United States v. Ciba-Geigy Corp., Civ. A. No. 791-69.

• Decision Date: 11 February 1981
• Docket Number: Civ. A. No. 791-69.
• Citation: 508 F. Supp. 1157
• Parties: UNITED STATES of America, Plaintiff, v. CIBA-GEIGY CORPORATION, Defendant.
• Court: U.S. District Court — District of New Jersey

508 F. Supp. 1157

UNITED STATES of America, Plaintiff, v. CIBA-GEIGY CORPORATION, Defendant.

Civ. A. No. 791-69.

United States District Court, D. New Jersey.

August 7, 1979.

As Corrected November 7, 1979.

Final Judgment February 11, 1981.

Robert J. Del Tufo, U. S. Atty., Newark, N. J. by P. Terry Lubeck, Joseph T. Melillo, Nicholas W. Clark, Asst. U. S. Attys., Intellectual Property Section, Antitrust Div., U. S. Dept. of Justice, Washington, D. C., for plaintiff.

Kenyon & Kenyon, Reilly, Carr & Chapin by Hugh A. Chapin, Paul H. Heller, Arthur D. Gray, James Galbraith, New York City, and Lowenstein, Sandler, Brochin, Kohl & Fisher by Murray J. Laulicht, Newark, N. J., for defendant.

OPINION

MEANOR, District Judge.

This is an action instituted on July 9, 1969 by the United States under section 4 of the Sherman Act, 15 U.S.C. § 4, for injunctive and other appropriate relief to remedy and prevent alleged violations of section 1 of the Act, 15 U.S.C. § 1.

The defendant, Ciba-Geigy, is a New York corporation with its principal offices in Ardsley, N.Y., and the principal offices of its pharmaceutical subsidiary in Summit, N.J.. Defendant was formed in 1970 through the acquisition of CIBA, a Delaware corporation, by Geigy Pharmaceuticals, a New York corporation, following which the name was changed to Ciba-Geigy Corporation.

Pursuant to an order of this court, the trial of this action was bifurcated, the issues of patent validity being separated from the issues of antitrust violation. The antitrust issues were tried to the court from April 29, 1975 to May 22, 1975. I rendered a written opinion on April 15, 1976, reported in 1976-1 Trade Cas. ¶ 60,908. It is important to read that opinion prior to the reading of this opinion for a thorough understanding of the issues.¹

The government alleges that it has standing to challenge the validity of Ciba's U.S. Patent No. 3,163,645 ("645 Patent") which covers hydrochlorothiazide ("HCT") and many derivatives of HCT.² The government, however, is only challenging product claims 1, 2, and 3, and process claims 40 and 41 of the '645 Patent. Of these product claims, claim 3 specifically covers HCT, claim 2 is a subgeneric claim covering HCT and three other derivatives, and claim 1 is a generic claim covering HCT and many of its analogs. Ciba contends that the government only has standing to show that product claim 3 is invalid.

HISTORICAL SETTING

Prior to 1957, Merck, Ciba, and other pharmaceutical companies were engaged in extensive research work to develop an effective oral diuretic. At that time, the most prevalent treatment for edema or hypertension was the injection of organic salts of mercury. Understandably, this was not an acceptable form of treatment for people suffering from long-term asymptomatic hypertension. Patients would not submit to the frequent injection of these salts to treat a disease that caused them no present discomfort. Merck was the first to succeed in discovering such an oral diuretic when, in 1956, it isolated and later patented chlorothiazide (CT). Merck marketed this drug in 1957 under the trade name "Diuril" after obtaining the necessary FDA approval.

The discovery of CT was a major medical breakthrough. It constituted one of the most significant discoveries of this century in the treatment of hypertension and edema. CT was discovered by a scientist at Merck named Fredrick C. Novello, when he reacted 5-chloro-2, 4-disulfamyl aniline (Novello aniline), known to him to have some diuretic properties, with formic acid. (GX 1212; Tr. 1020-21) The resultant product, CT, is described by the following chemical name, 6-chloro-7-sulfamyl-2-H-(1,2,4)-benzothiadiazine-1, 1 dioxide. (GX 1219).³

Novello's discovery of CT was made public in late 1957 via the issuance of Merck's patent covering CT, U.S. Patent No. 2,809,194 (GX 1212) as well as by various speeches and articles (GX 1217, 1218) presented by Dr. Novello and his colleague at Merck, Dr. James Sprague (Tr. 906-11). Following the announcement of CT in 1957, many pharmaceutical companies, including Ciba, undertook to make a product which would be more potent than CT, a pursuit in which Merck had been engaged for over a year (Tr. 1575-76). Between January and March 1958, Drs. George DeStevens and Lincoln Harvey Werner of Ciba discovered hydrochlorothiazide, a product which was 10 times as potent as CT. HCT is the primary focus of the patent aspect of this litigation.

COMPARISON OF THE CHEMICAL STRUCTURES OF HCT AND CT.

