Some history; in short, the patented olanzapine avoids side effects of similar prior-art compounds.

 A Lilly research chemist first synthesized olanzapine in the United Kingdom in 1982. Lilly filed the ’382 patent application on May 22, 1992. The patent issued on July 20, 1993. The United States Food and Drug Administration (FDA) approved olanzapine, sold by Lilly under the trademark Zyprexa®, in late 1996. By filing an ANDA, the defendants stipulate to infringement if the ’382 patent is valid and enforceable.

Before discovery of olanzapine, Lilly discovered other drugs in the same family of compounds (thienobenzodiazepines), namely clozapine, flumezapine, ethyl flumezapine and ethyl olanzapine (a.k.a. Compound ‘222). These compounds share a common structural nucleus as thienobenzodiazepines, namely a piperazine ring (R), a benzene ring (R1), and a thiophene ring (R2). Lilly used clozapine to treat some forms of schizophrenia in the late ‘60s and early ‘70s. Clozapine was thus the first “atypical” antipsychotic drug. Structurally, olanzapine differs from clozapine in that olanzapine has a methyl-substituted thiophene ring in place of the benzene ring in clozapine. Olanzapine also has hydrogen in place of the chlorine on its benzene ring.

Despite its advantages, researchers discovered in 1975 that clozapine caused an often fatal blood disorder (agranulocytosis) in one percent of patients. For that reason, Lilly withdrew clozapine from the market. Id. Nevertheless, after a general failure to replace clozapine, reflected by many documented reports of promising compounds that failed either for lack of efficacy or toxic side-effects, the FDA, in late 1989, approved clozapine with careful blood-monitoring.

Until discovery of olanzapine, researchers attributed the efficacy of clozapine and typical antipsychotics to their “neuroleptic substituent”—an electron-withdrawing group considered important to the antipsychotic activity of the compounds. Id. Halogen – a fluorine (F) or chlorine (Cl) atom – is such an electron withdrawing group. Olanzapine does not have a halogen atom, i.e. a fluorine (F) or chlorine (Cl) atom. Instead, it has a hydrogen atom (H), which is not an electron withdrawing (or electronegative) group.

The prior art to olanzapine includes ethyl flumezapine and flumezapine, both disclosed in U.S. Patent No. 4,115,574 (’574 patent) that issued in 1978. The prior art also includes ethyl olanzapine (a.k.a. Compound ‘222). Ethyl flumezapine caused widespread blood problems in dogs. Id. at 41. Flumezapine caused extra-pyramidal symptoms (EPS) and an increase in liver enzymes and a muscle enzyme called creatine phosphokinase (CPK). Ethyl olanzapine caused a significant increase in cholesterol in female beagle dogs. Id. Thus, the prior art to olanzapine had significant detrimental side effects.

Olanzapine differs structurally from flumezapine, by substitution of a hydrogen atom (H) for the fluorine atom (F) in flumezapine at the 7-position of the benzene ring. Olanzapine differs structurally from ethyl flumezapine by replacement of the fluorine atom (F) and ethyl group (CH2CH3) in ethyl flumezapine with a hydrogen atom (H) and methyl group (CH3) respectively. Olanzapine differs structurally from its ethyl analog, Compound ‘222 (ethyl olanzapine), by replacement of the ethyl group (CH2CH3) with a methyl group (CH3) at the 2-position of the thiophene ring.

There was a primary prior art reference relied upon in pinning hopes of marketing a generic given patent invalidity. That relied-upon published reference, authored by Chakrabarti, the '382 inventor, identified millions of compounds, none quite on-point. The defendants had cited two case law precedents, Petering & Schaumann. The courts saw the difference between this and those two previous cases, where specific compounds in the same families had been identified, whereas, in this case, Chakrabarti was more of a shot in the dark. Thus, the CAFC agreed with the trial court that "generic anticipation" is no anticipation at all.

The primary reference the defendants cited for anticipation of these claims is an article entitled “4-Piperazinyl-10H-thieno[2,3-b][1,5]benzodiazepines as Potential Neuroleptics” from the Journal of Medicinal Chemistry in 1980 (Chakrabarti 1980a). Jiban K. Chakrabarti, Linda Horsman, et al., 4-Piperazinyl-10H-thieno[2,3-b][1,5]benzodiazepines as Potential Neuroleptics, 23 J. Med. Chem. 8 (1980).

