In re Omeprazole Patent Litigation; Astrazeneca v. Apotex and Impax Laboratories (CAFC 2007-1414, -1416, -1458, -1459)

Patents in suit: 4,786,505 & 4,853,230. This is the "second wave" of a hard-fought litigation. A consolidated appeal.

The district court... held a 42-day bench trial. Following the trial and before the court issued its decision, the patents both expired. Impax filed a motion to dismiss Astra's claims against it as moot because Astra had dismissed its claims for damages against Impax. The district court denied that motion, however, because the FDA had granted Astra a six-month period of market exclusivity following the expiration of the '505 and '230 patents. On May 31, 2007, the district court issued its decision, holding that Astra's patents were valid, enforceable, and infringed by Impax. The court therefore set the effective date of Impax's ANDA to October 20, 2007, the end of Astra's six-month period of market exclusivity.

Section 271(e)(2)(A) makes it an act of infringement to file "an application under section 505(j) of the Federal Food, Drug, and Cosmetic Act or described in section 505(b)(2) of such Act for a drug claimed in a patent or the use of which is claimed in a patent." An application filed under section 505(j) of the Federal Food, Drug, and Cosmetic Act, codified at 21 U.S.C. § 355(j), is known as an Abbreviated New Drug Application ("ANDA"). An ANDA must contain one of four certifications regarding each patent that covers the application's drug:

(I) that such patent information has not been filed,
(II) that such patent has expired,
(III) of the date on which such patent will expire, or
(IV) that such patent is invalid or will not be infringed by the manufacture, use, or sale of the new drug for which the application is submitted.

21 U.S.C. § 355(j)(2)(A)(vii). If the applicant provides a Paragraph IV certification, the patent holder may file suit under section 271(e)(2)(A). If the patent holder files suit within 45 days, the FDA is barred from approving the ANDA for 30 months. 21 U.S.C. § 355(j)(5)(B)(iii). The FDA may approve the ANDA after that period, or earlier if the applicant succeeds in showing non-infringement of the patent or in proving the patent's invalidity. Id. § 355(j)(5)(B)(iii)(I).

If the patent holder proves infringement of a valid patent resulting from the filing of an ANDA, section 271(e)(4) provides three remedies. Subparagraphs (B) and (C) provide the typical remedies for infringement: injunctive relief and damages. Subparagraph (A), however, provides an additional type of relief after a finding of infringement under section 271(e)(2) by requiring the district court to "order the effective date of any approval of the drug or veterinary biological product involved in the infringement to be a date which is not earlier than the date of the expiration of the patent which has been infringed." If the FDA has not approved the ANDA before the district court determines that the patent has been infringed, the FDA may not approve the ANDA until the effective date specified by the district court under section 271(e)(4)(A). See 21 U.S.C. § 355(j)(5)(B)(iii)(II)(bb). If the FDA has already approved the ANDA, the district court's order would alter the effective date of the application, thereby converting a final approval into a tentative approval. See Ortho-McNeil Pharm., Inc. v. Mylan Labs., Inc., 520 F.3d 1358, 1366 (Fed. Cir. 2008); Mylan Labs., Inc. v. Thompson, 389 F.3d 1272, 1281-82 (D.C. Cir. 2004); see also S. Rep. No. 98-547, at 46 (1984), as reprinted in 1984 U.S.C.C.A.N. 2647, 2679 ("In the case where an ANDA had been approved, the order would mandate a change in the effective date.").

In most circumstances, the effective date in a district court's order under section 271(e)(4)(A) will be the date of patent expiration, including any patent extensions. In this case, however, Astra was entitled to an additional six-month period of market exclusivity (sometimes known as a period of "pediatric exclusivity") under the Food and Drug Administration Modernization Act of 1997, Pub. L. No. 105-115, 111 Stat. 2296. A provision of that Act, codified at 21 U.S.C. § 355a, authorizes the Food and Drug Administration to make a written request to the holder of an approved new drug application ("NDA") for the holder to perform pediatric studies. If the NDA holder agrees to the request and performs the pediatric studies, the period during which the FDA is barred from approving an ANDA filed by competing drug manufacturers is extended by six months. See 21 U.S.C. § 355a(b)-(c). Section 355a specifically addresses situations in which a Paragraph IV certification is submitted. In those cases, the period during which an ANDA may not be approved under section 355(j)(5)(B) "shall be extended by a period of six months [i.e., the period of pediatric or market exclusivity] after the date the patent expires (including any patent extensions)." Id. §§ 355a(b)(2)(B), 355a(c)(2)(B).

Impax argued that the court lost its jurisdiction once the patents expired.

Impax argues that once the patents expired, section 271(e)(4)(A) no longer provided a remedy because the patents' expiration rendered the claim of infringement moot. That argument simply assumes its conclusion; Impax offers no reason to suggest that section 271(e)(4)(A) provides no remedy after patent expiration other than to assert that no remedy is available after patent expiration.

Impax had noninfringement contentions that didn't contend well. But Impax arguing "public-use bar under section 102(b)" got some traction. The district court erred that experimental use contravened statutory public use. It is true that "experimental use cannot negate a public use when it is shown that the invention was reduced to practice before the experimental use." But experimental use to reduce to practice, as in this case, is okay.

