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Patentee need not join in appeal for exclusive licensee to retain standing
October 14, 2007
In a decision Friday, the Federal Circuit affirmed a district court decision that prosecution history estoppel barred application of the doctrine of equivalents, and accordingly affirmed the district court's summary judgment of no infringement.The court also held, as a matter of first impression, that when joinder of the patent owner is required before the district court for an exclusive licensee to have prudential standing to bring suit, the exclusive licensee may appeal an adverse decision even if the patent owner chooses not to join the appeal. The court noted the purpose of requiring the patent owner to be joined at the district court is to avoid subjecting the alleged infringer to multiple lawsuits based on the same conduct. However, when the patent owner was joined at the district court, it is bound by the district court's decision if it chooses not to appeal. As a result, the exclusive licensee appealing without the patent owner does not subject the defendant to the possibility of duplicative suits.More detail of Schwarz Pharma, Inc. v. Paddock Labs., Inc. after the jump.

Schwarz Pharma
is the exclusive licensee of a patent covering the use of alkali or alkaline earth metal carbonate to inhibit cyclization and discoloration of ACE inhibitors used for the treatment of hypertension. Warner-Lambert is the owner of the patent. Schwarz markets its ACE inhibitor using the patented stabilizer under brand name Univasc®.Paddock Laboratories, the alleged infringer, filed an Abbreviated New Drug Application (ANDA) for approval to market a generic version of Univasc®. Paddock used moexipril hydrochloride and magnesium oxide ("MgO") in its generic version.There are two independent claims in the patent, claims 1 and 16. They read as follows (emphasis added):
1. A pharmaceutical composition which contains:
(a) a drug component which comprises a suitable amount of an ACE inhibitor which is susceptible to cyclization, hydrolysis, and discoloration,
(b) a suitable amount of an alkali or alkaline earth metal carbonate to inhibit cyclization and discoloration, and
(c) a suitable amount of a saccharide to inhibit hydrolysis. 16. A process for stabilizing an ACE inhibitor drug against cyclization which comprises the step of contacting the drug with:
(a) a suitable amount of an alkali or alkaline earth metal carbonate and,
(b) one or more saccharides.
At the district court, Schwarz stipulated that the generic Paddock drug did not literally infringe, thus the district court only considered whether there was infringement under the doctrine of equivalents. The district court then granted summary judgment of noninfringement, finding that prosecution history estoppel barred application of the doctrine of equivalents in this case. Claim 1 as originally filed contained the limitation "metal containing stabilizer," and claim 16 as originally filed contained the limitation "an alkalai or alkaline earth-metal salt," but both were amended to include emphasized "alkalai or alkaline earth-metal carbonate" limitation in response to an obviousness rejection. The court held this was a narrowing amendment made for reasons of patentability, and that it was neither unforeseeable nor tangentially related to the equivalent in question. As a result, prosecution history estoppel applied, and the district court held there was no infringement. Schwarz appealed, but Warner-Lambert did not.Before addressing the infringement issue, the Federal Circuit first dealt with standing. Because the owner of the patent, Warner-Lambert, had not joined Schwarz in the appeal, Paddock argued Schwarz did not have standing to pursue the appeal. The court dismissed this challenge, holding that "when a patentee joins an exclusive licensee in bringing a patent infringement suit in a district court, the licensee does not lose standing to appeal even though the patentee does not join in the appeal." The court stated that there was no danger of subjecting Paddock to multiple actions, because Warner-Lambert would be bound by the district court's holding. Finally, the court noted that Schwarz was adversely affected by the district court judgment, so it was entitled to appeal that judgment without Warner-Lambert. Accordingly, while the patentee had to be joined in order for Schwarz to have standing at the district court, it was not necessary for the patentee to join on the appeal for Schwarz to have standing to appeal.Turning to the merits, the Federal Circuit paid particular attention to the fact that the original claims using the language "metal containing a stabilizer" and "an alkali or alkaline earth metal salt" had been rejected as obvious by the examiner, and after the rejection Schwarz amended both claims 1 and 16 to use the language "an alkali or alkaline earth metal carbonate." According to the court, Schwarz had surrendered any claim to coverage of magnesium oxide (MgO) as used in the Paddock drug, because it fell within the scope of the original claims but not the amended claims: a classic case of prosecution history estoppel.The court was unimpressed with Schwarz's arguments rebutting the presumption of surrender. For example, regarding whether MgO was a foreseeable equivalent, the court stated that:
Given the prior art that discloses that MgO is a stabilizer, it does not require much of a stretch of the imagination of a person skilled in the art of pharmaceutical formulation to foresee that that stabilizer might be helpful in stabilizing ACE inhibitors.
The court also rejected Schwarz's argument that the amendment in question was only tangentially related to the equivalent in question. Schwarz argued that the prior art cited against them did not discuss the use of a stabilizer in order to prevent cyclization of ACE inhibitors. The court stated that regardless of this argument, the inventors chose to distinguish over the prior art by amending and narrowing the range of stabilizers. Thus this argument was irrelevant and speculative. Further, the court noted that "the use of MgO is directly implicated by the amendment of the claim language at issue [and therefore not tangential] because the language amended concerns the types of stabilizers covered by the claims and excludes MgO." As a result, the court agreed with the district court that the Festo presumption had not been rebutted, and that prosecution history estoppel barred application of the doctrine of equivalents. The district court's decision was therefore affirmed.To read the full decision in Schwarz Pharma, Inc. v. Paddock Labs., Inc., click here.
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