Abbott Laboratories v. Baxter Pharmaceutical Products, Inc.

• Court: Court of Appeals for the Federal Circuit
• Decided: November 9, 2006
• Docket: 2006-1021
• Status: Published

Opinion

United States Court of Appeals for the Federal Circuit

06-1021, -1022, -1034

ABBOTT LABORATORIES and CENTRAL GLASS COMPANY, LTD.,

Plaintiffs-Appellants,

v.

BAXTER PHARMACEUTICAL PRODUCTS, INC. and BAXTER HEALTHCARE CORP.,

Defendants-Cross Appellants.

R. Mark McCareins, Winston & Strawn LLP, of Chicago, Illinois, argued for plaintiffs-appellants. With him on the brief were Edward L. Foote, Raymond C. Perkins, Peggy M. Balesteri, James F. Herbison, and Timothy M. Schaum.

Constantine L. Trela, Jr., Sidley Austin LLP, of Chicago, Illinois, argued for defendants-cross appellants. With him on the brief were David T. Pritikin, William H. Baumgartner, Jr., and Russell E. Cass. Of counsel on the brief was Thomas S. Borecki, Baxter Healthcare Corporation, of Deerfield, Illinois. Of counsel was Marc A. Cavan, Sidley Austin LLP, of Chicago, Illinois.

Appealed from: United States District Court for the Northern District of Illinois

Judge Ronald A. Guzman United States Court of Appeals for the Federal Circuit

BAXTER PHARMACEUTICAL PRODUCTS, INC. and BAXTER HEALTHCARE CORP.,

__________________________

DECIDED: November 9, 2006 __________________________

Before BRYSON, Circuit Judge, ARCHER, Senior Circuit Judge, and GAJARSA, Circuit Judge.

GAJARSA, Circuit Judge.

Plaintiffs Abbott Laboratories and Central Glass Company (collectively “Abbott”)

appeal from a judgment of noninfringement of U.S. Patent No. 5,990,176 (“the ’176

patent”) by the United States District Court for the Northern District of Illinois.

Defendants Baxter Pharmaceutical Products, Inc. and Baxter Healthcare Corp.

(collectively “Baxter”) cross-appeal the district court’s determination that the asserted

claims are valid and its refusal to find unenforceability due to inequitable conduct. This

is our second hearing of this case; following our first, we reversed the district court’s

claim construction and remanded for trial. Abbott Labs. v. Baxter Pharm. Prods., Inc., 334 F.3d 1274 (Fed. Cir. 2003). The district court conducted a bench trial, then further

construed the claims at issue and found them valid and enforceable but not infringed.

Abbott Labs v. Baxter Pharm. Prods., Inc., No. 01-CV-1867 (N.D. Ill. Sept. 26, 2005).

This appeal timely followed.

Because we hold the asserted claims of the ’176 patent to be anticipated by the

disclosure in U.S. Patent No. 5,684,211 (“the ’211 patent”), we reverse the district

court’s validity judgment.

I. BACKGROUND

A. The technology

Sevoflurane is a fast-acting, highly effective inhalation anesthetic. However, pure

sevoflurane has a serious problem, unknown at the time of its invention and original

shipment: it degrades in the presence of Lewis acids. Lewis acids are essentially

defined as any species with an empty electron orbit leading to electron affinity and are

common enough that avoiding exposure of sevoflurane to Lewis acids is quite difficult.

Among the products of the degradation reaction is hydrofluoric acid, which is highly

dangerous if inhaled. ’176 patent col.1 ll.52-57. The original containers in which Abbott

shipped its product had Lewis acids exposed on their interiors. The hydrofluoric acid

thus produced etched the containers’ glass surfaces, exposing even more Lewis acids,

resulting in a vicious-cycle cascading reaction that seriously compromised Abbott’s

product while on the shelf and forced a recall.

After investigating the cause of the degradation, Abbott discovered the source of

the problem. It also found a solution: water mixed in with sevoflurane will bind to and

deactivate Lewis acids, protecting the sevoflurane from the degradation reaction.

06-1021, -1022, -1034 2 A deliberate addition of water to sevoflurane ran counter to the conventional wisdom at

the time: previously, Abbott had sought to minimize its product’s water content. Abbott

filed a patent application on the degradation-preventing combination of water or other

“Lewis acid inhibitors” with sevoflurane, which issued as the ’176 patent at issue here.