HCT is described by the chemical name 6-chloro-7-sulfamyl-3, 4-dihydro-2-H-(1,2,4)-benzothiadiazine-1, 1-dioxide (GX 1220). HCT is neither a homologue nor an isomer of CT (Tr. 132). A comparison of the structures of CT and HCT reveals that HCT has a single bond rather than a double bond between the 3 and 4 positions in the heterocyclic ring (GX 1220).⁴ Whenever a double bond in a compound is eliminated, that bond is deemed to have been saturated. Thus, HCT is the saturated derivative of CT, and, conversely, CT is the unsaturated derivative of HCT.

In the case of HCT, this saturation or elimination of the double bond is caused by the addition of two hydrogen atoms to the molecule (Tr. 1037). Thus, two of the electrons forming the double bond at the 3-4 position are not shared between carbon atoms but instead operate to bond two additional hydrogens to the molecule. It is the addition of the two hydrogens which give HCT its name, i. e., dihydrochlorothiazide, which is commonly shortened to hydrochlorothiazide. The process of adding these two hydrogens to the molecule is referred to as saturation, hydrogenation or reduction.

While saturation might appear to be an insignificant structural change when the two compounds are compared two-dimensionally, saturation is the type of change that can have a substantial effect on a molecule since it alters such things as the shape and basicity of the molecule (Tr. 1311-12).

The government concedes that HCT is new and useful. It contends, however, that HCT is not in compliance with 35 U.S.C. § 103,⁵ the statutory requirement of non-obviousness, on the ground that HCT is structurally obvious in view of the Novello Patent on CT and the Freeman-Wagner article.^5a

The Novello Patent discloses the compound CT and its utility as an orally effective diuretic. It also discloses how to make the compound by reacting the starting material, Novello aniline, with an excess of formic acid. The Novello Patent also discloses and claims thousands of derivatives of CT (Tr. 541). Of these thousands of derivatives, all possess the double bond in the 3-4 position and none discloses or suggests the saturation of this double bond.

The Freeman-Wagner article discloses that if one takes a sulfamyl aniline and reacts it with a reactive derivative of formic acid, the resultant product can be a thiazide. The Freeman-Wagner article also discloses that if one takes a sulfamyl aniline and reacts it with formaldehyde, one can get a dihydrothiazide. The Freeman-Wagner article specifically teaches one to use an excess of formaldehyde. However, in order successfully to make HCT by the formaldehyde method, one must take the Novello aniline and react it with stoichiometric or equimolar amounts of formaldehyde. If an excess of formaldehyde is used, as the Freeman-Wagner article teaches, one will fail to obtain HCT.

Novello was probably the most skilled in the relevant art at the time, and his colleagues at Merck were extensively involved in a pursuit to find an improved analog of CT. While Novello envisioned HCT as a potential solution, it was not accorded a high priority (Tr. 1577-79). When he finally did try to make HCT, he used an excess of formaldehyde as called for in the Freeman-Wagner article and failed. Between March 14, 1956 and September 1958, Novello tried to make HCT on four separate occasions. Each time he used an excess of formaldehyde and each time he failed. In August 1958, Merck found out from a clinician that Ciba had a new product on the market which was 10 times more potent than CT (Tr. 1576-77). Merck was told the product was HCT. It is only then that Novello prepared HCT (Tr. 1587-89). This is noteworthy circumstantial evidence that HCT was not an obvious solution to Merck's quest for an improved analog of CT.

On the other hand, four other parties prepared HCT by reacting the Novello aniline and formaldehyde around the same time Ciba invented HCT. Each of these parties, including Merck, filed patent applications in the Patent Office claiming HCT. The Patent Office declared interference No. 90,020 to determine which of these parties was the first to discover HCT. The other parties were Abbott Laboratories, Schering Corporation, Lovens Kemiski, a Danish company, and Chinoin, a Hungarian company. Notwithstanding the circumstantial evidence suggesting obviousness, there was nothing in the relevant prior art indicating that saturation of CT would improve it. The government's expert, Dr. Burns, and Ciba's expert, Dr. Taylor, both testified that the results of saturation are totally unpredictable (Tr. 1287-98; DX 395, 400-01).

COMPARISON OF PROPERTIES OF HCT AND CT.

As mentioned previously, CT was an important medical breakthrough. It is the first potent, orally effective diuretic agent that is continuously effective in the treatment of all kinds of edema. CT is also effective in the treatment of hypertension, and it potentiates other antihypertensive agents. CT is also an extremely safe drug, even for long-term administration, and incidences of toxic reactions to CT are very rare. (Tr. 161-63; GX 1288 at 32). The major side effects of CT are hypokalemia (potassium loss), hyperuricemia (elevation of blood uric acid and urea), and hyperglycemia (elevation of blood sugar) (Tr. 164-69).

HCT, like CT, is also a very useful diuretic and antihypertensive agent. This is true, not because of any differences between the two drugs, but rather because the drugs...