Federal Circuit Finds Clinical Trials Are Not Public Use Where the Drug Was Not Ready for Patenting at the Time of Use

In In Re Omeprazole Patent Litigation, 536 F.3d 1361 (Fed. Cir. 2008), Astrazenca AB, et al. (Astra) owns U.S. Patent No. 4,786,505 (‘505 patent) and U.S. Patent No. 4,853,230 (‘230 Patent).  The ‘505 patent and the ‘230 patent are directed to omeprazole.  Omeprazole is the active ingredient of Prilosec® and is intended to treat gastrointestinal disorders by inhibiting secretion of gastric acid.  Omeprazole degrades in acid-reacting and neutral media and is also unstable when exposed to moisture and organic solvents.  To overcome the issues facing omeprazole, an enteric coating can be used to cover the drug core to protect omeprazole from gastric acid.  However, enteric coatings contain acidic compounds that will degrade the drug while in storage.  To increase drug stability in storage, the ‘505 and ‘230 Patents add an Alkaline Reacting Compound (“ARC”) to the drug core.

Impax, on Dec. 31, 1999, sought Food & Drug Administration (FDA) approval to sell 10 and 20 mg generic versions of Prilosec®.  Astra filed an infringement suit for the ‘505 and the ‘230 patent under 35 U.S.C. § 271(e)(2)(A), and filed a second action when Impax amended its application to include a 40 mg version.  The FDA granted final approval to Impax in September 2004 to market 10 and 20 mg versions of generic omeprazole, upon which Astra amended its complaint to include damages under 35 U.S.C. §§ 271(a)-(c).

Impax filed a response to Astra’s complaints and asserted counter-claims including fraud and sham litigation, a declaration of unenforceability to the patents, and noninfringement and invalidity as to the claims of the two patents and it additionally demanded a jury trial.  The District Court held a 42-day bench trial after stipulation by Astra to dismiss demand for damages against Impax.  After the trial, but before the court’s decision was issued, both of the patents expired.  However, Astra held a 6 month market exclusivity grant from the FDA after the expiration of the ‘505 and the ‘230 patents.  The District Court held that Astra’s ‘505 and ‘230 patents were valid and were infringed by Impax.

Impax appealed the decision, arguing that the District Court should not have denied Impax’s demand for a jury trial and should not have denied Impax’s motion to dismiss Astra’s claims as moot.  Impax also challenged the sufficiency of evidence for infringement and that the claims of the patent should be invalid under the public use bar set forth in 35 U.S.C. § 102(b).

On appeal, the Federal Circuit agreed with the District Court that, while the ‘505 and the ‘230 Patents expired on April 20, 2007, the District Court retained the authority to enforce Astra’s right to market exclusivity under 35 U.S.C. § 271(e)(4)(A).  Specifically, the Federal Circuit found that the District Court retained jurisdiction under the court’s general equitable authority.

Impax also challenged the District Court’s finding regarding the public use bar of 35 U.S.C. § 102(b).  The ‘505 and ‘230 patent applications were filed on April 20, 1987, making their one year critical date April 20, 1986.  Before the critical date, Astra had ordered four large clinical studies on the safety and effectiveness of its drugs in order to obtain FDA approval.  Impax argued that these clinical studies were a public use of Astra’s claimed formulation for purposes of 35 U.S.C. § 102(b).  The District Court ruled against Impax’s assertions on two grounds: (1) the studies constituted experimental uses and, therefore, not public uses; and (2) the patented drug was not ready for patenting until after completion of the clinical studies.

On appeal, the Federal Circuit found the District Court to be in error regarding the determination that an experimental use exception serves to negate the public-use bar of 35 U.S.C. § 102(b).  Relying upon Cargill, Inc. v. Canbra Foods, Ltd., 476 F.3d 1359, 1371 n.10 (Fed. Cir. 2007); Allen Eng’g Corp. v. Bartell Indus., Inc., 299 F.3d 1336, 1354 (Fed. Cir. 2002); New Railhead Mfg., LLC v. Vermeer Mfg. Co., 298 F.3d 1290, 1299 (Fed. Cir. 2002); EZ Dock, Inc. v. Schafer Sys., Inc., 276 F.3d 1347, 1357 (Fed. Cir. 2002); Zacharin v. United States, 213 F.3d 1366, 1369 (Fed. Cir. 2000); and Baxter Int’l, Inc. v. COBE Labs, Inc., 88 F.3d 1054, 1060 (Fed. Cir. 1996), the Federal Circuit stated that “it is clear from this court’s case law that experimental use cannot negate a public use when it is shown that the invention was reduced to practice before the experimental use.” As such, merely because a use is deemed a clinical trial does not prevent the clinical trial from being a public use.  Instead, the inquiry centers on whether the use occurred after the invention was ready for patenting.

