasis added).

The court then correctly stated that:

Determining obviousness requires consideration of two factors: 1) whether the prior art would have suggested to one of ordinary skill in the art that he should carry out the claimed process; and 2) whether the prior art would have also revealed that in carrying out the process, one of ordinary skill would have a reasonable expectation of success.

Id. The district court proceeded to articulate factual bases for its obviousness holding, which included (1) an article that pointed to the use of amines to improve yields in coupling reactions, (2) testimony by Rolabo's expert about additional such prior art, and (3) evidence that such prior art had actually motivated Medichem's inventor's to try adding tertiary amine to the reaction mixture. Medichem III, 2004 WL 2674632 at *7-8.

Having found the two-way test's second prong to be satisfied on both anticipation and obviousness grounds, the district court concluded that the Medichem and Rolabo patents interfered, a finding that gave it jurisdiction over the priority dispute pursuant to 35 U.S.C. § 291. It awarded priority to Medichem, after finding that the invention claimed in the '100 patent was reduced to practice prior to the constructive reduction to practice date of Rolabo's invention. See id. at *10-11 (referring to Medichem I and stating that the court "reinstates and reaffirms its former priority ruling").

In finding reduction to practice, the court neither explicitly discussed the legal requirement that reduction to practice be corroborated by independent evidence, nor made a factual finding of corroboration. However, it dismissed Rolabo's argument that Medichem's inventors were not credible as a result of having fraudulently backdated documents that it had offered to show reduction to practice in 1995. The court thus affirmed its finding in Medichem I that Medichem had provided adequate proof of reduction to practice in 1996. The court did so notwithstanding its previous observation that "the willingness of Medichem to fraudulently backdate [evidence of reduction to practice in 1995], coupled with Medichem's less than punctilious recordkeeping practices . . . does convince the Court that it cannot place the same reliance on plaintiff's testimony and documents as it might otherwise have." Transcript of Verdict at 658, Medichem I. However, the court apparently adhered to its view that Medichem's fraudulent backdating was "chiefly a belated attempt to deal with their noncompliance with [certain] regulatory requirements." Id. The Medichem III court therefore reaffirmed its award of priority to Medichem, and Rolabo appealed on February 9, 2005. This court has jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).

As an aside, we wish to note that in parallel with the district court proceedings under 35 U.S.C. § 291, the Board of Patent Appeals and Interferences ("Board") has been considering essentially the same interference and priority issues pursuant to 35 U.S.C. § 135. See Stampa v. Jackson, 65 U.S.P.Q.2d 1942 (B.P.A.I.2002) (involving an interference between Medichem's then-pending reissue application and both Rolabo's patent and a pending continuation application thereof, giving rise to Patent Interference Nos. 105,069 and 105,212). The Board held that the district court's holding in Medichem I did not bar the Board proceedings on grounds of issue preclusion. See id. at...