By Andrew Williams --
Last Thursday, the Federal Circuit affirmed the decision of the District Court for the District of New Jersey denying a request by Altana Pharma and Wyeth (collectively "Altana") for a preliminary injunction to prevent Teva Pharmaceuticals ("Teva") from marketing a generic version of the antiulcer drug Protonix®.
The active ingredient of Protonix® is the compound pantoprazole, which belongs to a class of compounds known as proton pump inhibitors ("PPI") that are used to treat gastric acid disorders in the stomach. A predecessor company to AstraZeneca began commercializing the first PPI compound, omeprazole, in 1989 under the trade name Prilosec®. After Prilosec®'s success, many drug companies, including Altana's predecessor, began to develop new PPIs to compete with omeprazole. In conjunction with this research, and before the filing of the application that was the subject of this litigation, Altana filed an application that issued as U.S. Patent No. 4,555,518 (the '518 patent). The '518 patent does not disclose pantoprazole and is not related to the patent-at-issue. However, the '518 patent does contain a pharmacology section that compared the effectiveness of eighteen claimed compounds against four prior art compounds, and one of the claimed compounds (compound 12) is structurally very similar to pantoprazole. Altana subsequently filed an application claiming pantoprazole, and this application issued on February 9, 1988 as U.S. Patent 4,758,579 (the '579 patent). The Patent Office also granted a 5-year term extension pursuant to the Hatch-Waxman Act, and thus the '579 patent expires on July 19, 2010.
On or about April 6, 2004, Teva filed an ANDA with the FDA requesting approval to market a generic version of Protonix®. Sun filed similarly directed ANDA applications on or about March 1, 2005 and June 25, 2005. Both Teva and Sun filed Paragraph IV certifications in conjunction with their respective ANDAs, and Altana filed suit against both parties. The District Court consolidated these cases. Altana subsequently filed a motion for preliminary injunction on June 22, 2007, presumably near the expiration of the 30-month stay for FDA approval of Teva's ANDA application. In opposition, both Teva and Sun conceded infringement, but maintained that the '579 patent was invalid because it was obvious in light of the teaching in the following prior art references: (1) Altana's '518 patent, (2) the Sachs reference (3) the Bryson reference, and (4) the patent covering the omeprazole compound. The District Court denied the request for preliminary injunction because the Court found that Teva had demonstrated a substantial question of invalidity and that Altana had not shown that it lacked substantial merit. Specifically, the District Court found that one of skill in the art would have selected compound 12 from the '518 patent as a lead compound for modification, and that the additional references provided both the motivation to modify compound 12, and the teaching that such a substitution was feasible. In addition, the District Court rejected Altana's position that allowing generic entry into the market would cause irreparable harm. Based on these reasons, the District Court denied the motion for preliminary injunction.
The Federal Circuit began its analysis by highlighting that an appellant carries a heavier burden when seeking to reverse the denial of a preliminary injunction motion than when seeking to reverse the grant of a preliminary injunction motion. This is because the movant must show not only that one or more factors relied on by the district court was clearly erroneous, but that the denial of relief amounted to an abuse of the court's discretion. A court examines four factors when determining whether to grant a preliminary injunction:
(2) irreparable harm if an injunction is not granted;
(3) a balance of hardships; and
(4) the impact on the public interest.
Essentially, a movant must establish the existence of both of the first two factors to be entitled to an injunction. Only these two first factors were at issue in the present case
Likelihood of Success on the Merits
At the preliminary injunction stage, an accused infringer must show a substantial question of invalidity. This burden is lower than what is required to prove invalidity at trial. If the accused infringer meets this requirement, the burden shifts to the patentee to show that the defense lacks substantial merit. Altana first argued that the District Court applied an incorrect standard. However, the Federal Circuit quickly dispensed with this argument, explaining why the District Court's standard was consistent with Federal Circuit precedent.
Altana also challenged the District Court's obviousness analysis on the merits. First, Altana argued that the District Court allowed defendants to select compound 12 of the '518 patent as a lead compound when the prior art suggested the availability of numerous other compounds. The general formula of the PPI at issue, as found in the '579 patent, is reproduced below:
The three main structural elements are the benzimidazole ring (left), the methylsulfinyl bridge (middle), and the pyridine ring (right). The issues in this case primarily relate to the R groups located on the pyridine ring. In fact, the only difference between pantoprazole and compound 12 of the '518 application is that pantoprazole has a methoxy group (–OCH3) at the R3 position, while compound 12 has a methyl group (–CH3) in the same position. In other words, the only difference between these two compounds is the substitution of an alkoxy group for an alkyl group. The District Court found that Teva raised a substantial argument that compound 12 was a natural choice for further development, and the Federal Circuit found that there was ample evidence supporting this finding. First, the '518 patent asserted that its compounds, including compound 12, were improvements over the prior art, specficailly omeprazole. In addition, the '518 patent disclosed that compound 12 was one of the more potent of the eighteen compounds provided. Moreover, the District Court considered the opinions of qualified experts, and relied on Teva's expert, Dr. Mitscher, that one of skill in the art would have selected the eighteen exemplary compounds of the '518 patent from which to pursue further development efforts. Finally, the District Court found that compound 12 was a natural choice for further developmental efforts because the '518 patent identified it as one of the more potent disclosed PPI compounds. The Federal Circuit noted that while potency of a compound is not dispostive, it was not unreasonable for the District Court to use this factor to conclude that one skilled in the art would have selected compound 12 from the group for further study. The Federal Circuit noted as apparent support for this proposition that Altana itself had selected compound 12 for further development efforts, but it is hard to see how such an observation does not amount to hindsight reasoning using the disclosure of the '518 patent to justify the obviousness determination.
