By Donald Zuhn —

The Federal Circuit today affirmed a finding on summary judgment by the District Court for the Northern District of California that U.S. Patent No. 5,110,493, which is owned by Plaintiff-Appellee Roche Palo Alto LLC, is valid and infringed by Defendants-Appellants Apotex, Inc. and Apotex Corp. (Apotex).  In affirming the District Court’s determination of validity and infringement, the Federal Circuit concluded that the lower court did not err in holding that the reverse doctrine of equivalents is inapplicable or that Apotex’s defenses of invalidity and unenforceability were barred by claim preclusion.

The ‘493 patent is directed to a drug formulation for treating eye inflammation that contains (1) a non-steroidal anti-inflammatory drug, (2) a quaternary ammonium preservative, and (3) the nonionic surfactant octoxynol 40.  Claim 1 of the ‘493 patent recites:

Claim 7, which depends from claim 1, adds 0.79% sodium chloride to the formulation.

Roche’s predecessor (Syntex (U.S.A.) LCC) marketed a drug formulation containing 0.5% of the non-steroidal anti-inflammatory drug ketorolac tromethamine (KT), 0.01% of the quaternary ammonium preservative benzalkonium chloride (BAC), 0.01% octoxynol 40, and 0.8% NaCl as ACULAR®.  Plaintiff-Appellee Allergan, Inc. currently markets another drug formulation containing 0.4% KT, 0.0063% BAC, 0.004% octoxynol 40, and 0.8% NaCl as ACULAR®LS.

During prosecution of the ‘493 patent, the examiner rejected the claims as being obvious over a number of references.  To overcome the rejection, applicants amended the claims to add the octoxynol 40 limitation, and submitted a declaration stating that a formulation containing octoxynol 40 yielded unexpected results (i.e., that it produced a clear solution).  In view of the amendment and declaration, the examiner allowed the claims.

Seeking approval to market a generic version of Roche’s ACULAR® formulation, Apotex filed an Abbreviated New Drug Application (ANDA) with the FDA in 2001.  In response, Syntex filed an infringement suit against Apotex in the District Court for the Northern District of California (Syntex I).

In Syntex I, the District Court first construed the term "stabilizing amount" in the octoxynol 40 limitation as being a statement of intended result rather than a claim limitation, since the octoxynol 40 limitation also recites a concentration range.  The District Court then granted Syntex’s motion for partial summary judgment of literal infringement, and following a bench trial, determined that the ‘493 patent is valid and enforceable.

On appeal, the Federal Circuit affirmed the District Court’s claim construction and finding of no inequitable conduct, but reversed its determination of nonobviousness (Syntex II).  On remand, the District Court again found the ‘493 patent to be valid as nonobvious (Syntex III), and the Federal Circuit affirmed without opinion.  One day after the Federal Circuit affirmed, the Supreme Court issued its decision in KSR Int’l Co. v. Teleflex Inc.  Apotex’s attempt to secure a rehearing in view of KSR, however, was unsuccessful as the CAFC denied Apotex’s motion for a recall and stay of the CAFC’s affirmance.

In 2005, Apotex filed a second ANDA with the FDA, this time seeking approval to market a generic version of Roche’s ACULAR®LS formulation.  In response, Roche filed an infringement suit against Apotex, once again in the Northern District of California.

At trial, Roche filed a motion for summary judgment that Apotex’s new formulation infringes the ‘493 patent, and that Apotex’s defenses of validity and unenforceability should be barred under the doctrines of issue preclusion and claim preclusion.  Apotex argued that its new formulation should escape infringement under the reverse doctrine of equivalents, and that the doctrines of issue preclusion and claim preclusion were inapplicable as a result of a change in the law (i.e., the intervening KSR decision).

The District Court granted Roche’s summary judgment motion, and found that Apotex had failed to establish a prima facie case of noninfringement under the reverse doctrine of equivalents.  The Court also determined that Apotex was barred by issue preclusion from asserting its defenses of invalidity (except for obviousness) or unenforceability, since the same assertions had been made in Syntex I.  As for obviousness, the District Court held that Apotex was barred by claim preclusion from asserting this defense.

