Key Pharmaceuticals v. Hercon Laboratories Corp.

• Decision Date: 25 November 1998
• Docket Number: 98-1180,Nos. 98-1067,s. 98-1067
• Citation: 161 F.3d 709,48 USPQ2d 1911
• Parties: KEY PHARMACEUTICALS, Plaintiff-Appellee, v. HERCON LABORATORIES CORPORATION, Defendant-Appellant. Federal Circuit
• Court: U.S. Court of Appeals — Federal Circuit

Page 709

161 F.3d 709

48 U.S.P.Q.2d 1911

KEY PHARMACEUTICALS, Plaintiff-Appellee, v. HERCON LABORATORIES CORPORATION, Defendant-Appellant.

Nos. 98-1067, 98-1180.

United States Court of Appeals,Federal Circuit.

Nov. 25, 1998.

Rehearing Denied Jan. 8, 1999.

John O. Tramontine, Fish & Neave, New York, New York, argued for plaintiff-appellee. With him on the brief were Duane-David Hough, Thomas J. Vetter, and Thomas P. Burke.

Kenneth R. Adamo, Jones, Day, Reavis & Pogue, Cleveland, Ohio, argued for defendant-appellant. With him on the brief were Gregory A. Castanias and Blaney Harper, Washington, DC. Of counsel on the brief were Bruce M. Schloss, Health-chem Corp., New York, New York; Sheldon I. Landsman, Sughrue Mion Zinn Macpeak & Seas, PLLC, Washington, DC; and Jack B. Blumenfeld, Morris, Nichols, Arsht & Tunell, Wilmington, Delaware.

Before MAYER, Chief Judge, PLAGER and CLEVENGER, Circuit Judges.

PLAGER, Circuit Judge.

This is an appeal from a patent infringement action in which Key Pharmaceuticals, Inc. ("Key") charged Hercon Laboratories Corporation ("Hercon") with infringement of its U.S. Patent No. 5,186,938 (" '938 patent" or "the patent"). Hercon, in addition to denying infringement, counterclaimed that the patent is invalid and unenforceable. Following a bench trial, the United States District Court for the District of Delaware concluded that Hercon infringed the patent and that it failed to prove the patent invalid or unenforceable, and entered a final judgment to that effect. See Key Pharm., Inc. v. Hercon Lab. Corp., 981 F.Supp. 299 (D.Del.1997). Hercon appeals the judgment on its invalidity and unenforceability counterclaims. We affirm.

BACKGROUND

Key manufactures and sells a nitroglycerin transdermal patch known as the Nitro-Dur II for treating angina pectoris due to coronary artery disease. The Nitro-Dur II patch consists of an impermeable plastic backing layer to which is laminated an adhesive layer having nitroglycerin dispersed therein. The "drug-in-adhesive" patch is applied to a patient's skin, and is designed to deliver nitroglycerin through the skin over a twenty-four hour period. The Nitro-Dur II is Key's purported commercial embodiment of the '938 patent, entitled "Adhesive Transdermal Dosage Layer."

Hercon is a generic drug manufacturer seeking to manufacture and sell a generic version of the Nitro-Dur II. This dispute arose when Hercon applied for Food and Drug Administration ("FDA") approval of its generic patch. Key sued Hercon, alleging that Hercon had infringed the '938 patent by submitting applications for FDA approval, and seeking to enjoin Hercon from manufacturing and selling its generic patch.

In response, Hercon asserted that its generic patch does not infringe and that the patent is invalid and unenforceable. Key ultimately limited its infringement charge to claim 14 of the '938 patent. Hercon, as part of its invalidity case, argued that claim 14 is anticipated and rendered obvious by, among other things, Japanese Kokai 46959-1983, a prior-art Japanese published patent application (hereafter the " '959 reference" or " '959 Japanese patent application").

Within the context of transdermal patches, the '938 patent, the patent-in-suit, is directed generally to the adhesive layer, namely, an "adhesive transdermal dosage layer" that contains a "pharmaceutically active drug" dispersed in the adhesive layer. '938 patent, col. 3, ll. 39-43. The adhesive layer is placed on a backing or "facing" layer to form a transdermal patch. Id. col. 4, ll. 18-26. The adhesive layer includes, intermixed, an adhesive acrylate polymer, a cross-linking agent, and a pharmaceutically active drug that by itself, or as dissolved in a solvent, acts as a solvent with respect to the adhesive polymer. See id. col. 3, ll. 39-51. The patent teaches that a sufficient amount of drug must be added to the adhesive layer for it to be "pharmaceutically effective." Id. col. 3, ll. 43-48. However, according to the patent, as more solvent-acting drug is added, the adhesive polymer becomes "soft and runny." Id. col. 3, ll. 54-64. To offset this solvent effect Claim 14, the only claim at issue, is a dependent claim, depending on claim 13, which in turn depends on claim 12, an independent claim. Claim 12 specifies an adhesive layer comprising a cross-linked acrylate polymer and a pharmaceutically active drug:

the cross-linking agent is added. See id. col. 3, l. 54, to col. 4, l. 5.

