Based upon "principles of equity," courts readily bifurcate drug patent cases from computer tech, where preliminary injunctions are as rare as hen's teeth. In pharmaceutical cases such as this, direct competitors are almost always involved, with big money at stake for both sides.

The four factors relevant to the district court’s decision to grant or deny a preliminary injunction are “(1) the likelihood of the patentee’s success on the merits; (2) irreparable harm if the injunction is not granted; (3) the balance of hardships between the parties; and (4) the public interest.” Oakley, Inc. v. Sunglass Hut Int’l, 316 F.3d 1331, 1338-39 (Fed. Cir. 2003) (citing Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1350 (Fed. Cir. 2001)).

In this case, Andrx's two-pronged attack lacked sharp tips.

Andrx appeals, arguing (1) that Abbott is collaterally estopped from asserting certain claims in the three patents because of findings of invalidity and unenforceability of the patents in proceedings against other defendants; and (2) that the district court erred in finding that Abbott is likely to succeed in proving infringement with respect to any of the asserted claims of the three patents. Because we find that collateral estoppel does not apply and the district court did not abuse its discretion in finding Abbott is likely to succeed on the merits, we affirm.

Collateral Estoppel

Andrx's collateral estoppel argument failed owing to lack of finality of the other related proceedings. Rare exception didn't apply because the district court's determination of preliminary injunction was not dispositive.

Andrx’s contentions regarding collateral estoppel involve the district court decisions in preliminary injunction proceedings regarding defendants Ranbaxy and Teva and this court’s decision in Teva’s appeal from those proceedings.

When Abbott moved for preliminary injunctions against Teva, Ranbaxy, and Andrx, the district court accepted separate arguments and held separate hearings for each defendant. Abbott presented different infringement contentions specific to the accused product of each defendant and each defendant presented its own and different defenses.

On appeal, Andrx argues that the Supreme Court’s decision in Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313 (1971), requires that Abbott cannot assert patents against one party which have been found to be invalid or unenforceable against another party. In Blonder-Tongue, the Supreme Court permitted accused infringers to plead collateral estoppel, also known as issue preclusion, when facing an infringement claim on a patent already declared invalid in a proceeding against another defendant.

In Blonder-Tongue, the Supreme Court discussed the importance of a final determination on the merits to application of collateral estoppel. The decision was limited to the issue of “permitting a patent holder to sue on his patent after it has once been held invalid following opportunity for full and fair trial.” Blonder-Tongue, 402 U.S. at 330 (emphasis added).

To determine whether findings made during preliminary injunction proceedings may invoke collateral estoppel under Blonder-Tongue we look to the law of the Seventh Circuit. That circuit has clearly held that in “certain rare instances,” a finding need not be part of a final judgment on the merits in order to be preclusive. A.J. Canfield v. Vess Beverages, 859 F.2d 36, 38 (7th Cir. 1988) (“Canfield”); see also Miller Brewing v. Jos. Schlitz Brewing Co., 605 F.2d 990, 996 (7th Cir. 1979).

In “certain rare circumstances,” however, the court held that decisions granting or denying preliminary injunctions may be sufficiently final to be given preclusive effect. Id. The exception to the general rule permits decisions regarding preliminary relief to accord preclusive effect if the decisions are necessarily based upon a determination that constitutes an “insuperable obstacle” to the plaintiff’s success on the merits. Id. (citing Miller, 605 F.2d at 995). Such an insuperable obstacle exists when a prior decision made in connection with a preliminary injunction proceeding “clearly intended to firmly and finally resolve the issue,” rather than “estimate the likelihood of success” of proving that issue.

Applying the principles of Canfield and Miller to the instant appeal, we conclude that the determinations made in proceedings against defendants Teva and Ranbaxy were not “full litigation and decision on the merits for purposes of issue preclusion.” Andrx argues that there has been a final resolution of the limited issue of whether there is a substantial question of invalidity of Abbott’s patents, but Seventh Circuit law does not support this view. A determination that there is merely a likelihood of proving invalidity is a determination made solely in terms of “probabilities, not certainties” and is therefore not “full litigation and decision on the merits for purposes of issue preclusion.”

Infringement Under Doctrine of Equivalents

Andrx makes two arguments as to why it cannot infringe Abbott’s asserted claims in any of the three patents. First, Andrx argues that it cannot infringe the ’718 and ’616 patents because its product does not satisfy the “pharmaceutically acceptable polymer” limitation in the patents either literally or under the doctrine of equivalents. Second, Andrx argues that the district court erred in finding that Abbott showed a likelihood of proving infringement of the ’407 patent because the district court explicitly found that Andrx’s product did not meet one of the pharmacokinetic property requirements recited in the claims.