In the instant appeal, Apotex first argued that the District Court erred in failing to find noninfringement under the reverse doctrine of equivalents.  Noting that "[t]he reverse doctrine of equivalents is rarely applied," and further, that the Federal Circuit had "never affirmed a finding of non-infringement under the reverse doctrine of equivalents," the CAFC described the equitable doctrine as one "designed ‘to prevent unwarranted extension of the claims beyond a fair scope of the patentee’s invention.’"  The doctrine stems from the Supreme Court’s decision in Graver Tank & Mfg. Co. v. Linde Air Prods. Co., 339 U.S. 605 (1950), where the Supreme Court stated (emphasis added):

[W]here a device is so far changed in principle from a patented article that it performs the same or similar function in a substantially different way, but nevertheless falls within the literal words of the claim, the [reverse] doctrine of equivalents may be used to restrict the claim and defeat the patentee’s action for infringement.

At trial, Apotex argued that the "principle" of the claimed formulation of the ‘493 patent is to use a sufficient amount of octoxynol 40 to cause the formation of micelles, which stabilize the drug formulation by preventing interactions between KT and BAC.  In support of its argument, Apotex relied on the declaration of its scientific expert.  Apotex also argued that the concentration of octoxynol 40 in its new formulation was below the threshold needed to form micelles, and that interactions between KT and BAC are instead prevented by NaCl, which acts to ionically shield KT and BAC.  As a result, Apotex contended that its new formulation is stabilized in a "substantially different way" from the claimed formulation of the ‘493 patent.

The Federal Circuit, however, determined that the District Court did not err in finding that Apotex had failed to establish a prima facie case of noninfringement under the reverese doctrine of equivalents.  In particular, the District Court determined that Apotex did not properly establish the "principle" of the claimed formulation because it exclusively relied on its expert declaration instead of the specification, prosecution history, and prior art.  The Federal Circuit noted that "there is no support in the claims or specification for micelle formation or for robust stabilization of the formulation by prevention of KT/BAC interactions," and further, that "there is no indication that the examiner, in allowing the claims, attributed the unexpected results of [octoxynol 40] to its superiority in forming micelles."  Moreover, the CAFC observed that Example 3 of the ‘493 patent discloses a formulation containing 0.004% of octoxynol 40, which is the same concentration of octoxynol 40 as in the ACULAR®LS formulation (and thus, the same concentration as in Apotex’s new formulation).

Apotex next argued that the District Court erred in determining that Apotex’s validity challenges were barred by claim preclusion.  In particular, Apotex asserted that the District Court erred in finding that the instant litigation and Syntex litigation involved the same claim or cause of action.

The Federal Circuit first noted that under its own law, an infringement claim in a second suit is the "same claim" as the infringement claim in an earlier suit if the accused products in the two suits are "essentially the same," and further, that accused products are essentially the same where the differences between the products are merely "colorable" or "unrelated to the limitations in the claim of the patent."  As with its reverse doctrine of equivalents argument, Apotex asserted that its new formulation was not essentially the same as its earlier formulation because the two formulations are stabilized by completely different ingredients and mechanisms.  Apotex also argued that the fact that it had to file separate ANDAs for the two formulations provided additional evidence that the formulations were materially different.

The Federal Circuit, however, once again found no error in the District Court’s analysis.  In particular, the District Court had determined that both of Apotex’s formulations fell within the ranges recited in the asserted claims.  The Federal Circuit stated that "[t]he fact that [Apotex’s two formulations] are stabilized by different mechanisms, even if true, is irrelevant because both formulations are encompassed by the claims of the ‘493 patent," and therefore concluded that "any difference in composition between the two formulations is merely colorable and the two formulations are ‘essentially the same.’"

The Federal Circuit dismissed Apotex’s final argument that claim preclusion should not apply in this case given the change in law following the Supreme Court’s decision in KSR, stating that the District Court "correctly recognized that there is no ‘change of law’ or fairness exception to prevent application of claim preclusion."  The Federal Circuit noted that to hold otherwise would be to nullify the doctrine of res judicata.

Roche Palo Alto LLC v. Apotex, Inc. (Fed. Cir. 2008)
Panel: Chief Judge Michel, Circuit Judge Prost, and District Judge Hochberg
Opinion by Circuit Judge Prost