Even though the District Court misapplied the experimental use exception to public use, the Federal Circuit affirmed the District Court’s decision that the claims were not invalid under 35 U.S.C. § 102(b) as they were not ready for patenting.  Relying upon Invitrogen Corp. v. Boicrest Mfg., L.P., 424 F.3d 1374, 1380 (Fed. Cir. 2005) and Pfaff v. Wells Electronics, Inc., 525 U.S. 52, 67 (1998), there was insufficient evidence that the patented formulation was not ready for patenting until after completion of the clinical studies.  The Federal Circuit noted that, in Pfaff, the Supreme Court detailed two ways to show that an invention was ready for patenting before the critical date for purposes of 35 U.S.C. § 102(b):  (1) proving reduction to practice before the critical date; or (2) proving that the inventor had prepared drawings or descriptions prior to the critical date that were sufficient for a person skilled in the art to practice the invention.

Citing z4 Techs., Inc. v. Microsoft Corp., 507 F.3d 1340, 1352 (Fed. Cir. 2007), the Federal Circuit noted that there needs to be evidence that, in addition to actually building the invention meeting all the claimed limitations, but also evidence that the inventors “determined that the invention would work for its intended purpose.”

In applying the test for actual reduction to practice for purposes of 35 U.S.C. § 102(b), the Federal Circuit rejected Impax’s challenge of the District Court’s finding with the assertion that the use of the formulation used in Phase III trials shows that Astra’s scientists had conceived and produced the formulation.  Specifically, the Federal Circuit stated that “[i]t is not disputed that the Phase III formulation had been produced before clinical trials.  The existence of the formulation, however, does not establish that the Astra scientists had determined that the invention would work for its intended purpose.”  Id at 20.

Impax went on to argue that the Astra scientists knew in 1979, the year of the first patent application, that omeprazole could be safe and effective for treatment purposes.  However, the Federal Circuit found no clear error with the District Court’s finding since “Impax’s argument misses the point…Impax has not demonstrated that, without conducting the Phase III clinical tests, the inventors knew that…it would be effective as a treatment for gastrointestinal disease.”   As such, the Federal Circuit affirmed the District Court’s finding that the claims were valid as there was insufficient evidence that the inventors appreciated that the drug formulation would work for its intended purpose during the clinical trials.

The Federal Circuit also rejected Apotex’s arguments that the ‘505 and ‘230 Patents claims would be anticipated under 35 U.S.C. § 102 and/or obvious under 35 U.S.C. § 103 in light of fifteen other prior art publications.  Specifically, the Federal Circuit found that the primary references applied for anticipation purposes for the ‘230 patent, U.S. Patent No. 2,991,226 (“the ’226 patent”), U.S. Patent No. 4,470,980 (“the ’980 patent”), and European Patent Application No. EP 122,815 A1 (“the ’815 European application”), lacked an “acid labile pharmaceutically active substance” as in the claimed invention and affirmed the District Court’s finding that the claims in the ‘230 patent were not anticipated by these primary references.

Further, the Federal Circuit affirmed the District Court’s decision that the claimed invention of the ‘230 and ‘505 Patents was not obvious under 35 U.S.C. § 103 in view of these primary references and various combinations of secondary references.  Specifically, while testimony existed as to references and how one of ordinary skill in the art would have understood the teachings of each, there was sufficient evidence from the testimony that one of ordinary skill in the art would not have combined the references in a manner which read on the claimed invention.  The Federal Circuit also found that two of such were not printed publications since there was insufficient evidence that such publications were available to the public in a manner required for 35 U.S.C. § 102, and thus were not available for purposes of 35 U.S.C. § 103.

In dismissing the challenges brought by Apotex and Impax, the Federal Circuit affirmed the District Court decision that Astra’s patents were enforceable and not invalid and that they were infringed by Apotex and Impax.

Significance to Patent Owners

In Re Omeprazole Patent Litigation demonstrates that the mere designation of a public use as “experimental” does not preclude the use as being invalidating under 35 U.S.C. § 102(b).  The important factor for purposes of 35 U.S.C. § 102(b) is whether the inventors understood that the invention would work for its intended purpose, not the subjective label given to the use.   That being said, In Re Omeprazole Patent Litigation also demonstrates the importance of filing for patent protection before beginning any public demonstration of an invention since such uses will invariably be challenged during litigation as being public, thereby risking the patent becoming invalid as well as charges of inequitable conduct where such uses were not disclosed to the Examiner during prosecution.

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