Anticipation is a question of fact, including whether or not an element is inherent in the prior art. See In re Schreiber, 128 F.3d 1473, 1477 (Fed. Cir. 1997). Therefore, this court reviews a finding of anticipation under the clearly erroneous standard. Atlas Powder Co. v. lreco, Inc., 190 F.3d 1342, 1346 (Fed. Cir. 1999). To anticipate, a prior art reference must place the inventive compound or composition in the possession of the public. In re Brown, 329 F.2d 1006, 1011 (C.C.P.A. 1964). Thus, the prior art reference must disclose each and every feature of the claimed invention, either explicitly or inherently. Glaxo Inc. v. Novopharm Ltd., 52 F.3d 1043, 1047 (Fed. Cir. 1995).

Pointing to In re Petering, 301 F.2d 676 (C.C.P.A. 1962) and In re Schaumann, 572 F.2d 312 (C.C.P.A. 1987), IVAX asserts that Chakrabarti 1980a anticipated claim 1 of the ’382 patent because it identified compounds from the same family of compounds (thienobenzodiazepines). Indeed, in Petering, the Board of Patent Appeals affirmed the examiner’s rejection of claims 1, 2, 4, 5, 7, and 10-12 of the patent applicant’s application on “isoalloxazines.” 301 F.2d at 677. However, in contrast to this case, the prior art in Petering did more than make a broad generic disclosure. In Petering, the prior art disclosed a limited number of specific preferences from a specifically defined group of isoalloxazines. Id. As a result, Petering actually disclosed to one skilled in the art a limited class of only “some 20 compounds,” including “6, 7-dimethyl-9-(B-monohydroxyethyl)-isoalloxazine.” Schaumann, 572 F.2d 315 (citing Petering, 301 F.2d at 682).

Similarly, the prior art in Schaumann disclosed 14 compounds, later further narrowed to 7, considering express preferences. Additionally, the structural formula of this prior art contained but a single variable. 572 F.2d at 314. Thus, in Schaumann, the prior art patent embraced a very limited number of closely related compounds and specifically described the claimed compound. 572 F.2d at 316. Thus, unlike this case, the prior art in both Petering and Schaumann expressly spelled out a definite and limited class of compounds that enabled a person of ordinary skill in the art to at once envisage each member of this limited class. Schaumann, 572 F.2d at 315; Petering, 301 F.2d at 681-82.

By contrast, the number of compounds actually disclosed by Chakrabarti 1980a numbers in the millions (including all proposed alternative substituents). Chakrabarti 1980a examined forty-five specific compounds (as opposed to a genus of compounds) in the 4-piperazinyl-10H-thieno[2,3-b][1,5]benzodiazepine family and fourteen analogous 5-piperazinyl-substituted 4H-thieno[2,3-b][1,4]benzodiazepines, which were created to compare activity. Indeed, Chakrabarti 1980a listed several preferred compounds and substituents, none of which resemble olanzapine...

Playing obviousness horseshoes with Chakrabarti didn't fly either, as there was some teaching away, and no motivation towards the patented olanzapine.

This court reviews obviousness without deference as a legal conclusion with underlying factual determinations which are reviewed for clear error. Medichem, S.A. v. Rolabo, S.L., 437 F.3d 1157, 1164 (Fed. Cir. 2006). The factual underpinnings are: (1) the scope and content of the prior art, (2) the differences between the prior art and the claimed invention at the time of invention, (3) the level of ordinary skill in the art, and (4) the objective indicia of nonobviousness. See Graham v. John Deere Co., 383 U.S. 1, 17 (1966); Panduit Corp. v. Dennison Mfg., 810 F.2d 1561, 1566-67 (Fed. Cir. 1987). For a chemical compound, a prima facie case of obviousness requires “structural similarity between claimed and prior art subject matter . . . where the prior art gives reason or motivation to make the claimed compositions.” In re Dillon, 919 F.2d 688, 692 (Fed. Cir. 1990) (en banc). “[A] reasonable expectation of success, not absolute predictability” supports a conclusion of obviousness. In re Longi, 759 F.2d 887, 896 (Fed. Cir. 1985).

The prior art references at the time of this invention taught away from using a non-halogenated compound as a substituent in the benzene ring, exactly where olanzapine has a hydrogen atom.

When claimed properties differ from the prior art, those differences, if unexpected and significant, may lead to nonobviousness. In re Mehta, 347 F.2d 859 (C.C.P.A. 1965); In re Grabiak, 769 F.2d 729 (Fed. Cir. 1985). In this case, the trial court noted some structural similarity of olanzapine and the prior art, but also accounted for the unexpected beneficial properties in olanzapine.

Finding in the prior art all the ingredients does not inherently provide the motivation to combine. The CAFC considered this case similar to Yamanouchi Pharm. Co., Ltd. v. Danbury Pharmacal, Inc., 231 F.3d 1339, 1344 (Fed. Cir. 2000).

