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December 19, 1997

PFIZER INC., Plaintiff, against PERRIGO COMPANY and L. PERRIGO COMPANY, Defendants.

The opinion of the court was delivered by: CHIN


 After a three-week trial in this case, the jury returned a verdict in favor of plaintiff Pfizer Inc. ("Pfizer") on its claim that defendants Perrigo Company and L. Perrigo Company (together, "Perrigo") infringed its patent no. 5,338,538 (the "'538 Patent") under the "doctrine of equivalents." The jury awarded Pfizer compensatory damages in the amount of $ 1,500,000. The jury also returned a verdict in favor of Perrigo finding that Pfizer had failed to prove either "literal infringement" of the '538 Patent or infringement of the trade dress of Pfizer's Advanced Formula PLAX(R) product.

 Certain claims were reserved for decision by the Court following the jury's verdict. These are Perrigo's claims that the '538 Patent is invalid and unenforceable and Pfizer's request for permanent injunctive relief with respect to both patent and trade dress infringement.

 For the reasons that follow, Perrigo's defenses of invalidity and unenforceability are rejected. Pfizer's request for permanent injunctive relief is granted as to its patent infringement claim but denied as to its trade dress infringement claim. Pursuant to Fed. R. Civ. P. 52, the following constitute my findings of fact and conclusions of law on the non-jury issues.


 A. The Parties

 Pfizer manufactures and sells national brand non-prescription personal care products, including Advanced Formula PLAX(R), a pre-brushing dental rinse that loosens plaque on teeth. Pfizer engages in extensive research to develop and improve its products, and it supports its products -- including PLAX(R) -- with substantial advertising.

 Perrigo produces and sells private label personal care products, including its own version of a plaque-loosening pre-brushing dental rinse, called "Anti-Plaque." Perrigo's products are sold to supermarket and drug store chains as well as independent stores and pharmacies under private labels. These private labels sometimes bear the name of the store or chain (e.g., Revco, Food Lion, Price Chopper) and sometimes they bear a house brand name (e.g., Equate, Good Sense).

 Perrigo does not engage in "primary research" to develop new products, but instead "focuse[s] on developing store brand products equivalent in formulation, quality and efficacy to existing national brand products." (PX 204, at 8). Likewise, Perrigo does not engage in any substantial advertisement of its products.

 B. PLAX(R) and Anti-Plaque

 1. Original PLAX(R)

 PLAX(R) was created by Pfizer's predecessor-in-interest, Oral Research Laboratories ("ORL"), in the mid-1980's. The original PLAX(R) was sold in a clear bottle with a white top, with a label that was clear except for horizontal white lettering and a horizontal blue strip across the middle. Soon thereafter, Perrigo came out with its Anti-Plaque product, sold in trade dress similar to Pfizer's PLAX(R) trade dress: a similarly shaped clear bottle with a white top, with a label that was clear except for horizontal white lettering and some horizontal blue lettering across the middle. (See PX 56, 57). Moreover, the formula for Perrigo's product was a copy of the formula for original PLAX(R), and the two products were sold in an identical red color.

 In 1988, Pfizer sued Perrigo for patent and trade dress infringement in the United States District Court for the District of New Jersey. A motion for a preliminary injunction was granted enjoining Perrigo from using 14 of its Anti-Plaque labels, as Judge Bissell found a likelihood of confusion; the motion was denied as to 8 labels.

 The New Jersey case was settled in 1991, with Perrigo admitting that it had infringed ORL's patents. (PX 41). Although the parties agreed that a certain bottle was "acceptable" and could be used by Perrigo (which is the bottle Perrigo is still using), Perrigo also agreed to make a "substantial modification" to its container "so that Perrigo's product no longer creates the same overall commercial impression as ORL's PLAX, and is immediately distinguishable from PLAX by consumers." (Id.).

 2. The New Trade Dress for Original PLAX(R)

 Thereafter, Pfizer wanted "to create a package for PLAX that would better distinguish it from the private label products made specifically . . . by Perrigo." (Tr. at 98). This effort started in 1992. Although Pfizer was exploring a re-formulation of PLAX(R) at the time, Pfizer decided to change its trade dress without waiting for the reformulation process to be completed, because it wanted to "clearly distinguish" its product from the "private label knock-offs." (Tr. at 100).

 A new trade dress was created and Pfizer started shipping original PLAX(R) in the new trade dress in 1992 and early 1993. (See id.). The new trade dress included a new logo with a distinctive blue and white vertical box on the left side of the bottle. (See PX 56).

