Substantial question regarding validity insufficient to defeat likelihood of success?
December 09, 2008

In a recent decision, the Federal Circuit affirmed a district court's grant of a preliminary injunction concerning the manufacture of an extended release formulation of an antibiotic. In a lengthy opinion, the Federal Circuit applied the Supreme Court's obvious-to-try logic from KSR to pharmaceutical patents. Notably, the court used the unpredictability of the pharmaceutical arts to find that, despite a prior art reference listing twelve different approaches in creating an extended release formula, the claimed formulation was (at least at the preliminary injunction stage) more than the predictable use of prior art elements according to their established functions.

The Federal Circuit also addressed the issue of inequitable conduct, reinforcing its holding in Kingsdown Medical that materiality alone does not automatically establish the bad faith necessary for a finding of inequitable conduct.

The panel majority, after an extensive review of case law regarding injunctive relief, held when determining likelihood of success, the court must examine the question with the ultimate issue in mind, namely whether the party will likely prevail on the issue. Judge Gajarsa's dissent, on the other hand, took the panel majority to task for diverging from the Federal Circuit's precedent on the issue, and would have held a substantial question of validity and enforceability was raised, making the preliminary injunction improper.

More on Abbot Labs. v. Sandoz, Inc. after the jump.

The case stems from two patents held by Abbott concerning extended release versions of an antibiotic clarithromycin. US Patent 6,010,718 (the '718 patent) covers an extended release version comprising a derivative of erythromycin and a pharmaceutically acceptable polymer. US Patent 6,551,616 (the '616 patent) is a continuation in part of the '718 patent directed at reducing gastrointestinal side effects. Abbott filed suit against Sandoz for alleged infringement of the patents and requested a preliminary injunction preventing Sandoz from making the allegedly infringing drugs. Sandoz answered claiming invalidity, inequitable conduct, and non-infringement. The district court granted the injunction and Sandoz filed the appeal claiming that the court improperly found likelihood of success on the merits and improperly balanced the equitable factors concerning the awarding of a preliminary injunction.


The district court held Abbott was likely to prevail on the issue of validity despite Sandoz's assertion that the patents in suit were anticipated and obvious in light of the prior art. Regarding anticipation, Sandoz claimed that European Patent Publication 0,280,571 (the '571 publication) anticipated the '718 patent, as it described a similar pharmaceutical compound. Abbott responded that the publication failed to meet every element of the claims because it did not mention the specific compound and it did not disclose the pharmacokinetic limitations in the claims. The district court concluded, and the Federal Circuit agreed, that Abbott was likely to succeed in showing no anticipation as the '571 publication.

Regarding obviousness, Sandoz claimed that the patents in suit were obvious in light of the '571 publication, describing a sustained release matrix formulation or erythromycin in tablet form, PCT Application WO 95/30422 (the '422 application), describing a number of approaches to formulating extended release pharmaceuticals with azithromycin (an erythromycin derivative),and US Patent No. 5,705,190 (the '190 patent) describing the use of an alginate salt to modify the release of clarithromycin.

The likelihood of success on the obviousness argument hinged largely on Sandoz's argument that it would have been obvious to try the multiple extended-release pharmaceutical formulations disclosed in the '422 application. This argument was largely based on the Supreme Court's decision in KSR v. Teleflex, which states that "when there is a design need or market pressure to solve a problem and there are a finite number of identified predictable solutions, a person of ordinary skill has good reason to pursue the known options within his or her technical grasp."

Abbot argued that the combination of references failed to render the claimed invention obvious because there was no guidance to select the particular combination claimed from the many possible combinations disclosed. Abbott noted that the obvious to try approach in KSR relied on there being "a finite number of identified, predictable solutions." Abbott noted that approximately twelve different formulations were disclosed in the '422 application and the results obtained by using the disclosed methods in the '422 application did not yield predictable results, but instead relied on experimentation to achieve the desired results. Abbott argued that hindsight would be required to make the claimed approach obvious due to reliance on the inventors experiments which led to the claimed invention. Abbott cited the prohibition against the use of hindsight in finding obviousness in Graham v. John Deere Co., where the Supreme Court stated "the obviousness inquiry must guard against clipping into use of hindsight and to resist the temptation to read into the prior art the teachings of the invention at issue."