As taught by Yamanouchi Pharm. Co. and other precedent, mere identification in the prior art of each component of a composition does not show that the combination as a whole lacks the necessary attributes for patentability, i.e. is obvious. In re Kahn, 441 F.3d 977, 986 (Fed. Cir. 2006) (citing In re Rouffet, 149 F.3d 1350, 1355 (Fed. Cir. 1998)). Rather, to establish a prima facie case of obviousness based on a combination of elements in the prior art, the law requires a motivation to select the references and to combine them in the particular claimed manner to reach the claimed invention.

Lilly successfully argued secondary considerations swaying against a finding of obviousness.

Furthermore, Lilly overcame any prima facie case of obviousness. Among other things, Lilly proved extensive secondary considerations to rebut obviousness. The trial court found the evidence clearly established four of the five proffered secondary considerations. Findings of Fact and Conclusions of Law, slip op. at 52-101, 173-87. Lilly established (1) a long-felt and unmet need; (2) failure of others; (3) industry acclaim; and (4) unexpected results. Id. The record shows a long-felt need for a safer, less toxic, and more effective clozapine-like drug; a decade (or more) of failure to find a replacement for clozapine; a reasonable amount of commercial success for olanzapine; and a number of awards for olanzapine as indicators of industry acclaim.

Though there was a long gap between the discovery and clinical trails of olanzapine and the patent, the courts refused a prior art bar, as the trials were private, and were experimental.

The trial court concluded that Lilly’s clinical trials of olanzapine were not a public, but an experimental, use that negated any section 102 bar. Findings of Fact and Conclusions of Law, slip op. at 192-93. Under section 102, a person is entitled to a patent, unless “the invention was . . . in public use . . . in this country, more than one year prior to the date of the application for patent in the United States.” 35 U.S.C. § 102(b) (2000). Public use includes “any [public] use of [the claimed] invention by a person other than the inventor who is under no limitation, restriction or obligation of secrecy to the inventor.” In re Smith, 714 F.2d 1127, 1134 (Fed. Cir. 1983) (citing Egbert v. Lippmann, 104 U.S. 333, 336 (1881)).

In considering whether a particular use was “public” within the meaning of section 102(b), this court considers the policies underlying the bar. Tone Bros., Inc. v. Sysco Corp., 28 F.3d 1192, 1198 (Fed. Cir. 1994), cert. denied, 514 U.S. 1015 (1995). In assessing this case, the trial court found that Lilly personnel conducted the HGAA, HGAB, and HGAC Phase I clinical trials of olanzapine in the Lilly clinic. Findings of Fact and Conclusions of Law, slip op. at 189. In all three stages, Lilly restricted access to the facility and provided full-time security. Id. Lilly closely monitored and confined the movements of the volunteers, who were healthy and not suffering from schizophrenia, for the duration of the study. Id. Visitors to the volunteers did not interrupt the control or confidentiality of the study. Id. Moreover, as the trial court noted, the clinical trials did not use the drugs to treat schizophrenic patients, but merely to test the safety and efficacy of the drug. Findings of Fact and Conclusions of Law, at 190-91.

Beyond this convincing record evidence, the experimental character of these tests negated any statutory bar. Even a use that occurs in the open may not invoke a bar when undertaken to experiment on or with the claimed invention. TP Labs., Inc. v. Prof’l Positioners, Inc., 724 F.2d 965, 971, (Fed. Cir. 1984), cert. denied, 469 U.S. 826 (1984). In the words of the Supreme Court, “[t]he use of an invention by the inventor himself, or of any other person under his direction, by way of experiment, and in order to bring the invention to perfection, has never been regarded as [a public] use.” City of Elizabeth v. Am. Nicholson Pavement Co., 97 U.S. 126, 134 (1877). Several indicia may show the negating experimental character of a use, including (1) the length of the test period, (2) any confidentiality agreement, (3) any records of testing, (4) any monitoring and control of the test results, (5) the number of tests, and (6) the length of the test period in relation to tests of similar inventions. TP Labs., 724 F.2d at 971-72; see also In re Brigance, 792 F.2d 1103, 1108 (Fed. Cir. 1986). In this case, Lilly tailored its tests to their experimental drug safety and efficacy purpose, adequately monitored for results, and maintained confidentiality throughout the duration of the study. The trial court did not err in finding no public use.

The defendants threw in an inequitable conduct charge with several prongs, but the high bar of deceptive intent could not be met.

Thus, the appeals court agreed with the trial court, finding '382 valid and infringed.