B. Prior proceedings

Baxter sought to ship its own sevoflurane product. On January 26, 2001, it filed

an amended Abbreviated New Drug Application (“ANDA”) with the Food and Drug

Administration (“FDA”) covering its own sevoflurane product. Baxter filed with the FDA

a certification of noninfringement and invalidity of the ’176 patent pursuant to 21 U.S.C.

§ 355(j)(2)(A)(vii)(IV) (commonly known as a “paragraph IV certification”), which created

the cause of action giving rise to this suit under 35 U.S.C. § 271(e)(2).

There are multiple product and method claims at issue. Claim 1 of the ’176

patent is representative:

An anesthetic composition comprising: a quantity of sevoflurane; and a Lewis acid inhibitor in an amount effective to prevent degradation by a Lewis acid of said quantity of sevoflurane, said Lewis acid inhibitor selected from the group consisting of water, butylated hydroxytoluene, methylparaben, propylparaben, propofol, and thymol.

’176 patent col.11 ll.21-29. The other claims at issue speak to using water specifically,

methods of combining sevoflurane and Lewis acid inhibitors to produce the above-

mentioned composition, or both. Id. at cols.11-12.

This case came before us for the first time when we reviewed the district court’s

construction of the phrase “amount effective to prevent degradation” to require at least

131 parts per million (“ppm”) of water and its consequent summary judgment of

noninfringement. Abbott, 334 F.3d at 1277. We disagreed with that construction, noting

that “an effective amount of any given Lewis acid inhibitor will vary according to the

06-1021, -1022, -1034 3 conditions to which sevoflurane is subjected,” making construction referencing particular

ranges of water content inappropriate. Id. at 1278. We vacated the district court’s

summary judgment and remanded. Id. at 1283. On remand, the district court

conducted a bench trial. It determined that the term “to prevent degradation” had been

left unconstrued, Abbott, No. 01-CV-1867, slip op. at 7, and concluded that “sevoflurane

is degraded if it contains degradants in amounts greater than 300 ppm.” Id. at 16. It

found Abbott’s literal infringement evidence to be unpersuasive, id. at 27, and Abbott’s

doctrine of equivalents argument to be barred by prosecution history estoppel, id. at 31.

It addressed Baxter’s claim that the patent was unenforceable due to inequitable

conduct, but declined to so hold. Id. at 48.

Baxter made two distinct invalidity arguments. It first argued that since some lots

of the pre-recall sevoflurane sold by Abbott had not degraded, there had been a prior

sale which would bar the patent. The district court found insufficient evidence that those

lots had actually been exposed to Lewis acids, making a finding that they had contained

water “in an amount effective to prevent degradation” unsupportable. Id. at 44. Baxter’s

second argument was that the ’211 patent disclosed a composition of water-saturated

sevoflurane that met all the limitations of the asserted claims. Id. at 37-39. The district

court noted some of our holdings finding anticipation even where, as here, there was no

knowledge at the time of the relevant properties of the prior art. Id. at 40-41 (citing Atlas

Powder Co. v. IRECO, Inc., 190 F.3d 1342, 1348-49 (Fed. Cir. 1999); SmithKline

Beecham Corp. v. Apotex Corp., 403 F.3d 1331, 1343-44 (Fed. Cir. 2005); Schering

Corp. v. Geneva Pharms., Inc., 339 F.3d 1373, 1378-80 (Fed. Cir. 2003)). However, it

concluded that the ’211 patent did not anticipate. Id. at 43. That decision was based on

06-1021, -1022, -1034 4 its reading of our decision in Bristol-Myers Squibb Co. v. Ben Venue Labs., Inc., in

which we noted that “[n]ewly discovered results of known processes directed to the

same purpose are not patentable because such results are inherent.” Id. at 42 (quoting

246 F.3d 1368, 1376 (Fed. Cir. 2001) (emphasis added by district court)). It concluded

that since the ’211 patent disclosed an “intermediate step” in the manufacture of

sevoflurane, “the patent’s purpose was not to produce sevoflurane in its final useable

form,” in distinction to the purpose of the ’176 patent, which “involves a final step in

production.” Id. at 42. The district court reasoned that since the patents’ purposes were

different, the Bristol-Myers Squibb distinction foreclosed a finding of anticipation. Id. at

42-43.

All of these rulings by the district court are before us via either Abbott’s appeal or

Baxter’s cross-appeal. Abbott challenges the claim construction, arguing that the

intrinsic evidence of the ’176 patent permits more than 4,000 ppm of impurities before

the sevoflurane may be considered “degraded.” Abbott also challenges the district

court’s findings on literal and doctrine of equivalents infringement. Baxter challenges

enforceability and validity, the latter in light of both the ’211 patent and the alleged prior

sale. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).

