Apotex Inc. v. Ucb, Inc., 2013–1674.

• Decision Date: 15 August 2014
• Docket Number: No. 2013–1674.,2013–1674.
• Citation: 763 F.3d 1354
• Parties: APOTEX INC., a Canadian Corporation, and Apotex Corp., a Delaware Corporation, Plaintiffs–Appellants, v. UCB, INC., a Delaware Corporation, and Kremers Urban Pharmaceuticals, Inc., a Delaware Corporation, Defendants–Appellees, and Schwarz Pharma, INC., a Delaware Corporation, Paddock Laboratories, Llc, and Perrigo Company, Defendants.
• Court: U.S. Court of Appeals — Federal Circuit

763 F.3d 1354

APOTEX INC., a Canadian Corporation, and Apotex Corp., a Delaware Corporation, Plaintiffs–Appellants,

v. UCB, INC., a Delaware Corporation, and Kremers Urban Pharmaceuticals, Inc., a Delaware Corporation, Defendants–Appellees,andSchwarz Pharma, INC., a Delaware Corporation, Paddock Laboratories, Llc, and Perrigo Company, Defendants.

No. 2013–1674.

United States Court of Appeals, Federal Circuit.

Aug. 15, 2014.

Robert B. Breisblatt, Katten Muchin Rosenman LLP, of Chicago, IL, argued for plaintiffs-appellants.

With him on the brief were Eric C. Cohen, Craig M. Kuchii, and Martin S. Masar III; and Howard R. Rubin and Christopher D. Jackson, of Washington, DC.

Adam Gahtan, White & Case LLP, of New York, N.Y., argued for defendants-appellees. With him on the brief were Dimitrios T. Drivas, Christopher J. Glancy, Amit H. Thakore, And Laura T. Moran.

Before REYNA, WALLACH, and HUGHES, Circuit Judges.

REYNA, Circuit Judge.

Apotex Inc. and Apotex Corp. (collectively, “Apotex”) appeal the decision of the United States District Court for the Southern District of Florida finding that: (1) Apotex's U.S. Patent No. 6,767,556 (“the '556 patent”) is unenforceable due to inequitable conduct; (2) Apotex is judicially estopped from alleging infringement of the '556 patent by the accused products; (3) the asserted claims are indefinite; (4) Apotex disclaimed coverage of the accused products from the scope of the '556 patent's claims; and (5) Apotex is barred by laches from recovering pre-suit damages. Apotex, Inc. v. UCB, Inc., 970 F.Supp.2d 1297 (S.D.Fla.2013). Because the district court did not abuse its discretion in finding inequitable conduct, we affirm the district court's judgment on that basis.

Background

A. The '556 Patent

The '556 patent, titled “Pharmaceutical Compositions Comprising Moexipril Magnesium,” is about ten years old. The patent issued on July 27, 2004, from an application that claims priority to a Canadian application filed on April 5, 2000. Dr. Bernard Charles Sherman, founder and chairman of Apotex, wrote the ' 556 patent application and is its sole inventor. Dr. Sherman leads the development of Apotex's drug formulations and manufacturing processes, and has himself written approximately one hundred patent applications for Apotex. He also directs all litigation for Apotex.

The '556 patent is generally directed to a process for manufacturing moexipril tablets. Moexipril is an angiotensin-converting enzyme (“ACE”) inhibitor used to treat hypertension. Like other ACE inhibitors, Moexipril and its acid addition salts (e.g., moexipril hydrochloride) are susceptible to degradation and instability. To improve stability, the '556 patent discloses a process of making moexipril tablets consisting mostly of moexipril magnesium obtained by reacting moexipril or its acid addition salts with an alkaline magnesium compound. '556 patent col. 2 ll. 53–56. This process is captured in claim 1, the only independent claim of the '556 patent:

1. A process of making a solid pharmaceutical composition comprising moexipril magnesium, said process comprising the step of reacting moexipril or an acid addition salt thereof with an alkaline magnesium compound in a controlled manner in the presence of a sufficient amount of solvent for a predetermined amount of time so as to convert greater than 80% of the moexipril or moexipril acid addition salt to moexipril magnesium.

In the preferred embodiment, moexipril hydrochloride is reacted with magnesium hydroxide or the magnesium salt of a weak acid (e.g., magnesium carbonate) to obtain moexipril magnesium. See id. col. 2 l. 66–col. 3 l. 5. The '556 patent explains that the reaction cannot be accomplished in dry form and must be carried out in the presence of a solvent. Id. col. 2 ll. 38–45. After the reaction has occurred and the solvent has evaporated, the dried material can be compressed into tablets. This process is called “wet granulation” and has been known in the pharmaceutical industry since at least the 1980s.