Finally, Impax challenges the district court's findings with respect to the public-use bar under section 102(b). Astra filed its applications for the '505 and '230 patents on April 20, 1987. The critical date of the patents is therefore April 20, 1986. Before that date, Astra commissioned four large clinical studies to determine the safety and efficacy of its formulation in order to obtain FDA approval. At trial, Impax argued that the studies involved the public use of Astra's claimed formulation. The district court ruled against Impax on two grounds. First, the court ruled that the studies constituted experimental uses, and therefore not public uses, of the claimed invention. Second, the court ruled that the patented formulation was not ready for patenting until after the studies were completed. Impax challenges each of those findings.

We agree with Impax that the district court misapplied this circuit's law with respect to the experimental use exception. The district court found that, even if Astra's formulation had been reduced to practice before or during the clinical studies, the studies were experimental and therefore negated the public-use bar to patentability. Impax correctly points out, however, that it is clear from this court's case law that experimental use cannot negate a public use when it is shown that the invention was reduced to practice before the experimental use. See Cargill, Inc. v. Canbra Foods, Ltd., 476 F.3d 1359, 1371 n.10 (Fed. Cir. 2007); Allen Eng'g Corp. v. Bartell Indus., Inc., 299 F.3d 1336, 1354 (Fed. Cir. 2002); New Railhead Mfg., LLC v. Vermeer Mfg. Co., 298 F.3d 1290, 1299 (Fed. Cir. 2002); EZ Dock, Inc. v. Schafer Sys., Inc., 276 F.3d 1347, 1357 (Fed. Cir. 2002) (Linn, J., concurring); Zacharin v. United States, 213 F.3d 1366, 1369 (Fed. Cir. 2000); Baxter Int'l, Inc. v. COBE Labs, Inc., 88 F.3d 1054, 1060 (Fed. Cir. 1996). But see Atlanta Attachment Co. v. Leggett & Platt, Inc., 516 F.3d 1361, 1368-69 (Fed. Cir. 2008) (Prost, J., concurring). We therefore do not agree with the district court's ruling that the experimental use exception served to negate the public-use bar to patentability.

The second prong was the snag: "the claimed formulation was not ready for patenting until after the clinical studies were completed."

We may nevertheless affirm the district court's conclusion that the claims were not invalid under section 102(b) based on the court's factual determination that the claimed formulation was not ready for patenting until after the clinical studies were completed. See Pfaff v. Wells Electronics, Inc., 525 U.S. 52, 67 (1998); Invitrogen Corp. v. Biocrest Mfg., L.P., 424 F.3d 1374, 1380 (Fed. Cir. 2005) ("the ready for patenting component of Pfaff's two-part test [is] another necessary requirement of a public use bar."). The district court found that the claimed formulation was not reduced to practice before the clinical trials were completed, and we uphold that finding.

In Pfaff, the Supreme Court described two ways for a party to show that an invention was ready for patenting before the critical date of section 102(b): "by proof of reduction to practice before the critical date; or by proof that prior to the critical date the inventor had prepared drawings or other descriptions of the invention that were sufficiently specific to enable a person skilled in the art to practice the invention." 525 U.S. at 67-68.

At trial, Impax bore the burden of demonstrating by clear and convincing evidence that the Phase III formulation had been reduced to practice before the testing began. See z4 Techs., Inc. v. Microsoft Corp., 507 F.3d 1340, 1352 (Fed. Cir. 2007). To demonstrate reduction to practice, a party must prove that the inventor (1) "constructed an embodiment or performed a process that met all the limitations" and (2) "determined that the invention would work for its intended purpose." Id. (quoting Cooper v. Goldfarb, 154 F.3d 1321, 1327 (Fed. Cir. 1998)). "Testing is required to demonstrate reduction to practice in some instances because without such testing there cannot be sufficient certainty that the invention will work for its intended purpose." Id. (quoting Slip Track Sys., Inc. v. Metal-Lite, Inc., 304 F.3d 1256, 1267 (Fed. Cir. 2002)).

The inventors weren't sure the formulation would work. That's what the clinical testing showed.

The district court found that the Phase III formulation was not reduced to practice before the trials because the evidence showed that at that time the inventors believed only that the formulation "might solve the twin problems of in vivo stability and long-term storage." The district court found that "the Phase III formulation still required extensive clinical testing and real-time stability testing to determine whether it could treat gastric acid diseases safely and effectively."

Apotex fared no better with highly technical arguments of noninfringement and invalidity. Elaborate but under-substantiated obviousness arguments went down the drain.

Apotex also argues that its manufacturing process merely practices the prior art, citing European Patent Application No. EP 124,495 A2 ("the '495 European application"). It is well established, however, that "practicing the prior art" is not a defense to infringement. Tate Access Floors, Inc. v. Interface Architectural Res., Inc., 279 F.3d 1357, 1365-69 (Fed. Cir. 2002); Baxter Healthcare Corp. v. Spectramed, Inc., 49 F.3d 1575, 1583 (Fed. Cir. 1995).

Affirmed.