II. DISCUSSION

A. Standard of review

Patent claims are presumed to be valid, 35 U.S.C. § 282, and the party seeking

to show invalidity must prove facts supporting invalidity by clear and convincing

evidence. N. Am. Vaccine, Inc. v. Am. Cyanamid Co., 7 F.3d 1371, 1379 (Fed. Cir.

1993). Since this case comes to us from a trial without jury, we review the district

06-1021, -1022, -1034 5 court’s findings of fact for clear error and its legal conclusions de novo. Panduit Corp. v.

Dennison Mfg. Co., 810 F.2d 1561, 1565 (Fed. Cir. 1987).

B. The ’211 patent

The ’211 patent was applied for in 1995 and awarded to Kawai et al. in

November 1997. Appellant Central Glass Co. is the assignee. The parties do not

dispute that the ’211 patent predates the ’176 patent for the purposes of 35 U.S.C.

§ 102, and the facts about what the ’211 patent teaches are in relevant part undisputed.

It discloses a technique for purifying sevoflurane for “use[] as a pharmaceutical and

particularly as an inhalation anesthetic,” ’211 patent abstract, which involves the

addition of water. If the steps of its Illustration 1, Table 2 are practiced, the result will be

sevoflurane that is saturated with water, unable to absorb any more moisture.

Saturation implies that the sevoflurane contains an amount of water sufficient to prevent

it from degrading due to Lewis acids.

At the time, however, knowledge of the beneficial nature of a water-sevoflurane

mix was wholly lacking in the art. The district court describes the matter succinctly:

[P]rior to [the ’176 patent] invention no one had any idea that Lewis acids had the potential to degrade sevoflurane. Further, no one was aware of the stabilizing effect water would have to prevent Lewis acid degradation. In fact, water was considered an impurity and was removed from sevoflurane to the extent possible during the manufacturing process that included the teachings of the ’211 patent.

Abbott, No. 01-CV-1867, slip op. at 39. Thus, the ’211 patent discloses a particular

composition and claims a process for making that composition, but does not teach the

advantageous feature of that composition whose discovery led to the patent in suit.

06-1021, -1022, -1034 6 C. Unknown properties and anticipation

Our cases have consistently held that a reference may anticipate even when the

relevant properties of the thing disclosed were not appreciated at the time. The classic

case on this point is Titanium Metals Corp. v. Banner, 778 F.2d 775 (Fed. Cir. 1985). In

Titanium Metals, the applicants sought patent protection on an alloy with previously

unknown corrosion resistance and workability properties. Id. at 776. The prior art

reference was an article by two Russian scientists that disclosed in a few data points on

its graphs an alloy falling within the scope of the claims of the patent in suit. Id. at 776-

77. There was no sign that the Russian authors or anyone else had understood the

later-discovered features of the alloy thus described. Id. at 780-81. Despite the fact

that “the applicants for patent had discovered or invented and disclosed knowledge

which is not to be found in the reference,” we held that the Russian article anticipated

the asserted patent claims. Id. at 782. The Titanium Metals rule has been repeatedly

confirmed and applied by this court. See, e.g., In re Crish, 393 F.3d 1253, 1258-59

(Fed. Cir. 2004) (citing cases; holding asserted claims covering a gene’s nucleotide

sequence anticipated where the gene, though not its particular sequence, was already

known to the art); In re Cruciferous Sprout Litig., 301 F.3d 1343, 1349-50 (Fed. Cir.

2002) (inventor’s recognition of substances that render broccoli and cauliflower

particularly healthy does not permit patent on identifying broccoli seeds or preparing

broccoli as a food product); Atlas Powder, 190 F.3d at 1347-1350 (holding asserted

claims covering air mixed into an explosive composition anticipated by prior art that

necessarily also contained air as claimed, even though benefits of the air were not

recognized). Indeed, the rule did not originate with Titanium Metals. See Ansonia

06-1021, -1022, -1034 7 Brass & Copper Co. v. Elec. Supply Co., 144 U.S. 11, 18 (1892) (“[T]he application of

an old process or machine to a similar or analogous subject, with no change in the

manner of application and no result substantially distinct in its nature, will not sustain a

patent even if the new form of result had not before been contemplated.”); In re

Pearson, 494 F.2d 1399, 1403 (C.C.P.A. 1974) (inventor’s recognition that prior-art

compound inhibited defects in peanut plants did not suffice to grant patent protection on

that compound); In re Benner, 174 F.2d 938, 942 (C.C.P.A. 1949) (“[N]o provision has

been made in the patent statutes for granting a patent upon an old product based solely

upon discovery of a new use for such product.”).

