Medpointe Healthcare, Inc. v. Hi-Tech Pharmacal Co., Inc.

115 F. App'x 76

• Court: Court of Appeals for the Federal Circuit
• Decided: November 17, 2004
• Docket: 2004-1310
• Status: Unpublished

Opinions

PROST, Circuit Judge.

Opinion for the court filed by Circuit Judge PROST. Dissenting opinion filed by Chief Judge MAYER.

Hi-Tech Pharmacal Co. (“Hi-Tech”) appeals a preliminary injunction granted by the United States District Court for the District of New Jersey to plaintiff Medpointe Healthcare Inc. (“Medpointe”) in regard to the sale and manufacture of a pharmaceutical composition protected by United States Patent No. 6,417,206 (“the ’206 patent”). Because Medpointe has not shown Hi-Tech’s invalidity defense based on obviousness is without substantial merit, we vacate the preliminary injunction.

BACKGROUND

MedPointe brought suit against Hi-Tech for allegedly infringing the ’206 patent. The ’206 patent claims therapeutic compositions of a pharmaceutical drug containing three active ingredients: (1) carbetapentane tannate, (2) pyrilamine tannate, and (3) phenylephrine tannate.¹ Hi-Tech is a generic drug company that manufactures the same claimed composition. It does not dispute that its generic version of the drug infringes the ’206 patent, but asserts in its defense that the patent is invalid for obviousness under 35 U.S.C. § 103. In this appeal, Hi-Tech argues that the district court erred in concluding that it had not raised a substantial question of validity of the ’206 patent. Hi-Tech contends that a pharmaceutical composition, named “Candettes,”² either alone or in combination with other prior art, such as Medpointe’s Tussi-12 product,³ renders the claims of the ’206 patent obvious. The Candettes product, which has been available to the public since 1938, contains the same three types of active molecules claimed by the ’206 patent, but has associated with each type of active molecule a different salt counterion than that claimed by the ’206 patent. According to Hi-Tech, it would have been obvious to substitute tannate for the counterions in Candettes. Alternatively, Hi-Tech contends that it would have been obvious to modify the prior art, by substituting, for example, pyrilamine tannate for chlorpheniramine tannate in Medpointe’s Tussi-12 product. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).

DISCUSSION

I. Standard of review

“[TJhis court reviews a district court’s decision granting, denying, or modifying an injunction, in a patent case ... applying Federal Circuit law.” Int’l Rectifier Corp. v. Samsung Elecs. Co., 361 F.3d 1355, 1359 (Fed.Cir.2004); see also Lab. Corp. of Am. Holdings v. Chiron Corp., 384 F.3d 1326, 1331 (Fed.Cir.2004) (recognizing the Federal Circuit’s precedent of reviewing the grant or denial of an injunction directed to substantive issues in patent cases under Federal Circuit law). We review the grant or denial of a preliminary injunction by a district court for abuse of discretion. Novo Nordisk of N. Am., Inc. v. Genentech, Inc., 77 F.3d 1364, 1367 (Fed.Cir.1996). “An abuse of discretion may be established by showing that the court made a clear error of judgment in weighing relevant factors or exercised its discretion based upon an error of law or clearly erroneous factual findings.” Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1359 (Fed.Cir.2001) (quoting Novo Nordisk, 77 F.3d at 1367).

Medpointe is entitled to a preliminary injunction only if it can carry its burden of showing: (1) a reasonable likelihood of success on the merits; (2) irreparable harm if an injunction is not granted; (3) a balance of hardships tipping in its favor; and (4) the injunction’s favorable impact on the public interest. Id. at 1350. Although in some circumstances these factors taken individually may not be dispositive because the district court’s decision to grant or deny a preliminary injunction rests on an overall process of balancing, a preliminary injunction cannot be granted if the movant is unable to show a reasonable likelihood of success on the merits. Nat’l Steel Car, Ltd. v. Canadian Pac. Ry., Ltd., 357 F.3d 1319, 1325 (Fed.Cir.2004). To succeed at demonstrating the likelihood of success, Medpointe must present a “clear case” supporting the validity of the patent in suit, thus showing that Hi-Tech’s invalidity defense lacks substantial merit. Amazon, com, 239 F.3d at 1359. Hi-Tech may defeat the motion for a preliminary injunction by showing that the patent is “vulnerable” to attack based on validity. Id.

II. Analysis

A.

