Glaxo Inc. v. Novopharm Ltd.

• Citation: 931 F. Supp. 1280
• Decision Date: 05 July 1996
• Docket Number: No. 5:94-CV-527-BO(1).,5:94-CV-527-BO(1).
• Parties: GLAXO INC. and Glaxo Group Limited, Plaintiffs, v. NOVOPHARM LIMITED, and Granutec Inc., Defendants-Counterclaim Plaintiffs, v. GLAXO INC. and Glaxo Group Limited, Counterclaim Defendants.
• Court: U.S. District Court — Eastern District of North Carolina

931 F. Supp. 1280

GLAXO INC. and Glaxo Group Limited, Plaintiffs, v. NOVOPHARM LIMITED, and Granutec Inc., Defendants-Counterclaim Plaintiffs, v. GLAXO INC. and Glaxo Group Limited, Counterclaim Defendants.

No. 5:94-CV-527-BO(1).

United States District Court, E.D. North Carolina, Western Division.

July 5, 1996.

COPYRIGHT MATERIAL OMITTED

Joseph W. Eason, Moore & Van Allen, Raleigh, NC, Stephen B. Judlowe, Lynn A. Borchers, Janet B. Linn, Robert G. Gibbons, Hopgood, Calimafde, Kalil & Judlowe, New York City, for Plaintiffs.

John R. Wallace, Kirby, Wallace, Creech, Sarda & Zaytoun, Raleigh, NC, Robert F. Green, Jeffrey S. Ward, Pamela J. Ruschau, Leydig, Voit & Mayer, Chicago, IL, for Defendants.

ORDER

TERRENCE WILLIAM BOYLE, District Judge.

Introduction

Plaintiffs Glaxo Inc. and Glaxo Group Limited (singularly "Glaxo"), located in North Carolina and the United Kingdom, develop and manufacture ethical drugs. Among Glaxo's products is the anti-ulcer drug "Zantac." The active ingredient in Zantac is the aminoalkyl furan derivative ranitidine hydrochloride, the subject of Glaxo's United States Patents Nos. 4,128,658 ("the '658 patent"), 4,521,431 ("the '431 patent"), and 4,672,133 ("the '133 patent").

Salts such as ranitidine hydrochloride may take several different crystalline structures, or polymorphic forms. The chemical composition of a molecule is the same regardless of its polymorphic form, as polymorphism describes merely the manner in which the molecules of the substance are arranged. Yet distinctions among polymorphic forms may affect the physical properties — and legal status — of a molecule. Ranitidine hydrochloride, by any other form, is not the same substance.

At the time Glaxo obtained its first ranitidine hydrochloride patent in 1978, the '658 patent, the molecule was not known to be polymorphic. The '658 patent discloses one method for the production of ranitidine hydrochloride at Example 32. On April 15, 1980, for reasons still unknown, Glaxo scientists conducting the thirteenth run of a slightly modified Example 32 process ("the 3B process")¹ obtained a new polymorphic form of the molecule. Having stumbled upon what was christened "Form 2" ranitidine hydrochloride, Glaxo could no longer replicate the original polymorphic form of the molecule described in the '658 patent, which came to be known as "Form 1." Since April 15, 1980, neither Glaxo nor anyone else has successfully produced Form 1 on a continuous basis by practicing Example 32, which inevitably yields Form 2. Form 2 is the polymorphic used in Glaxo's Zantac.²

Glaxo sought a patent on Form 2 ranitidine hydrochloride, and was awarded two such patents: the '431 patent, dated June 4, 1985, which claims the Form 2 product; and the '133 patent, dated June 9, 1987, a divisional patent of the '431 patent identical to the '431 patent but claiming separately the process for Form 2's manufacture.³ The patent office did not easily grant the Form 2 patents, acceding only after debate with Glaxo regarding the question of whether the company was seeking to double-patent something inherent in or anticipated by the '658 patent. The patent examiner initially rejected the first two claims of Glaxo's Form 2 patent application on grounds of anticipation. As United States patents were typically valid for a period of seventeen years from the date of issue, the '658 patent for ranitidine hydrochloride was set to expire December 5, 1995, while the '431 patent for Form 2 ranitidine hydrochloride was not to expire until 2002.

Defendant Novopharm Limited ("Novopharm") is a Canadian-based manufacturer of generic pharmaceuticals. Novopharm has long desired to enter the ranitidine hydrochloride market. Notwithstanding some of the differences between Form 2 and Form 1, the right to market a Form 1 product is quite valuable. Given the projected seven-year gap between expiration of the "Form 1" and Form 2 patents, Novopharm set its sights on launching a Form 1 product upon expiration of the '658 patent in December, 1995.

A reliable, reproducible process for making Form 1 proved elusive. Ranitidine hydrochloride strongly favors the Form 2 polymorphic configuration, and once Form 2 crystals appear in a laboratory, Form 1 is all but impossible to obtain by the same process. Novopharm thus attacked the validity of Glaxo's Form 2 patents.