It is important to keep in mind the procedural posture of this case in determining what precedential value it has. One clear conclusion, however, is that the Federal Circuit rejected Altana's suggestion that the prior art must point to only a single lead compound for further development efforts. Such a restrictive view of the lead compound test, the Court reasoned, would suffer the same fate of the rigidly applied teaching-suggestion-motivation test that was explicitly rejected by the Supreme Court in KSR. The District Court's flexible approach, therefore, concluding that Teva has raised a substantial question that one of skill in the art would have used the more potent compounds of the '518 patent, including compound 12, as a starting point was not clearly erroneous.
Altana also challenged the District Court's findings with respect to the teachings of one of the supporting references, the Bryson article. After focusing on the selection of compound 12 as a lead compound for modification, Teva argued that the Sachs article provided motivation to lower the pKa of a PPI to a value of 4 in order to provide better stability of the compound in the patient's body. Altana did not challenge the determination related to the Sachs article before the Federal Circuit. Teva further argued that the Bryson article taught that a methoxy group at the 3-position of a pyridine ring provides a lower pKa than a methyl group at the same position. The District Court agreed, but in doing so included erroneous statements regarding the pKa values of such methoxy group substitutions. For example, the District Court reported that Bryson stated that a methoxy group would have a pKa of 4, where in reality Bryson disclosed the values of 4.83 and 4.91. And, because the pKa values are measured on a logarithmic scale, even an apparently small difference results in a very substantial mathematical difference. Nevertheless, because Altana did not establish that such an error resulted in an abuse of discretion, the Federal Circuit did not disturb the District Court's decision on this ground. The CAFC found that even though the District Court erred in its representation of the pKa values, the reference to the values correlated with the difference in magnitude of the pKa values of the substituted pyridines described in Bryson. Moreover, the District Court relied on Teva's expert, Dr. Mitscher, who not surprisingly disclosed the correct pKa values. The District Court understood that the obviousness position depended on Byrson's teaching of a way to substantially lower the pKa value of the pyridine ring, and therefore the Court's determination was not an abuse of discretion.
Judge Newman concurred in the decision because of the discretionary weight that must be given to a district court's determination. However, it was her view that the evidence presented to the District Court in this case does not establish invalidity of the patent on pantoprazole. This just highlights the fact that the analysis and outcome of this case might have been different had it resulted from the District Court's determination of obviousness of the patent-at-issue rather than from the denial of a preliminary injunction.
Irreparable Harm
The Federal Circuit also found that there was no error in the District Court's determination that Altana would not suffer irreparable harm without the issuance of a preliminary injunction. Important in this determination were the facts that there was no indication that Teva could not respond in money damages, and that it was unlikely that Altana did not have a business plan to deal with the launch of generic competition. In fact, the District Court found it difficult to accept that Nycomed, who purchased Altana during the pendency of this case, had failed to account for potential generic launches. Altana argued that the District Court dismissed certain harms, such as price erosion, loss of market share, loss of profits, loss of research opportunities, and possible layoffs, as not irreparable. However, the Federal Circuit pointed out that a carful reading of the District Court's entire analysis reveals that the District Court correctly understood that these very factors can, in fact, support a finding of irreparable harm. It is also likely that Federal Circuit's analysis was influenced by the fact that Wyeth launched a generic version of pantoprazole, which is currently being distributed by Prasco, shortly after the denial of the preliminary injunction motion. The Federal Circuit noted that the District Court's determination that Altana's argument that its business would be crushed by the entry of a generic was exaggerated in view of the events subsequent to the expiration of the Hatch-Waxman stay. Of course, just because Wyeth launched its own generic version of pantoprazole does not necessarily mean that its business was not crushed by the denial of the injunction. Still, because the CAFC found that the District Court's determination was not clearly erroneous, the Federal Circuit affirmed.
Panel: Circuit Judges Newman and Gajarsa and District Judge Ward
Opinion by District Judge Ward; concurring opinion by Circuit Judge Newman
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