Turning to the first of these arguments, Andrx asserts that the district court erred in granting a preliminary injunction based on the ’718 and ’616 patents because Abbott did not show that it is likely to succeed in proving infringement of the “pharmaceutically acceptable polymer” claim limitation. Andrx asserts that it cannot infringe literally or under the doctrine of equivalents because its product does not include a “pharmaceutically acceptable polymer” as required by the claims. All of the asserted claims of the ’718 patent—claims 1, 4, and 6—and claim 2 of the ’616 patent contain this limitation.

The “pharmaceutically acceptable polymer” in the ’718 and ’616 patent serves as the release controlling agent for the claimed extended release clarithromycin compositions. ’718 patent, col. 1. l. 67 – col. 2 l. 2. Both sides concede that Andrx’s product does not contain a polymer, but instead uses glyceryl monostearate (“GMS”) as its release controlling ingredient. Abbott therefore does not assert that Andrx infringes the claims of the ’718 and ’616 patents literally, but solely under the doctrine of equivalents. The parties dispute whether GMS is properly referred to as a wax or a fat and whether it can be found to be an equivalent of the claimed polymer.

This led to claim construction tussle over "pharmaceutically acceptable polymer." The district court appeared to apply Markush group limitation to the term based upon specification language, but the CAFC pointed out that Markush grouping is only applicable in claim language; the disclosure doesn't count.

Abbott argues, as it did to the district court, that the district court erred in its claim construction because it relied on “Markush group” language in the specification, i.e., language indicating that the claimed pharmaceutically acceptable polymer is “selected from the group consisting of” the polymers expressly identified in the specification. Given that the specification used the “selected from the group of” language, the district court limited the pharmaceutically acceptable polymers to those listed. Abbott argues that this was erroneous because limiting claim scope based on Markush language only applies when the phrase is used in the claims, not in the written description.

The district court focused on the “selected from the group consisting of” phrase in the specification to hold that there was a Markush group and therefore Abbott was limited to the listed polymers. A Markush group is a form of drafting a claim term that is approved by the PTO to serve a particular purpose when used in a claim—to limit the claim to a list of specified alternatives. Gillette Co. v. Energizer Holdings, Inc., 405 F.3d 1367, 1372 (Fed. Cir. 2005); Manual of Patent Examining Procedure § 803.2 (8th ed. 2001). The term “Markush group” does not have any meaning within the context of a written description of a patent and therefore to the extent the district court relied on the Markush group language to limit its construction to the compounds listed in the written description, it erred.

There was also an inconclusive tiff over the disclosure limiting scope under doctrine of equivalents.

The district court also appears to have grounded its claim construction on the theory that the “pharmaceutically acceptable polymer” is explicitly defined in the written description when it states, “The pharmaceutically acceptable polymer is a water-soluble hydrophilic polymer . . . .” ’718 patent, col. 1 ll. 65-66 (emphasis added). Although a term may have an ordinary meaning to one of ordinary skill in the art, the patentee may “expressly define terms used in the claims.” Phillips 415 F.3d at 1321 (quoting Vitronics, 90 F.3d at 1582. The patentee here states in the written description that “a pharmaceutically acceptable polymer is” a specific subset of polymers. The word “is” may signify that a patentee is serving as its own lexicographer. However, there is significant evidence at this stage of the litigation to believe that the patentee here was not providing a definition of the “pharmaceutically acceptable polymer” claim term in the written description... We therefore conclude that the district court erred at this preliminary stage in limiting the “pharmaceutically acceptable polymer” term to hydrophilic, water-soluble compounds selected from a list given in the written description of the ’718 and ’616 patents.

As to infringement under DOE -

The parties conceded below that there is no literal infringement of the limitation by the GMS ingredient in the Andrx product... On appeal, Andrx argues that GMS cannot be an equivalent of the “pharmaceutically acceptable polymer” term for two reasons: first, because it would violate the specific exclusion principle; and second, because a finding of equivalence would vitiate the claim limitation.

Andrx first contends that permitting its product to infringe would violate the specific exclusion principle. This principle limits what can be claimed under the doctrine of equivalents by mandating that “the concept of equivalency cannot embrace a structure that is specifically excluded from the scope of the claims.” Athletic Alternatives, Inc. v. Prince Mfg. Inc., 73 F.3d 1573, 1582 (Fed. Cir. 1996). According to Andrx, the district court’s claim construction consistently held that the pharmaceutically acceptable polymer excludes other forms of polymers such as hydrophobic or water insoluble substances such as waxes. Therefore, any equivalence that encompasses hydrophobic or water insoluble substances, Andrx argues, would violate the specific exclusion principle. As discussed above, we hold that the district court erred by limiting the scope of pharmaceutically acceptable polymers covered by the claims to hydrophilic or water-soluble substances. Therefore, we need not consider Andrx’s argument that specific exclusion bars the application of the doctrine of equivalents because GMS is a hydrophobic, water-insoluble substance.

