Daiichi Pharmaceutical Co., Ltd. v. Apotex, Inc.

• Decision Date: 02 August 2006
• Docket Number: Civ. No. 03-937 (WGB).
• Citation: 441 F.Supp.2d 672
• Parties: DAIICHI PHARMACEUTICAL CO., LTD. and Daiichi Pharmaceutical Corporation, Plaintiffs, v. APOTEX, INC. and Apotex Corp., Defendants.
• Court: U.S. District Court — District of New Jersey

441 F.Supp.2d 672

DAIICHI PHARMACEUTICAL CO., LTD. and Daiichi Pharmaceutical Corporation, Plaintiffs, v. APOTEX, INC. and Apotex Corp., Defendants.

Civ. No. 03-937 (WGB).

United States District Court, D. New Jersey.

August 2, 2006.

COPYRIGHT MATERIAL OMITTED

James P. Flynn, Esq., Epstein, Becker & Green, P.C., Newark, NJ, Brian P. Murphy, Esq., David Leichtman; Esq., Morgan Lewis Bockius LLP, New York City, for Plaintiff.

Stephen Gerber, Esq., Adorno & Yoss, LLP, Wayne, NJ, Robert B. Breisblatt, Esq., Julie A. Katz, Esq., Michael A. Krol, Esq., Welsh & Katz, Ltd., Chicago, IL, Attorneys for Defendant.

OPINION

BASSLER, Senior District Judge.

In this patent infringement action,¹ Plaintiffs, Daiichi Pharmaceutical Co. Ltd., a Japanese drug manufacturer, and its New Jersey-based subsidiary, Daiichi Pharmaceutical Corporation (collectively, "Daiichi") sued Apotex Inc., a Canadian-based generic drug manufacturer, and its subsidiary, Apotex Corp. (collectively, "Apotex"). Daiichi claims that Apotex infringed on Daiichi's Patent No. 5,401,741 ("'741 patent").

The First Amended Complaint alleges willful patent infringement under the Hatch-Waxman Act, 35 U.S.C. § 271(e)(2), and the Declaratory Judgment Act, 28 U.S.C. §§ 2201 and 2202, and 35 U.S.C. § 271(a), (b) and/or©.² Apotex denies Daiichi's allegations and raises the following defenses: (1) patent invalidity; (2) anticipation; (3) obviousness; (4) unenforceability; (5) noninfringement; (6) noninfringement of claim 7; and (7) misuse. Apotex filed a counterclaim against Daiichi.³ Magistrate Judge Arleo severed Counts 7-11 of the counterclaim, which were not directly related to the infringement action and stayed proceedings regarding the severed counts pending trial on the issue of infringement. See September 1, 2004 Discovery and Case Management Order.

For the reasons set forth below, the Court finds that the '741 patent is not invalid or unenforceable. Furthermore, the Court determines that Apotex infringed on Daiichi's '741 patent.

I. FINDINGS OF FACT

These findings of fact constitute the Court's final determination of contested factual issues and therefore supersede any prior recitation of facts contained in Opinions previously entered on the docket. The Court makes these findings of fact pursuant to Fed.R.Civ.P. 52. Before the Court sets forth its findings, it wishes to elaborate on the procedure it utilized to arrive at its factual determinations.

The. Court invited the parties to submit proposed findings of fact and conclusions of law, and responses thereto, after the close of testimony.⁴ The final proposed finding of fact submission was filed February 17, 2006. The Court has carefully reviewed the proposed findings, the documentary evidence and the testimony adduced at trial. The Court, having considered this array of information, sets forth its findings of fact based on its independent review of the evidence and utilizes the parties' proposed findings of fact merely to assist the Court in organizing this information. See 9A Wright & Miller, Federal Practice and Procedure: Civil 2d § 2578 (1995) ("Proposed findings submitted by counsel are no more than informal suggestions for the sole purpose of assisting the court.")

The Court bases its findings of fact on its careful consideration of the testimony adduced at trial and a review of the documentary evidence submitted, as well as the logical inferences to be drawn from them. In evaluating the evidence of record, the Court undertook an individualized assessment of the credibility of each witness and assigned the appropriate weight to the testimony based on the Court's conclusions with respect to credibility.⁵

To the extent that any of the findings of fact might constitute conclusions of law, they are adopted as legal conclusions. Conversely, to the extent that any conclusions of law constitute findings of fact, they are adopted as factual determinations.

A. The Parties

Daiichi Pharmaceutical Co., Ltd. ("DSK") is a Japanese corporation having its principal place of business in Tokyo, Japan. (Trial Tr. Vol. 2, 101:21-24). DSK is the owner of all right, title and interest in the '741 patent, entitled "Topical Preparation for Treating Otopathy," issued on March 28, 1995. The patent was issued in the name of inventors Kiichi Sato, Akira Handa and Takeji Kitahara—all of Japan, who assigned their right to the patent to DSK. (PTX 1 at 2; PTX 4; PTX 5 at 2, patent application number 622, 121; Trial Tr. Vol. 2, 102:8-15; Defendants' Answer to First Amended Complaint dated June 23, 2004 at ¶ 7). DSK is also the holder of New Drug Application ("NDA") No. 20-799 for FLOXIN® Otic (Ofloxacin Otic Solution, 0.3%), which was approved by the U.S. Food and Drug Administration ("FDA") on December 16, 1997. (PTX 31 at DPC-04 00007; PTX 32 at DPC-03 01363; Defendants' Answer to First Amended Complaint dated June 23, 2004 at ¶ 9).

