Unigene Laboratories Inc. v. Apotex Inc.

• Citation: 655 F.3d 1352,99 U.S.P.Q.2d 1858
• Decision Date: 25 August 2011
• Docket Number: No. 2010–1006.,2010–1006.
• Parties: UNIGENE LABORATORIES, INC. and Upsher–Smith Laboratories, Inc., Plaintiffs–Appellees,v.APOTEX, INC. and Apotex Corp., Defendants–Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

655 F.3d 1352

99 U.S.P.Q.2d 1858

UNIGENE LABORATORIES, INC. and Upsher–Smith Laboratories, Inc., Plaintiffs–Appellees,

v.APOTEX, INC. and Apotex Corp., Defendants–Appellants.

No. 2010–1006.

United States Court of Appeals, Federal Circuit.

Aug. 25, 2011.

Bruce C. Haas, Fitzpatrick, Cella, Harper & Scinto, of New York, NY, argued for plaintiffs-appellees. With him on the brief was Steven C. Kline.Manny D. Pokotilow, Caesar, Rivise, Bernstein, Cohen & Pokotilow, Ltd., of Philadelphia, PA, argued for defendants-appellants. With him on the brief were Robert S. Silver, James J. Kozuch and Marc B. Bassler. Of counsel was William Joseph Castillo.Before RADER, Chief Judge, MOORE, and O'MALLEY, Circuit Judges.RADER, Chief Judge.

The United States District Court for the Southern District of New York heard a dispute between Apotex, Inc. and Apotex Corp. (“Apotex”), the appellants, and Unigene Laboratories, Inc. and Upsher–Smith Laboratories, Inc. (collectively, “Unigene”), the appellees, over claim 19 of U.S. Patent No. RE40,812E (“'812E patent”). On cross-motions for summary judgment, the district court granted Unigene's motion that the patent would not have been obvious at the time of invention. Unigene Labs., Inc., v. Apotex, Inc. (“Summary Judgment Opinion”), No. 06–CV–5571, Dkt. No. 175, slip op. at 28–29, 2009 WL 2762706 (S.D.N.Y. Aug. 31, 2009). The trial court also denied Apotex's motion to breach the attorney-client privilege under the crime-fraud exception. Unigene Labs., Inc., v. Apotex, Inc. (“Crime–Fraud Opinion”), No. 06–CV–5571, Dkt. No. 89, slip op. at 18, 2008 WL 356482 (S.D.N.Y. Feb. 4, 2008). In addition, the district court determined that Apotex had waived several counter-claims. Unigene Labs., Inc., v. Apotex, Inc. (“Counterclaim Opinion”), No. 06–CV–5571, 2010 WL 2730471 (S.D.N.Y. July 7, 2010). Because the district court correctly decided all of these motions, this court affirms.

I.

Unigene owns the '812E patent through assignment from inventor Dr. William Stern (“Stern”). The '812E patent is a reissue of U.S. Patent No. 6,440,392 (“'392 patent”). The reissue occurred on June 30, 2009, while this case was before the district court.

Covered by the '812E patent, Fortical® is an Food and Drug Administration (“FDA”) approved pharmaceutical nasal spray with the active ingredient salmon calcitonin (“salmon calcitonin” or “calcitonin”). Unigene filed for FDA approval under 21 U.S.C. § 355(b)(2) and now holds the New Drug Application (“NDA”) for Fortical®. Unigene's NDA claims Miacalcin® as its reference drug, meaning that for FDA approval, Unigene had to prove that Fortical® was a bioequivalent of Miacalcin®. Upsher–Smith is the exclusive patent licensee, with rights to market and sell Fortical® in the United States. Fortical® treats, among other things, postmenopausal osteoporosis.

Fortical® is a bioequivalent of Novartis International AG's Miacalcin® calcitonin nasal spray. Miacalcin® has been marketed since 1995, before the '812E patent's February 4, 2000 priority date. Unigene developed Fortical® as an alternative to Miacalcin®.

Both Miacalcin® and Fortical® use salmon calcitonin at a concentration of 2,200 I.U./mL as their active ingredient. Salmon calcitonin is a natural polypeptide hormone. Calcitonins help regulate calcium ions in the blood and therefore address calcium-related conditions like osteoporosis. To be effective, polypeptides, like salmon calcitonin, must reach the bloodstream. Delivery to the bloodstream, however, is not easy because calcitonins are readily degraded by bodily fluids, are relatively unstable in pharmaceutical compositions, and are poorly absorbed through tissues. Miacalcin® and Fortical® are both nasal sprays.

Fortical® and Miacalcin® have different formulations. For instance, Miacalcin® also contains 8.5 mg of sodium chloride, which acts as a tonicity agent; nitrogen, which acts as a sparging agent; hydrochloric acid, which acts as a pH adjuster; and purified water, which acts as a carrier. Of particular importance to this appeal, Miacalcin® contains 0.10 mg of benzalkonium chloride (“BZK”) which functions as a preservative, absorption enhancer, and surfactant. In contrast, Fortical® contains 20 mM of citric acid, which functions as an absorption enhancer and stabilizer/buffer; polyoxyethylene(2) sorbitan monooleate (“polysorbate 80”), which acts as a surfactant; and phenylethyl alcohol and benzyl alcohol, which serve as preservatives.