The more interesting argument was equivalency in this instance vitiating the claim.

Andrx also argues that permitting its product to infringe the “pharmaceutically acceptable polymer” term under the doctrine of equivalents would vitiate that claim limitation. A finding of equivalence of the Andrx product is erroneous as a matter of law, Andrx contends, because the Andrx product “employs a material[, GMS] that is the exact opposite of the material recited in the claims of the ’718 patent (polymer vs. nonpolymer (or even further, hydrophilic water soluble polymer vs. hydrophobic water insoluble nonpolymer)).” Andrx argues that, regardless of whether GMS meets the test for factual equivalence by performing substantially the same function in substantially the same way to achieve substantially the same result, a finding of equivalence by something that is the opposite of the claimed limitation would essentially read the limitation out of the claim. Andrx also argues that GMS was well known in the prior art, but not claimed by Abbott in its claims. Therefore, Andrx contends, allowing GMS to infringe as an equivalent would seriously undermine the public notice function required by patent claims.

Abbott responds that under either its asserted claim construction or that adopted by the district court, the equivalence of GMS to the claimed “pharmaceutically acceptable polymer” would not vitiate the claim limitation because the district court found that GMS was an equivalent of the polymer limitation under the function-way-result test. Andrx did not appeal the factual equivalence, so Abbott argues that Andrx has no basis for arguing that the claim term is vitiated by a finding of equivalence. Andrx replies that Abbott’s arguments regarding factual equivalence are immaterial to the issue on appeal, whether a water insoluble hydrophobic non-polymeric substance, can be considered insubstantially different from its antithesis, the claimed water soluble hydrophilic polymer.

A claim element is not vitiated merely because it does not literally exist in the accused product—“such an interpretation of the ‘all elements’ rule would swallow the doctrine of equivalents entirely.” Depuy Spine, Inc. v. Medtronic Sofamor Danek, Inc., 469 F.3d 1005, 1018 (Fed. Cir. 2006). Rather,

[a] holding that the doctrine of equivalents cannot be applied to an accused device because it ‘vitiates’ a claim limitation is nothing more than [(1)] a conclusion 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 [(2)] that the theory of equivalence to support the conclusion of infringement otherwise lacks legal sufficiency.

Id. at 1018-19.

Here, Andrx appears to argue the second type of vitiation described by Depuy Spine—that Abbott’s theory as to the “polymer” claim element is legally insufficient to prove equivalence. Specifically, Andrx argues that GMS, a hydrophobic, non-polymeric substance, is the antithesis of the required polymer. See Planet Bingo v. Gametech Int’l, No. 05-1476, slip op. at 13 (Fed. Cir. Dec. 12, 2006) (explaining that a theory of equivalence may be legally insufficient when the accused product contains the antithesis of the claim limitation). Therefore, Abbott’s assertion that it can avoid a finding of vitiation because it showed factual equivalence does not address Andrx’s argument that Abbott’s theory of equivalence is legally insufficient. It also appears that the district court did not consider this aspect of vitiation. Rather, the court addressed only whether GMS could factually be an equivalent of the polymer limitation.

Nevertheless, as discussed above, we hold that the district court erred in construing the “pharmaceutically acceptable polymer” claim term as only covering hydrophilic, water-soluble substances. Because this erroneous construction forms the basis for Andrx’s vitiation arguments that GMS cannot be an equivalent of the required polymer, we reject those arguments.

We are left with the district court finding that GMS could be factually equivalent to the required polymer under its erroneous claim construction—that GMS performs the same function, in the same way, to achieve the same result as the “pharmaceutically acceptable polymer” in the claims. Ranbaxy-Andrx, slip op. at 44. Andrx does not argue in this appeal that the district court erred in this finding of factual equivalence. Although the district court’s equivalence analysis applied an erroneous claim construction, its conclusion regarding equivalence would clearly also apply under a claim construction that was not erroneously narrowed as explained above. Therefore, we affirm the district court’s finding, based on the preliminary record, that Abbott showed a likelihood of success in proving infringement of claims 1, 4, and 6 of the ’718 patent and claim 2 of the ’616 patent under the doctrine of equivalents.

So, having gotten its claim construction wrong made the district court grant of preliminary injunction okay. Andrx had failed to cover its bases in appeal arguments, particularly in failing to argue factual equivalence, and thus lost out.