Novopharm filed an abbreviated new drug application ("ANDA") with the United States Food and Drug Administration ("FDA") in August, 1991 seeking permission to market Form 2 ranitidine hydrochloride upon expiration of the '658 patent. This action triggered an expected lawsuit for patent infringement by Glaxo, which Novopharm had hoped would be the vehicle for invalidating the Form 2 patents. Novopharm thus admitted infringement, but asserted a host of affirmative defenses. Among the defenses asserted by Novopharm in that trial were related claims that Glaxo's Form 2 patents were anticipated by the '658 patent and that the Form 2 patents were the product of a fraud upon the patent office.⁴

On September 17, 1993, this Court upheld the Form 2 patents against Novopharm's challenge and entered judgment for Glaxo. The Court of Appeals for the Federal Circuit affirmed this Court's judgment, and the Supreme Court denied Novopharm's application for writ of certiorari. Glaxo v. Novopharm ("Glaxo I"), 830 F.Supp. 871, 29 U.S.P.Q.2d 1126 (E.D.N.C.1993), aff'd, 52 F.3d 1043, 34 U.S.P.Q.2d 1565 (Fed.Cir.), cert. denied, ___ U.S. ___, 116 S.Ct. 516, 133 L.Ed.2d 424 (1995).

Thereafter, Novopharm re-examined the possibility of marketing Form 1 ranitidine hydrochloride upon expiration of the '658 patent. A provision of the legislation implementing the Uruguay Round of the General Agreement on Tariffs and Trade Treaty, enacted by Congress in December, 1994, extended the term of the basic ranitidine hydrochloride '658 patent through December 5, 1997. 35 U.S.C. § 154(c).

Novopharm managed to develop a stable, reproducible, commercial process for the manufacture of Form 1 ranitidine hydrochloride.⁵ On April 25, 1994, Novopharm filed an ANDA, No. 74-488, seeking permission to sell anti-ulcer tablets containing Form 1 ranitidine hydrochloride upon expiration of the '658 patent. The FDA has provisionally approved this ANDA and its accompanying Drug Master File⁶ pending resolution of the legal dispute which is the subject of this litigation.

Glaxo brought this action against Novopharm on July 22, 1994, alleging that Novopharm has sought permission to manufacture and market a product which would contain not pure Form 1, but rather a mixture of Form 1 and Form 2, thereby infringing upon Glaxo's Form 2 patents.⁷ Glaxo further accuses Novopharm, in developing the manufacturing process for its ranitidine hydrochloride product, of having misappropriated Glaxo trade secrets by violating a protective order issued by this Court in Glaxo I. Thus, Glaxo's first two claims for relief are for infringement of the '431 and '133 patents, respectively, while the third claim for relief is grounded upon North Carolina's Trade Secrets Protection Act, N.C.Gen.Stat. §§ 66-152 et seq. and a theory of contempt. Novopharm has counter-claimed against Glaxo, accusing the plaintiff of attempting to monopolize the ranitidine hydrochloride market in violation of the Sherman and Clayton Anti-Trust Acts, 15 U.S.C. §§ 2, 15; and the North Carolina Unfair Trade Practices Act, N.C.Gen.Stat. § 75-1.1, et seq.

By stipulation, the parties have agreed to name Granutec, Novopharm's wholly owned subsidiary manufacturing arm, as a defendant.⁸ Jurisdiction is proper under 28 U.S.C. §§ 1331, 1332, 1338, and 1367. Federal patent law governs the patent infringement claims. With regard to the trade secret claims, the Court applies the substantive law of North Carolina.

Novopharm had previously moved for summary judgment against the infringement claims, arguing that Glaxo's position throughout the first trial estops the plaintiff from pressing a contradictory position in the instant trial. While that issue was not suitable for decision on a motion for summary judgment, after trial and the development of a complete body of evidence relating to the issue of estoppel the Court must revisit this defense raised by Novopharm as a legal bar to plaintiff's infringement claims. The Court had also denied a second Novopharm motion for summary judgment on the infringement claims which raised issues now resolved in Novopharm's favor. Following a variety of disputes relating to discovery and exhibits used in the previous trial, the parties filed cross motions for summary judgment on Glaxo's trade secret and protective order violation claim. As briefing on these motions was completed only on the eve of trial, the Court declined to rule on the motions pending resolution at trial.

Trial on Glaxo's claims was held before the Court from April 16 through April 30, 1996. The counterclaims have been stayed on Novopharm's motion pending resolution of the plaintiff's case. At trial, the parties offered expert testimony, much of which is directly contradictory. Where conflicts in the evidence exist, the Court has reached a conclusion based upon its evaluation, as the finder of fact, of the credibility, accuracy, and weight of the testimony of various witnesses and of the exhibits, as well as its interpretation of the data presented.

The Court now enters judgment for Novopharm on all of Glaxo's claims.

I. The Infringement Claims

A.

"A finding of literal infringement requires that the asserted claims, as properly construed, read on the accused product. The patentee has the burden of proving infringement by a preponderance of the evidence." Morton Intern., Inc. v. Cardinal Chemical Co., 5 F.3d 1464, 1468, 28 U.S.P.Q.2d 1190 (Fed.Cir.1993) (citations omitted); Conroy v. Reebok Int'l, Ltd., 14 F.3d 1570, 1572, 29 U.S.P.Q.2d 1373 (Fed.Cir.1994).

These principles do not change when the patent at issue claims a...