Hi-Tech relies on Candettes, which was not before the Patent and Trademark Office (“PTO”), as the primary reference that allegedly renders the claims of the ’206 patent obvious. Hi-Tech contends that Candettes provides the requisite teaching that it would be desirable to combine salts of carbetapentane, pyrilamine, and phenylephrine, and that reference, either alone or in combination with Tussi-12, renders obvious the tannate composition defined by claim 1 of the ’206 patent. Hi-Tech complains that the district court erroneously determined that ammonium chloride, which Candettes lists as one of its ingredients, is an active ingredient that must be removed, among other things, to transform Candettes into the composition defined by the claims of the ’206 patent. Further, Hi-Tech argues that the court effectively ignored Candettes in addressing the incentive to combine prior art. In addition, the district court allegedly made a legal error by erroneously requiring an explicit teaching to combine the three active ingredients claimed by the ’206 patent, thereby effectively requiring anticipation by the prior art to raise a substantial question of invalidity based on obviousness, and mischaracterizing Hi-Tech’s arguments as “obvious to try.” Further, Hi-Tech argues that the district court erred in regard to a number of factual findings that allegedly should not have weighed in favor of finding the ’206 patent nonobvious, including (1) the difficulty of working with tannates as a disincentive to combine prior art products, (2) the patented invention’s commercial success, (3) the copying by Hi-Tech after MedPointe released its product, and (4) the failure of others to formulate or market an anticipatory pharmaceutical composition before the ’206 patent. As to the other preliminary injunction factors, Hi-Tech asserts that the district court erred in finding that MedPointe would be irreparably harmed without an injunction.

B.

The parties’ principal dispute revolves around the district court’s scrutiny of Candettes. For the reasons that follow, we find that the district court clearly erred in concluding that ammonium chloride must be removed to place Candettes within the scope of the claims of the ’206 patent. In addition, we find that the district court clearly erred in its assessment of evidence concerning a teaching or motivation to modify Candettes by replacing the counterion associated with each active ingredient with a tannate. Lastly, the district court erred in its weighing of the evidence of secondary considerations against the evidence of incentive to modify Candette. These errors mandate that we vacate the district court’s preliminary injunction. We discuss the errors in greater detail below.

1.

Although claim 1 uses open-ended, i.e., “comprising,” language to permit pharmaceutically acceptable inactive ingredients to be a part of the claimed therapeutic composition, it limits the range of active ingredients to only carbetapentane tannate, pyrilamine tannate and phenylephrine tannate. Because the district court held that the ammonium chloride must be removed as part of the transformation to place Candettes within the scope of the composition defined by claim 1, the court evidently assumed that ammonium chloride is an active ingredient. Neither the district court nor Medpointe, however, cite any record evidence to support the assumption or to rebut Hi-Tech’s expert, who testified that ammonium chloride is an inactive ingredient. Medpointe contends that Hi-Tech’s testimony should be disregarded because its expert did not testify “how one of ordinary skill would interpret the Candettes reference.” Alternatively, Medpointe argues that we should infer that ammonium chloride is active merely because it is listed in a specific quantity on the specification sheet for the Candettes product.

After careful review of the record evidence proffered by Medpointe in its briefs and at oral argument, we discern no reasonable basis for the court’s implicit factual finding that ammonium chloride is an active ingredient that must therefore be removed to transform Candettes into the composition claimed by the ’206 patent. In view of the uncontroverted testimony from Hi-Tech’s expert that ammonium chloride is inactive, the court’s factual determination to the contrary is unsupported and thus clearly erroneous.

2.

Operating under the false premise that a suggestion or motivation must be found to remove the ammonium chloride for Candettes to read on the claims of the ’206 patent, the district court determined that it was “far more likely for a practitioner to have discerned a suggestion or motive in the prior art to add an anti-tussive to Ryna-12 or the ’597 composition” than to modify Candettes.⁴ Notwithstanding the erroneous factual finding in regard to ammonium chloride that underlies the court’s preliminary injunction, Medpointe maintains that the injunction may still stand. Medpointe asserts that any incentive to undertake the exchange of salts to make the tannate version of Candettes would have been counteracted by the knowledge that tannate salts are difficult to work with and present significant formulation problems at high levels.