B. The Prior Art

Several methods for stabilizing ACE inhibitors in general, and moexipril in particular, were known in the prior art before Dr. Sherman filed the '556 patent application. U.S. Patent No. 4,743,450 (“the '450 patent”), which issued in 1998 to Warner–Lambert, discloses a method for stabilizing an ACE inhibitor using alkaline magnesium compounds. '450 patent col. 3 ll. 25–35. The examples in the '450 patent use quinapril as the ACE inhibitor and magnesium carbonate as the alkaline stabilizer. Id. col. 4 l. 58–col. 5 l. 39. As in the '556 patent, wet granulation is the preferred technique for processing tablets according to the '450 patent. Id. col. 4 ll. 26–28.

The two accused products in this case, Univasc and Uniretic, are also prior art to the '556 patent. Both products are moexipril tablets that have been sold in the United States since 1995 and 1997, respectively. Univasc and Uniretic are made in accordance with the process described in the '450 patent, which Defendant UCB, Inc. licenses from Warner–Lambert and has listed in the FDA's Approved Drug Products with Therapeutic Equivalence Evaluations (the “Orange Book”) for both products. The manufacture of Univasc and Uniretic involves the wet granulation of moexipril hydrochloride and magnesium oxide.

The '556 patent discusses the '450 patent and the Univasc product. Specifically, the Background section states that Univasc tablets contain moexipril hydrochloride and magnesium oxide, and are made in accordance with the teachings of the '450 patent. '556 patent col. 2 ll. 16–22. This section also states that the moexipril hydrochloride and alkaline magnesium compound are capable of an acid-base reaction that is difficult to control and results in uncertainty regarding the final composition of the product. Id. col. 2 ll. 31–39.

The '556 patent also discusses a 1990 article by Gu et al.¹ (“the Gu article”), which describes the chemistry involved in stabilizing moexipril. Gu examined the degradation of moexipril after mixing it with alkaline stabilizers in both wet granulation and dry powder mixing (dry granulation), concluding that only wet granulationstabilizes moexipril. The Gu article theorizes that such stabilization results from “neutralization” by the outer surface of the granulated material and also possibly because “a portion of the moexipril hydrochloride was converted to the cation salts via granulation” (i.e., moexipril magnesium was obtained). According to the Background section of the '556 patent, the Gu article teaches that only a portion (if any) of the drug may be converted to moexipril magnesium and that stabilization therefore occurs not because of conversion, but because of the presence of the alkaline stabilizing compound in the final product. '556 patent col. 2 ll. 4–11.

C. The Prosecution History

During prosecution before the U.S. Patent and Trademark Office (“PTO”), the ' 556 patent received three obviousness rejections. First, the Examiner rejected the claims based on the combination of the '450 patent and U.S. Patent No. 4,344,949, which discloses using moexipril tablets to treat hypertension. In response, Dr. Sherman's counsel argued that the cited prior art did not disclose a reaction, but disclosed only combining moexipril hydrochloride and an alkaline magnesium compound. In support, counsel submitted the Product Monograph for Univasc and the portion of the Orange Book that lists Univasc as being covered by the '450 patent, stating:

Applicant herewith submits the Product Monograph for Univasc® (Moexipril Hydrochloride Tablets) wherein the tablets marketed by Schwarz Pharma (as listed in the FDA Orange Book as per the teachings of United States Patent No. 4,743,450) include magnesium oxide; unreacted but combined and functioning as a stabilizer (see first page). The Examiner is referred to those pages. Full reconsideration is respectfully requested.

Joint Appendix (“J.A.”) at 12172 (emphasis added).

The Examiner rejected the claims a second time, but this time based on the combination of the '450 patent and the Gu article. The Examiner observed that it would have been obvious to combine the '450 patent's teaching that ACE inhibitor drugs can be stabilized with an alkaline magnesium compound, with Gu's teaching regarding stabilization of moexipril hydrochloride via wet granulation. In response, counsel again distinguished the prior art on the basis that no reaction was taught:

The Examiner alleges that Gu et al. renders obvious the process of making moexipril magnesium and that Gu discloses a process of making a moexipril alkaline salt by allegedly reactingmoexipril hydrochloride with an alkaline stabilizing agent. Respectfully no such reaction is taught. The components are merely combined and any reaction is insignificant to the desired end result.

Id. at 12223 (emphasis in original). Dr. Sherman's counsel once more referred the Examiner to the Product Monograph for Univasc and the Orange Book and argued that Univasc includes magnesium oxide “unreacted but combined.” Id. at 12224.

Unconvinced, the Examiner issued a third and final rejection on obviousness grounds based on Gu and the '450 patent, finding that the neutralization taught by the cited references constituted a reaction. Dr. Sherman's counsel appealed the final rejection to the PTO's Board of Appeals, arguing that the cited references merely taught combining moexipril hydrochloride with an alkaline stabilizing agent. Id. at 12249. Counsel again referred the Board to the Product Monograph for Univasc and the Orange Book and represented that Univasc, made according to the '450 patent, contained “unreacted but combined” moexipril hydrochloride and magnesium oxide. Id. at 12251.

At the direction of Dr. Sherman, counsel also submitted the expert declaration of Dr. Michael Lipp, who reinforced the representations regarding the prior art. Specifically, Dr. Lipp explained that the function of a...