By Kevin E. Noonan --
The Federal Circuit availed itself of another opportunity to demonstrate that the Supreme Court's recent decision in Teva v. Sandoz may be relevant in cases that are the exception rather than the rule. The Federal Circuit's decision in Cadence Pharmaceuticals Inc. v. Exela Pharmsci Inc. affirmed the District Court's findings of literal infringement, infringement under the doctrine of equivalents, and failure of the defendant Exela Pharmsci to show the claims were invalid by clear and convincing evidence.
At issue were two Cadence Pharmaceuticals patents: U.S. Patent No. 6,028,222 ("the '222 patent) and U.S. Patent No. 6,992,218 (the "'218 patent") which are directed to formulations of acetaminophen (also called paracetamol and exemplified by brands like Tylenol®). As it turns out, formulated in aqueous solution acetaminophen can break down to produce toxic decomposition products. The '222 patent claims formulations that inhibit this decomposition using a buffer and a free-radical capture agent:
1. A stable, liquid formulation consisting essentially of acetaminophen dispersed in an aqueous medium containing a buffering agent and at least one member of the group consisting of a free radical scavenger and a radical antagonist. (emphasis added)
The '218 patent claims a method for producing such formulations:
1. A method for preparing an aqueous solution with an active [principle of phenolic] nature susceptible to oxidation, which is paracetamol, while preserving for a prolonged period, comprising de-oxygenation of the solution by bubbling with at least one inert gas and/or placing under vacuum, until the oxygen content is below 2 ppm, and optionally the aforementioned aqueous solution with an active principle is topped with an inert gas atmosphere heavier than air and placed in a closed container in which the prevailing pressure is 65,000 Pa maximum, and the oxygen content of the aqueous solution is below 2 ppm, and optionally the deoxygenation of the solution is completed by addition of an antioxidant.
Cadence's product is provided as an injectable sold under the name Ofirmev® and Cadence has listed both the '222 and '218 patents in the Orange Book (also known as the FDA's Approved Drug Products with Therapeutic Equivalence Evaluations). Litigation ensued under the Hatch-Waxman statutory scheme when Exela sent a Paragraph IV motion to Cadence asserting that the '222 and '218 patents are invalid and not infringed. The District Court found neither patents invalid but found both were infringed by Exela's generic formulations. These decisions were appealed to the Federal Circuit with regard to the infringement judgments (both literal and under the Doctrine of Equivalents) and the Court's invalidity determinations (except that Exela did not appeal the District Court's finding that the asserted claims of the '222 patent were not infringed.
The Federal Circuit affirmed in an opinion by Judge Linn, joined by Judges Reyna and Wallach. With regard to claim construction, the opinion noted that "the district court's claim constructions were based solely on the intrinsic record" and hence "the Supreme Court's recent decision in Teva does not require us to review the district court's claim construction any differently than under the de novo standard we have long applied," citing Fenner Invs., Ltd. v. Cellco P'ship, 2015 WL 570730 (Fed. Cir. Feb. 12, 2015). Accordingly, the Court then turned to the issues on appeal regarding the '222 patent, which "turned" on claim construction according to the opinion. The disputed term, "buffering agent," was construed by the District Court to mean "[a]n agent that helps the formulation resist change in pH." The Court did not adopt Exela's proposed construction that the term should mean "in an effective concentration to resist material changes in pH" based on an absence in the specification of any basis for this construction. Exela argued that the specification and prosecution history did in fact contain support for this construction, but the Federal Circuit was content to rely on the "plain and ordinary meaning" of the term because there was nothing (in its view) "in the intrinsic record [that] warrant[ed] adding requirements of effective concentration or resistance to material change." With this construction the opinion found substantial evidence that "the sodium ascorbate present in Exela's formulation as an antioxidant met the buffering agent limitation, as correctly construed" and affirmed the judgment of literal infringement of the '222 patent claims.