The district court, in agreement with Medpointe, found “it is difficult for practitioners of ordinary skill to work with tannates,” and “a practitioner would thus not have been inclined to experiment with them barring external reason for doing so.” The district court appeared, however, to unduly discount other evidence in the record, which weighs in favor of finding that there was indeed incentive to modify Candettes to attain the composition claimed by the ’206 patent. In particular, the court found that tannates were “well-known to ordinarily skilled practitioners” and that such practitioners would know tannate salts are useful as a way to provide longer-lasting dosages of pharmaceuticals to a person. Further, the record shows that the three active ingredients found in Candettes were each previously converted with success from a non-tannate to a tannate salt, demonstrating that the barriers imposed by working with tannates were in fact not insurmountable or so great as to deter those skilled in the art from undertaking the conversion. Moreover, the evidence shows that each of the active ingredients found in Candettes was successfully used in the tannate form, often in combination with the tannate versions of one of the other active ingredients present in Candettes. Medpointe submits no evidence to suggest that any person skilled in the art expected the tannate version of the three active ingredients in Candettes would not work together. Perhaps most importantly, the inventors of the ’206 patent admitted in the Background of Invention section of their patent that at the time of invention it was at least somewhat accepted that “[ajntitussives, antihistamines, and decongestants in the form of their tannate salts are very desirable because such salts are generally stable and may be combined in such form without any untoward side effects.” ’206 patent, col. 1, 1. 63 — col. 2, 1. 2 (emphasis added). The statement from the ’206 patent appears to acknowledge the presence of an existing motivation to undertake the salt conversion that the district court evidently deemed missing from the record evidence. Thus, the court clearly abused its discretion when it faded to give weight to the significance of this professed motivation in its scrutiny of Candettes.

3.

As for evidence of secondary considerations, we find them insufficient to show that the defendant’s invalidity defense based on Candettes is without substantial merit. Evidence of secondary considerations, such as failure of others, unexpected results, long felt but unresolved need, commercial success, and copying, is often probative in the obviousness analysis. Ruiz v. A.B. Chance Co., 357 F.3d 1270, 1274 (Fed.Cir.2004). Here, the district court did not find evidence of failure of others or unexpected results. Moreover, the court opined that “[i]t was unclear whether the ’206 patent fulfills any ‘long felt need.’ ” Although the district court found that Medpointe had demonstrated the commercial success of its claimed composition (marketed as Tussi-12D), the purported commercial success is somewhat tenuous given that Medpointe’s product has so far only broken even in the amount of money made, with the product’s long-term profitability yet to be established. The weak evidence of commercial success and copying by competitors is inadequate to demonstrate nonobviousness of the claimed invention in view of the substantial question of validity raised by Candettes and the strong desirability professed by the ’206 patent to use antitussives, antihistamines, and decongestants in their tannate form.

CONCLUSION

We conclude that the district court erred in failing to recognize that Candettes raises a substantial question of invalidity.⁵ Because Medpointe has not shown Hi-Tech’s obviousness defense lacks substantial merit, Medpointe has failed to carry its burden of showing it will likely prevail on the merits at the final hearing. Accordingly, we must conclude that a necessary prerequisite for entry of a preliminary injunction is absent. We therefore vacate the preliminary injunction.⁶

1 . The sole independent claim in the patent reads as follows:

1. A therapeutic composition for the symptomatic relief of cough associated with adverse respiratory tract conditions in warm-blooded animals in need of such treatment said composition comprising pharmaceutically effective amounts of active ingredients, wherein said active ingredients consist of carbetapentane tannate, pyrilamine tannate and phenylephrine tannate.

2 . Candettes contains carbetapentane citrate, phenylephrine hydrochloride, and pyrilamine maleate.

3 . Tussi-12 contains carbetapentane tannate, phenylephrine tannate, and chlorpheneramine tannate.

4 . Ryna-12 and the '597 composition (United States Patent No. 6,287,597) contain both phenylephrine tannate and pyrilamine tannate.

5 . Our decision today on the validity issue in no way resolves the ultimate question of invalidity. It remains to be determined in what way any shortcomings in Hi-Tech’s initial preliminary validity challenge will be developed with further fact finding. We hold at this juncture only that Hi-Tech has cast enough doubt on the validity of the '206 patent to avoid a preliminary injunction.

6 . Because we find that Medpointe has failed to show it will likely prevail on the merits, as required, to warrant issuance of the preliminary injunction, we find it unnecessary to address the alleged errors by the district court in regard to the irreparable harm finding.