The general principle that a newly-discovered property of the prior art cannot

support a patent on that same art is not avoided if the patentee explicitly claims that

property. “[A] prior art reference may anticipate without disclosing a feature of the

claimed invention if that missing characteristic is necessarily present, or inherent, in the

single anticipating reference.” Schering, 339 F.3d at 1377 (citing Continental Can Co. v.

Monsanto Co., 948 F.2d 1264, 1268 (Fed. Cir. 1991)). “[I]nherent anticipation does not

require that a person of ordinary skill in the art at the time would have recognized the

inherent disclosure.” Id. (citing Cruciferous Sprout, 301 F.3d at 1351).

Abbott’s objection here is merely that at the time of the ’211 patent, nobody knew

that the water-saturated sevoflurane that patent disclosed had the property of resisting

the Lewis acid degradation reaction. Just as in Titanium Metals, that lack of knowledge

is wholly irrelevant to the question of whether the ’176 patent claims something “new”

over the disclosure of the ’211 patent; the claimed property of resistance to degradation

is found inherently in the disclosure. Since the ’211 patent discloses sevoflurane

06-1021, -1022, -1034 8 saturated with water – i.e., unable to absorb any additional water to further protect it

from the degradation reaction – it anticipates the claims of the ’176 patent. This is true

under any definition of the term “prevent degradation” that the claims might reasonably

bear, so we need not construe that phrase with numerical exactitude in order to reach

our decision.

The district court nonetheless found the patent valid due to the purpose-based

distinction we drew in Bristol-Myers Squibb. Abbott, No. 01-CV-1867, slip op. at 42-43

(citing 246 F.3d at 1376). As a threshold matter, we note that that distinction is

applicable only to process claims. Bristol-Myers Squibb states that “new uses of known

processes may be patentable,” citing in support the definition of “process” found at 35

U.S.C. § 100(b). 246 F.3d at 1376. The case does not speak to composition claims;

the district court therefore committed legal error by applying it to sustain the validity of

those claims of the ’176 patent that cover a mixture of sevoflurane and water. As to the

’176 patent’s process claims, we agree that Bristol-Myers Squibb needs to be

considered, but we disagree with the concept that the processes described in the ’176

patent are not “directed to the same purpose,” id., under the meaning of Bristol-Myers

Squibb. Both the ’211 and the ’176 patents disclose methods which help to ensure that

sevoflurane will be of high purity at the time it is administered to patients. The ’211

patent discloses a method of achieving that end by adding water and then distilling the

solution, which results in removing impurities from the sevoflurane, while the ’176 patent

accomplishes the same objective by merely adding water, which results in safeguarding

the sevoflurane against impurities generated by the presence of Lewis acids. All of the

steps of the ’176 patent are thus disclosed in the ’211 patent in furtherance of the same

06-1021, -1022, -1034 9 purpose: the delivery of safe, effective sevoflurane anesthetic. All that is contributed by

the method claims of the ’176 patent is the recognition of a new property of the prior art

process. We hold today, as we did in Bristol-Myers Squibb, that “the claimed process

here is not directed to a new use; it is the same use.” Id.; see also Catalina Mktg. Int’l,

Inc. v. Coolsavings.com, Inc., 289 F.3d 801, 809-10 (Fed. Cir. 2002) (explaining that an

inventor may not obtain a patent on a process having the same steps as a prior art

process, in which the new process merely identifies a new, advantageous property of

the prior art process).

We also do not find it material that the district court found the anticipating

method in the ’211 patent to be “an intermediate step” in the manufacture of

sevoflurane. Abbott, No. 01-CV-1867, slip op. at 42. The product of that method was

an anesthetic sevoflurane composition with sufficient water to prevent Lewis acid

degradation—exactly what is claimed by the ’176 patent. Commercial finality is not

claimed.

III. CONCLUSION

For the reasons given above, we reverse the district court’s judgment that the

asserted claims of the ’176 patent are valid. Since all asserted claims are invalid, we do

not reach questions of infringement or inequitable conduct.

REVERSED.

No costs.

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