12. An adhesive transdermal layer for sustained release of a pharmaceutically active drug to the skin of a human patient, comprising:

a pharmaceutically active drug-containing essentially planar sheet of an at least partially cross-linked acrylic adhesive, said essentially planar sheet comprising a flexible self-supporting cross-linked acrylate polymer of sufficient adhesivity, durability and strength whereby intimate diffusional contact with skin of the patient is maintained for a period of at least about 24 hours without destruction of the physical integrity thereof, said essentially planar sheet being capable of retaining dispersed therein sufficient pharmaceutically active drug to deliver to the skin a pharmaceutically effective amount of said pharmaceutically active drug over a 24-hour time interval, without dissolution of the at least partially cross-linked acrylic pressure-sensitive adhesive.

Id. col. 12, ll. 5-23 (emphasis added).

Whereas claim 12 is directed to adhesive layers containing "pharmaceutically active drug[s]" generally, claim 13 limits claim 12 by requiring that the "pharmaceutically active drug" be a "vasodilator," and claim 14 in turn limits claim 13 by requiring that the vasodilator be "nitroglycerin." Id. col. 12, ll. 24-28.

At trial, the question of the validity of claim 14 over the '959 reference turned principally on the proper construction of the claim clause "sufficient pharmaceutically active drug [nitroglycerin, in the case of claim 14] to deliver to the skin a pharmaceutically effective amount of said pharmaceutically active drug [nitroglycerin] over a 24-hour time interval." The primary dispute was whether the '959 reference disclosed a transdermal patch capable of delivering such an amount of nitroglycerin. At Hercon's urging at trial, the trial court construed the clause based on the range of nitroglycerin dosages conditionally approved by FDA in 1984, i.e., 2.5 to 15 milligrams per day ("mg/day"), see Key Pharm., 981 F.Supp. at 307-10; the year 1984 relates to the '938 patent in that the patent issued from a series of continuing applications, the first of which was filed in that year. Specifically, the court construed the clause to mean "an amount sufficient to provide a patient with 2.5 to 15 mg of nitroglycerin per day--that is, 2.5 to 15 mg of nitroglycerin, plus an excess amount to ensure that the desired amount is delivered." Id. at 310. Based on this claim construction, and upon rejecting Hercon's other arguments, the court found that Hercon had failed to prove by clear and convincing evidence that the '959 reference anticipates or renders obvious claim 14. See id. at 311-13.

Hercon's unenforceability counterclaim was also based in large part on the '959 reference. During the prosecution that led to the issuance of the '938 patent, Key submitted to the U.S. Patent and Trademark Office ("PTO") only the English-language abstract of the '959 Japanese patent application. Hercon argued that Key committed inequitable conduct by failing to submit the English-language translation of the complete '959 Japanese patent application.

As found by the trial court, the '959 reference discloses a transdermal acrylic adhesive layer, at least partially cross-linked, for administering a drug through the skin. See id. at 311. The abstract of the '959 reference, which was submitted to the PTO, describes an adhesive transdermal formulation containing an adhesive polymer, cross-linking agents, and a solvent drug; the abstract however does not mention any specific drug. The complete '959 Japanese patent application, on the other hand, discloses nitroglycerin as one suitable drug, and provides a specific example, "Example 3," in which 40 milligrams ("mg") of nitroglycerin are contained in a cross-linked acrylic adhesive layer in a 100 square-centimeter ("cm 2") patch.

The trial court found that Hercon failed to establish the threshold levels of materiality and intent required for inequitable conduct Here on appeal Hercon asserts that the trial court erred in not finding the '938 patent invalid or unenforceable based on the '959 reference. Hercon does not challenge the infringement finding or any other aspects of the judgment.

                see Halliburton Co. v. Schlumberger Tech.  Corp., 925 F.2d 1435, 1439, 17 USPQ2d 1834, 1839 (Fed.Cir.1991), and thus determined that "Hercon has not established by clear and convincing evidence that Key's actions constituted inequitable conduct."  Key Pharm., 981 F.Supp. at 317-19.   In reaching this decision, the trial court concluded that "Key's failure to present to the PTO anything more than the abstract[ ] for the ['959 Japanese patent application] does not satisfy the threshold level of materiality required for an inequitable conduct inquiry."  Id. at 317.   With regard to intent, the trial court found that the evidence was not such "from which one can clearly infer a deceitful motive," noting that "Hercon produced no evidence that suggests that [the prosecuting patent attorney] did not believe that he had appropriately brought the ['959 reference] to the attention of the PTO by submitting the abstract[ ]."  Id. at 319
                

DISCUSSION

I.

With regard to validity, Hercon argues that claim 14 of the '938 patent is anticipated or rendered obvious by the '959 reference, and that the trial court's contrary conclusions are in error. Hercon's appeal in this regard hinges largely on claim construction, namely, the proper construction of the clause "sufficient pharmaceutically...