The Federal Circuit affirmed the district court's finding that Sandoz was not likely to succeed in its obviousness defense, stating "[w]e agree that the obviousness of selection of components, when there is no prediction in the prior art as to the results obtainable from a selected component, differs from the issue in KSR, where the court provided guidance that 'a court must ask whether the improvement is more than the predictable use of prior art elements according to their established functions. " The Federal Circuit noted the "Court explained that when the problem is known, the possible approaches to solving the problem are known and finite, and the solution is predictable through use of a known option, then the pursuit of the known option may be obvious even absent a 'teaching, suggestion, or motivation' concerning that option."

Applying the teaching of KSR to the present case, the Federal Circuit stated: "[t]he Court in KSR did not create a presumption that all experimentation in fields where there is already a background of useful knowledge is 'obvious to try,' without considering the nature of the science or technology." The Federal Circuit then set forth several elements to be considered, stating: "Each case must be decided in its particular context, including the characteristics of the science or technology, its state of advance, the nature of the known choices, the specificity or generality of the prior art, and the predictability of results in the area of interest." Here, the proposed solution was not "obvious to try," at least at the preliminary injunction stage. Accordingly, the court affirmed the district court's conclusion that Sandoz was not likely to prevail on its invalidity defenses. Interestingly, this was the third time a panel of the court had addressed the strength of an invalidity case regarding these claims at the preliminary injunciton stage. In the two previous cases, the court once held the claims not likely to be held invalid (and affirmed the preliminary injunction), and once held substantial questions regarding validity had been raised (and vacated the preliminary injunction). Further, while the panel held Abbott likely to prevail on the issue of validity, Judge Archer concurred in the jugment on this issue, and therefore the validity portion of the opinion is solely by Judge Newman, who dissented in the previous case where the court vacated the injunction.

Inequitable Conduct

Sandoz alleged multiple theories of inequitable conduct during the prosecution of the patents in suit. Sandoz claimed that the '718 patent was unenforceable due to a declaration by Dr. Gustavson claiming that the differences in blood concentration between the extended release and the standard release formulations were statistically significant despite failing to conduct the tests to determine statistical significance (although tests showing differences in the concentration were conducted), Abbott's failure to disclose the results of some clinical tests regarding taste perversion, and Abbott's failure to provide the PTO with the results of a study conducted after the patent application was filed. Regarding the '718 patent, Sandoz claimed that Abbott had committed inequitable conduct by failing to disclose the results of some clinical tests regarding taste of the pharmaceutical.

The Federal Circuit affirmed the district court's finding that there was no likelihood of success on the inequitable conduct claims. In affirming the district court, the Federal Circuit cited its decision in Kingsdown Medical Consultants v. Hollister, a case that is widely regarded as reducing the availability of inequitable conduct defenses to alleged infringers. Under the Kingsdown standard, the Federal Circuit noted that inequitable conduct requires both a "failure to disclose material information, or submission of false material information" and "an intent to deceive" and that "these two elements, materiality and intent, must be proven by clear and convincing evidence."

Regarding the assertion of a statistically significant difference between blood concentrations in extended release and standard release versions, the district court had found that the representation was material, however, the court found that there was no evidence of intent to deceive the examiner presumably as the actual data were before the PTO and the results did show a lower concentration in the extended release trials. The Federal Circuit did not find any abuse of discretion in this holding.

The district court's analysis was slightly different regarding the omission of the clinical taste results in the prosecution of the '718 patent. The district court found the omission of the results was not material because the results were for different dosages of the two formulations of the drug while "a reasonable examiner would compare data at comparable dosages, and the data were not comparable." The district court also found that, even if the omission were material, there was again no evidence of intent to deceive based on the omission. Again the Federal Circuit found that the district court did not abuse its discretion.

The failure to disclose the study begun after the application was determined to not be material as it failed to contradict the information and arguments submitted to the PTO. Again the Federal Circuit did not find any error.

Sandoz argued that the failure to submit the taste data was clearly material regarding the '616 patent as the '616 patent contained a claim relating to taste when originally submitted. Abbott argued that the information was not material as the taste-related claim was withdrawn before the patent was issued. The Federal Circuit affirmed the district court's determination that the information was not relevant as "a reference that is material only to withdrawn claims can not be the basis of a holding of inequitable conduct."