Daiichi Pharmaceutical Corporation ("DPC") is a Delaware corporation with its principal place Of business in Montvale, New Jersey and a wholly owned subsidiary of DSK. (Trial Tr. Vol. 2, 101:25-102:4). DPC is the sales and marketing arm of DSK in the United States (Trial Tr. Kane, Vol. 8, 31:9-13). DPC has been and remains the agent of DSK for the filing and regulatory review of NDA No. 20-799 and has an exclusive license to market and sell FLOXIN® Otic in the United States and Puerto Rico (PTX 31 at DPC04 00007; PTX 32 at DPC-03 01363; Trial Tr. Kane, Vol. 8, 45:23-46:3).

The approved treatment indications for FLOXIN® Otic medicine are i) Otitis Externa in adults and pediatric patients, one year and older; ii) Acute Otitis Media in pediatric patients one year and older with tympanostomy tubes; and iii) Chronic Suppurative Otitis Media in patients 12 years and older with perforated tympanic membranes, caused by the designated microorganims. (PTX 7C at 2, "Indications and Usage"; PTX 31 at DPC-03 10426; PTX 47 at A000087; PTX 78 at 3, "Indications and Usage").

Apotex, Inc. is a privately held Canadian corporation having its principal place of business in Weston, Ontario, Canada. (Trial Tr. Vol. 2 102:5-7). On or about October 25, 2002, through its Novex Pharma division, Apotex filed Abbreviated New Drug Application ("ANDA") No. 76-527 with the U.S. Food and Drug Administration ("FDA") requesting approval to market and sell a generic version of Daiichi's FLOXIN® Otic in the United States for the same FDA-approved treatment indications as FLOXIN® Otic. (PTX 47 at A00001 and 000057; Defendants' Answer to First Amended Complaint dated June 23, 2004 at ¶ 10). Daiichi was given notice by letter of Apotex's ANDA submission pursuant to Section 505(j)(2)(B)(ii) of the Federal Food, Drug and Cosmetic Act (21 CFR § 314.95(c)) requesting marketing approval to manufacture, use or sell Ofloxacin Otic Solution, 0.3% prior to the expiration of the '741 patent. (Defendants' Answer to First Amended Complaint dated June 23, 2004 at ¶ 11). Apotex Corp. has been designated by Apotex, Inc. to act as Apotex Inc.'s sole agent in the U.S. in all matters relating to the ANDA. (PTX 47 at A000057; Trial Tr. Vol. 2, 103:6-12). Apotex's ANDA included a "Paragraph IV Certification," challenging the validity and infringement of Daiichi's '741 patent. (PTX 47 at A000068).⁶

B. '741 Patent

The '741 patent is directed to a method for treating bacterial ear infections by topically administering the antibiotic known as ofloxacin into the ear (PTX 1 at Col. 1, lines 58-64, Col. 5, lines 49-50; Daiichi Pharm. Co., v. Apotex, Inc., 380 F.Supp.2d 478, 481, 488-89 (D.N.J.2005)).⁷ Ofloxacin is the only antimicrobial compound in Daiichi's eardrops; it has no other active ingredients. (Trial Tr. Klein, Vol. 2, 54:13-24).⁸ Daiichi's patented method of treatment covers the use of its FLOXIN® Otic product. (PTX 7C; PTX 78).⁹ The 741 patent claims priority from Japanese Patent Application No. 86378/88, filed in Japan on April 8, 1988. (PTX 1 at 2, left column; PTX 6; PTX 6A; Trial Tr., Vol. 2, 102:16-18).¹⁰

The '741 patent discloses and claims that the topical otic administration of ofloxacin is safe and efficacious to treat bacterial ear infections (PTX 1 at Col. 2, line 30—Col. 6, line 55; Trial Tr. Klein, Vol. 2, 35:13-25; Trial Tr. Dohar, Vol. 7, 27:12-16; Daiichi Pharm. Co., 380 F.Supp.2d at 488). FLOXIN® Otic was the first antibiotic ear drop medicine ever approved by the FDA for treating bacterial ear infections in pediatric and adult patients who have a perforation in their ear drum. (PTX 185 at DSK-06 09300; Trial Tr. Dohar, Vol. 7, 15:1-9; Daiichi Pharm. Co., 380 F.Supp.2d at 482). Prior to the time of the '741 patent, the available ototopical (ear drop) drugs were known to be ototoxic—i.e., they had a propensity to cause (i) hearing impairment, by damaging the cochlea and its hair cells, and/or (ii) balance impairment, by damaging the vestibular system. (Trial Tr. Klein, Vol. 1, 114:8-24; Trial Tr. Hain, Vol. 3, 119:6-120:8; Daiichi Pharm. Co., 380 F.Supp.2d at 481-82).

The risk of ototoxicity can occur when an antibiotic compound is applied directly to the middle ear or where the tympanic membrane has been ruptured. (Trial Tr. Klein, Vol. 1, 115:1-25).¹¹ There are, therefore, at least two situations that present the risk of ototoxicity. First is when a patient suffers from otitis media, a bacterial infection of the middle ear. Second is when a patient suffers from otitis externa, a bacterial infection of the external auditory canal, with a ruptured tympanic membrane.¹² The risk of ototoxicity was present when using ear drops to treat otitis externa because there could be a perforation of the ear drum not appreciated by the physician. (PTX 153 at DSK-06 09694-95—see "Cortisporin® Otic Solution"—"Precautions"; PTX 314 at 7 ("Otitis externa is easily diagnosed by looking into the external ear with an otoscope. The main problem with diagnosis is deciding whether or not there is also an otitis media, as often one cannot...