On May 19, 2017 Federal Circuit upheld a preliminary injunction barring Aurobindo from selling a dye (isosulfan blue) used to map lymph nodes during a patent suit by Mylan, finding that while a lower court’s decision was incorrect regarding two of the patents at issue, it was correct on one patent.
Aurobindo Pharma appeal from a decision of the United States District Court for the Eastern District of Texas granting Mylan and Apicore US LLC’s motion for a preliminary injunction precluding Aurobindo from making, using, selling, offering to sell, and importing the accused isosulfan blue (“ISB”) product that allegedly infringes three of Apicore’s patents—U.S. Patent 7,622,992(“the ’992 patent”), U.S. Patent 8,969,616 (“the ’616 patent”), and U.S. Patent 9,353,050 (“the ’050 patent”). Apicore owns, and Mylan is the exclusive licensee of, the ’992, ’616, and ’050 patents. The ’992 and ’616 patents (together, “the process patents”) are directed to a process for preparing ISB. The ’050 patent (which the parties refer to as “the purity patent”) is directed to an ISB compound having a purity greater than 99.0%, as measured by HPLC.
Aurobindo sought FDA approval for a generic Lymphazurin®, informing the FDA that it had studied a “number of patents” describing ISB manufacture and selected, inter alia, Apicore’s ’992 patent, and that it “considered the process described [therein] for the initial sample preparation and further, the optimization of the process.” Aurobindo acknowledged to the FDA that it was looking for a reagent “other than silver oxide.” It eventually selected “manganese dioxide” and its process resulted in ISB with a 5–10% impurity which could not be removed by recrystallization. Instead, it used preparatory HPLC to achieve an ISB purity of greater than 99.5%. Mylan sued Aurobindo for infringement and sought a preliminary injunction, which the district court granted based on infringement under DOE & failed invalidity attack.
CAFC on appeal discussed each issue (DOE, Validity & Irreparable harm) in detail.
I. Process patents:
With respect to infringement of process patents under DOE court concluded that the district court’s analysis of equivalence in this case was flawed, no doubt because of the sparse and confusing case law concerning equivalents, particularly the paucity of chemical equivalence case law, and the difficulty of applying the legal concepts to the facts. Court said that this appeal is unusual in a first sense in that it arises from the grant of a preliminary injunction based on the doctrine of equivalents. Moreover, the law on the doctrine of equivalents as applied to chemical materials is not clear, and its misapplication can lead to unsound results. This appears to be such a case.
The district court here applied the “function-way-result” (FWR) test in evaluating the equivalence issue. CAFC concluded that district court’s analysis of the process claims under FWR was flawed by being unduly truncated and hence incomplete. The district court made a finding that silver oxide and manganese dioxide are “equivalent” in the context of the process patents, without considering the “way” prong of the FWR test without considering critical factors under that prong, namely, the relative oxidation strengths of silver oxide & manganese dioxide. The district court correctly evaluated the “function” aspect of the FWR test—deciding, in effect, that the function of the silver oxide was to oxidize the precursor isoleuco compound to ISB acid. But that is not considering the “way” the oxidation works. Manganese dioxide and silver oxide may have the same function, but the question is whether they operate in the same way. Critical facts that might be considered in an equivalents analysis include the relative oxidation strengths of the two oxidizing agents, as argued by Aurobindo, and the fact that manganese dioxide requires the use of an acid for oxidation, but silver dioxide does not, and results in a different yield. All of this in fact may at trial indicate a different “way.” Thus, there is room for sufficient doubt as to whether silver oxide and manganese dioxide oxidize isoleuco acid in the same way so as to satisfy the “way” prong of the FWR test. Accordingly, the district court erred in its equivalents analysis under FWR and we reverse its determination.
Federal circuit next considered whether the district court erred in finding that Aurobindo did not raise a substantial question as to validity of the ’050 patent. The preliminary injunction premised on the ’050 patent will stand unless Aurobindo raised a substantial question concerning the validity of the patent, or unless the court erroneously found irreparable harm. We find that the court did not err in either respect.
We have previously acknowledged that “a purified compound is not always prima facie obvious over the [prior art] mixture” if the process to arrive at the purified compound is itself of patentable weight (Aventis, 499 F.3d at 1301). Moreover, if the prior art teaches a mixture containing a compound but does not enable its purification, then the purified form of the compound may not have been obvious over the prior art mixture. See, e.g., Spectrum Pharm., Inc. v. Sandoz Inc., 802 F.3d 1326, 1335–36 (Fed. Cir. 2015). It is clear from the record here that, although ISB was known in the prior art, the path to arrive at ISB with a purity of greater than 99.0% was not known before the relevant date of the ’050 patent. Thus, we see no error in the court’s legal analysis or its factual findings pertaining to validity of the ’050 patent, particularly at the preliminary injunction stage of the litigation.
III. Irreparable Harm:
Finally, court considered whether the district court erred in finding likelihood that Apicore will sustain “substantial and immediate irreparable injury” without preliminary relief. Aurobindo argues that the district court erred in finding a causal nexus between Apicore’s alleged harm and the patented features of the process and ’050 patents. Mylan responds that Aurobindo’s causal nexus argument is flawed because it improperly focuses on a subset of the relevant customers (physicians) and ignores all others (active pharmaceutical ingredient (“API”) suppliers, pharma companies, hospitals, the FDA, etc.). Mylan maintains that Apicore’s harm is directly caused by Aurobindo’s infringement because ample evidence shows Sigma’s difficulty in finding an acceptable ISB supplier and that, by admittedly copying Apicore’s patented process, Aurobindo gained a competitive advantage.
We agree with Mylan that the district court’s determinations were not clearly erroneous. On the record evidence, the court found that: (1) due to Aurobindo’s infringement, Apicore has, and will continue to, suffer from lost sales, lost research and development, price erosion, and having to directly compete with an infringer (2) there was a causal nexus between Aurobindo’s infringement and Apicore’s harm because Aurobindo’s product “would not be on the market if [it] had not obtained [FDA] approval for a product that will likely be found to be covered by the patents.
Take-away: This decision highlights the use of FWR test in pharmaceutical/chemical field. By citing Supreme court‘s decision of Graver Tank, Federal circuit said that non-mechanical cases may not be well-suited to consideration under the FWR test. However, this test can be used depending on the circumstances of the case. Thus, the Court seemingly blessed two equivalents tests (FWR & the substantial difference), leaving to the lower courts in future cases the choice of which to apply.
CAFC further said that when this case goes back to the district court for a full trial on the merits, the court may wish to consider whether the substantiality of the differences test may be more applicable in this chemical case. In this case, the district court conducted an incomplete FWR analysis while essentially bypassing the substantial differences test, in a situation where the latter test might seemingly be more appropriate.