Apotex, a Canadian pharmaceutical company, filed Abbreviated New Drug Application (“ANDA”) No. 078200 with the FDA on June 1, 2006. Apotex's ANDA certified under 21 U.S.C. § 355(j)(2)(A)(vii)(IV) (“paragraph IV certification”) intends to make, use, offer to sell, sell, and/or import a generic version of Unigene's Fortical® product before the expiration of the ' 812E patent. Because a paragraph IV certification is an act of infringement under 35 U.S.C. § 271(e)(2), see also Glaxo Group Ltd. v. Apotex, Inc., 376 F.3d 1339, 1351 (Fed.Cir.2004), Unigene lodged a Complaint for infringement in the district court. The only asserted claim in the litigation is claim 19. Claim 19 reads:

A liquid pharmaceutical composition for nasal administration comprising about 2,200 MRC units of salmon calcitonin, about 20 mM citric acid, about 0.2% phenylethyl alcohol, about 0.5% benzyl alcohol, and about 0.1% polyoxyethylene(2) sorbitan monooleate

'812E patent col.18 ll.1–5.

Apotex's original Answer of September 20, 2006 contained numerous affirmative defenses. In addition to allegations of invalidity under 35 U.S.C. §§ 101, 102, 103, and 112, Apotex alleged noninfringement and inequitable conduct. The inequitable conduct assertions cited the failure to disclose an allegedly material piece of prior art and making allegedly misleading statements during patent prosecution. Apotex filed an Amended Answer on May 8, 2007 with two more inequitable conduct allegations, one based on an error in Table 3 of the '392 patent and another based on the failure to disclose a piece of prior art.

In September 2007, during fact discovery, Apotex moved to breach Unigene's attorney-client privilege under the crime-fraud exception. In support of these allegations, Apotex referred to Unigene's alleged failure to disclose U.S. Patent No. 5,912,014 (“'014 patent”) to the U.S. Patent and Trademark Office (“Patent Office”) and to errors in Table 3 of the '392 patent, the same conduct upon which Apotex premised some of its inequitable conduct claims at issue in this appeal.

The prior art '014 patent, with Dr. Stern as a co-inventor, carries the title “Oral Salmon Calcitonin Pharmaceutical Products.” The '014 patent claims enteric-coated solid pharmaceutical formulations of salmon calcitonin, administered orally. The '014 patent discloses a solid oral tablet that the specification touts as a more convenient and comfortable dosage method for patients. The '014 patent teaches an oral formulation that resists degradation during the digestion process to keep the salmon calcitonin active. The '014 patent discloses experiments measuring the effects of citric acid on buffer pH, bioavailability of salmon calcitonin, and absorption of salmon calcitonin in the presence of enhancers. These experiments injected 0.5 mL of liquid formulation containing citric acid, taurodeoxycholic acid, mannitol, and calcitonin into the exposed duodenum of anesthetized rats. The experiments showed an increase in calcitonin's bioavailability when the amount of citric acid was increased and noted that bioavailabilty was “minor” in the presence of enhancers when compared to citric acid alone.

Table 3 of the '392 patent, reproduced below, shows the effect of citric acid concentration on the stability of salmon calcitonin stored at 50°C. Table 3 shows the percentage of calcitonin in formulations with different amounts of citric acid over fifteen days. As published '392 patent, Table 3 had two errors, indicated by the strike-through lines:

+-----------------------------------------------------------------------------+
                ¦Effect of the Concentration of Citric Acid on the Stability of sCT Stored for¦
                ¦Varying Periods at 50°C (Percent sCT Recovered)                              ¦
                +-----------------------------------------------------------------------------+
                

Citric Acid         0 mM     10 mM       25 mM          50 mM       100 mM
                (pH 3.7)
                Days at 50°C
                0                   100      100         100            100         100
                3                   83       94          91             90          87
                6                   53       90          87             83          77
                9                   24       82          78             73          66
                15                  22       74          68             61          52
                

J.A. at 31. The error on the top axis, characterized as clearly typographical in nature by the district court, labels a column “20 mM” instead of “25 mM.” Second, the point of Apotex's allegations, a data point on the table reads 20 percent instead of the 52 percent actually measured. The column containing the second error shows that a salmon calcitonin solution with 100 mM of citric acid degrades over time, as the percentages of recovered calcitonin decrease from 100 percent to 52 percent over time. Whether the 15 day measurement is 20 percent or 52 percent, the recovery is still below the 66 percent recovered after 9 days.

The record indicates that Dr. Stern immediately informed the Patent Office when he became aware of the errors in Table 3. Specifically, Dr. Stern submitted a declaration on September 7, 2007, explaining an “inadvertent error during automated data analysis.” He explained further that the error did not affect the trend of salmon calcitonin reduction.

The district court declined to find that these errors or non-disclosures were sufficient to pierce the attorney-client privilege. The district court found the '014 patent to be either immaterial to the '392 patent or cumulative to the...