Regarding the '218 patent, the issue was whether reducing the oxygenation level of the acetaminophen formulation to below 2 ppm before admixture of the drug product was equivalent to reducing the dissolved oxygen levels to below 2 ppm after admixture. Exela also argued that the "vacuum stoppering step" in the claimed method was not optional (and thus the absence of this step in Exela's process avoided application of the doctrine of equivalents). The distinction between deoxygenating before (per Exela's method) or after (per the claimed method) precluded a finding of literal infringement. However, the District Court found no difference in when the formulation was deoxygenated and thus applied the doctrine of equivalents to find infringement. The Federal Circuit found no clear error in this determination, based on expert testimony from Cadence that the timing of the deoxygenation step "would have no impact on the stability of the final product." This conclusion was supported by unchallenged testimony that the final formulation is stable regardless of when the deoxygenation step takes place. The Federal Circuit opinion also agreed with the District Court that finding equivalence in deoxygenating before and after admixture of acetaminophen did not "vitiate" a claim limitation, distinguishing over Exela's citation of the Court's decision in Planet Bingo, LLC v. GameTech International, Inc., 472 F.3d 1338, 1345 (Fed. Cir. 2006). In that case, according to the opinion, the outcome was "substantially different" and that vitiation is equivalent to a determination that "the evidence is such that no reasonable jury could conclude that an element of an accused device is equivalent to an element called for in the claim, or that the theory of equivalence to support the conclusion of infringement otherwise lacks legal sufficiency." More generally, the Federal Circuit set forth its understanding (supported by copious citation) that "vitiation" "is not an exception or threshold determination that forecloses resort to the doctrine of equivalents, but is instead a legal conclusion of a lack of equivalence based on the evidence presented and the theory of equivalence asserted." The Federal Circuit again agreed with the District Court that the phrase on its own terms indicated that the step was optional ("optionally topped with an inert gas . . . and placed in a closed container in which the prevailing pressure is 65,000 Pa maximum"). In addition to the plain meaning, the opinion found support in the specification for the optional nature of this step and rejected Exela's argument that Cadence had disclaimed the optionality of this step during prosecution, saying that the evidence of disavowal was not "clear and unmistakable."
With regard to the '222 patent (and keeping in mind that the District Court decision and briefing before the Federal Circuit occurred before the Supreme Court's Teva decision), it seems likely that Exela would have benefited from independent testing and expert testimony regarding the function of the buffering agent in the formulations disclosed in the '222 patent. In view of the Teva decision it seems equally apparent that accused infringers will avail themselves of this opportunity in future infringement actions. Similarly, with regard to the '218 patent there is no mention in the opinion that the appellate record contained affirmative evidence of a difference in the formulation when deoxygenation was performed before rather than after admixture of acetaminophen in the formulation and thus no basis for either the District Court or the Federal Circuit to rule in Exela's favor.
Finally, the Federal Circuit affirmed the District Court's determination that Exela had not established by clear and convincing evidence that the '218 patent was invalid for obviousness over the '222 patent. This part of the opinion also highlights the importance of the underlying facts supporting an obviousness determination in view of the standards of review (clear error for factual matters and de novo review for the ultimate legal conclusion of obviousness). Exela was also under a heightened burden, according to the Federal Circuit, because the arguments and the art put forward by Exela had been considered by the Examiner during prosecution. Thus, the combination of the statutory presumption of validity, and the additional presumption that "the Patent Office is 'presumed to have properly done its job' when it ultimately allowed the '218 patent" (citing PowerOasis, Inc. v. T-Mobile USA, Inc., 522 F.3d 1299, 1304 (Fed. Cir. 2008), quoting Am. Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F.2d 1350, 1360 (Fed. Cir. 1984) made finding of clear error the only avenue by which Exela could prevail. The evidence was that the teachings of the cited prior art related to degradation by oxidation rather than hydrolysis, as with acetaminophen and Exela did not proffer sufficient evidence to the contrary to amount to clear error in the district court's conclusion.
While not particularly unconventional, this decision highlights a tendency for legal questions (obviousness, claim construction, enablement) to be much more a matter to the underlying facts than had been the case heretofore. As a consequence, Federal Circuit review of these questions may be less frequently de novo and district courts may be entitled to greater deference based on their factual determinations. Which, of course, merely enhances the value of patent practitioners who can adduce the necessary evidence at trial now that it has become evident that they will need to do so.
Cadence Pharmaceuticals Inc. v. Exela Pharmsci Inc. (Fed. Cir. 2015)
Panel: Circuit Judges Reyna, Linn, and Wallach
Opinion by Circuit Judge Linn