The likelihood of success in establishing infringement turned primarily on claim construction. Sandoz claimed that the district court improperly construed the term "pharmaceutically acceptable polymer." First, Sandoz claimed that the district court erred in not treating Markush-type language in the specification to be limiting in the same way as if it were in a claim. Sandoz argued that the language should have limited the choice of pharmaceutically acceptable polymers to water soluble ones. The district court, relying on Abbott v. Andrx, held the language was not limiting, and the Federal Circuit agreed.

Next, Sandoz argued that the construction of the term was incorrect because it included the term "matrix" which appeared in neither the claims nor the specification of the patent. The Federal Circuit rejected this argument, noting that "claim construction often calls upon words other than those of the patent, lest the claim simply define itself."

Finally, Sandoz argued the claim construction was incorrect because it did not distinguish between pharmaceutically acceptable carriers and pharmaceutically acceptable excipients. Sandoz argued the components in its extended release formula were merely excipients and could not infringe. The district court found that Sandoz had characterized these excipients as extending the release of the drug in a pending patent application, precluding Sandoz from disclaiming the extended release properties of their formulation. The Federal Circuit agreed.

Equitable Considerations when Issuing a Preliminary Injunction

Sandoz, relying heavily on Abbott's licensing of the patented technology, argued that a preliminary injunction should not have been issued. The district court determined that an injunction was appropriate and the Federal Circuit affirmed. Regarding irreparable harm, the Federal Circuit stated that "the district court considered [the licensing relationships] and concluded that they do not negate the market share and revenue loss upon Sandoz' entry while the litigation proceeds." Regarding the balance of hardships, the Federal Circuit concurred with the district court stating "we agree that the fact that a patentee has licensed others under its patents does not mean that unlicensed infringement must also be permitted while the patentees are litigated. Precedent illustrates that when the patentee is simply interested in obtaining licenses, without itself engaging in commerce, equity may add weight to permitting infringing activity to continue during litigation." Regarding the balancing of public interest, Sandoz argued that the district court did not balance the public interests but instead applied a presumption of entitlement to an injunction. The Federal Circuit dismissed this argument stating that "the district court objectively weighed the legal probabilities and the equities, and exercised its discretionary judgment as to the entirety of the cause."

Likelihood of Success

The final portion of the opinion was devoted to addressing an issue regarding the appropriate measure of likelihood of success on the merits when determining if a preliminary injunction is appropriate. This portion of the opinion (authored by Judge Newman alone) stated that "[t]he correct standard is not whether a substantial question has been raised [concerning the validity of the patent], but whether the patentee is likely to succeed on the merits, upon application of the standards of proof that will prevail at trial." Judge Newman noted that "the evidence that favors the patent must be considered in deciding a motion for a preliminary injunction, as well as the evidence against the patent." Judge Newman surveyed the various circuits tracing the evolution of the approach throughout the nation to bolster its determination of this issue. Further, Judge Newman provided a listing of various Federal Circuit cases applying the "established law" in what could be the longest string cite in several years in a published opinion, citing 13 cases and coming in at just under 3 pages in the slip opinion (see pages 51-54).

Judge Gajarsa dissented. In his opinion, "when the alleged infringer raises a substantial question regarding validity, a preliminary injunction cannot issue because the patentee has failed to demonstrate a likelihood of success on the merits." Here, Judge Gajarsa would have held substantial questions of validity and enforceability had been raised, and that Abbott had not shown those questions "lacked substantial merit." Accordingly, Judge Gajarsa would have vacated the preliminary injunction. He also took at shot at Judge Newman's lengthy discussion of precedent on the issue, observing:

While Section VI of the opinion contains a superfluity of citations, it does not state the law relevant to this case. It is a pleasant, ambulatory, and meandering discussion; but it is not required to decide this case, is not part of the majority opinion, and is clearly dicta. Although Section VI discusses the relevant four-factor test and properly emphasizes the likelihood of success factor, it ignores the way this court has consistently analyzed whether or not a patentee has demonstrated it will likely succeed at trial. The real question before us in this case, as our precedent clearly explains, is whether the district court erred in finding that Sandoz had not established a substantial question as to the obviousness of the '718 patent.

To read the full decision in Abbot Labs. v. Sandoz, Inc., click here.

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