 3. Advanced Formula PLAX(R)

 In January 1994, after extensive research and development, *fn1" Pfizer introduced Advanced Formula PLAX(R), which contained a new ingredient -- tetrasodium pyrophosphate -- that was believed to increase the effectiveness of the product. The final composition of Advanced Formula PLAX(R) was "completely different" from the composition of Original PLAX(R). (Tr. at 281). In developing the new composition, Pfizer's inventors sought to create a product with improved "organoleptic properties" -- smell, appearance, and taste. Flavor and alcohol content were increased for "impact." (Tr. at 281, 286-87). Improved efficacy was also a major factor.

 By June of 1990, Pfizer researchers were exploring the use of tetrasodium pyrophosphate; the Pfizer inventors believed that the addition of tetrasodium pyrophosphate, a "detergent booster," would help make sodium lauryl sulfate, a "detergent," work more effectively. (Tr. at 288, 295, 306-07). One difficulty they encountered was that at cold temperatures (near freezing), the product would crystallize or "flocculate" -- solid matters would precipitate out of the solution. Eventually, after hundreds of hours of additional research, a solution to the problem was uncovered and a new formula -- the Advanced Formula -- was developed.

 Advanced Formula PLAX(R) was marketed in a trade dress similar to the trade dress introduced in 1992, but there were some changes, including the addition of the words "ADVANCED FORMULA" in blue letters in a horizontal yellow box. (PX 8). The vertical blue and white vertical box remained, although some "stippling" was added to one end of the box. Pfizer spent in excess of $ 100,000 in connection with the re-design of its trade dress. (Tr. at 108-09).

 To publicize the newly-adopted trade dress and to give notice that it intended to protect its trade dress, Pfizer ran an advertisement stating:

Our New Logo Looks Different . . . Pfizer intends to fully protect its new Plax package design.

 (PX 65; see Tr. at 107-08).

 4. Perrigo's Anti-Plaque Product

 Within weeks after the release of Advanced Formula PLAX(R), Perrigo started the process of copying Pfizer's formula and emulating its trade dress. Perrigo prepared three "New Product Profiles," each dated February 24, 1994, one for each of Pfizer's three versions of Advanced Formula PLAX(R): regular, mint, and peppermint. Attached to each profile was a copy of the trade dress for Advanced Formula PLAX(R). The profiles contain the following comments:

NB [national brand] version is first new product introduction in several years. . . . New introduction should help pump some life into the NB and boost promotion/advertising activity by them. . . .
Changes reflect an enhanced formulation which should prove to be more appealing to customers and consumers. . . .
Alcohol level is up from 7.2% to 8.5%. Tetrasodium Pyrophosphate has been added. Other ingredient changes involved, too. Patent(s) may be involved.

 By January 1995, Perrigo started marketing its Advanced Formula Anti-Plaque dental rinse. (Tr. at 104-05). Advanced Formula Anti-Plaque was distributed in approximately 169 labels. Many of these labels were not challenged by Pfizer as infringing its trade dress. Some 77 labels, however, were challenged. These contested labels were divided into four groups at trial: Group A consisted of 29 labels featuring a vertical "Anti-Plaque" box on the left side in a blue and white scheme; most have some stippling or a fade motif in the box; most feature the words Advanced Formula; all have store names; none say "Compare to Plax." Group B consisted of a single label, Perrigo's house label; the label contains no store name and does say "Compare to Plax." Group C consisted of 41 labels featuring a vertical, blue box (on the left side for 39 labels and on the right side for 2 labels) containing the word "Anti-Plaque"; most have the words "Advanced Formula" and all say "Compare to PLAX." Finally, Group D consisted of 7 labels with "Anti-Plaque" featured horizontally.

 Revco, one of Perrigo's customers, specifically asked Perrigo to use graphics that "compared closely to NBE inlook [sic] and colors." (PX 225). "NBE" refers to the national brand equivalent -- here, Pfizer's Advanced Formula PLAX(R). The Revco label (PX 223) does compare closely to Pfizer's Advanced Formula PLAX(R) label both in look and colors.

 Pfizer obtained a patent for the new formula -- the '538 Patent, which issued on August 16, 1994. The application for the '538 Patent, as well as two predecessor applications, were reviewed by Primary Examiner Shep K. Rose.

 The '538 formula provided for "at least about 0.3% by weight" tetrasodium pyrophosphate. Perrigo's product initially contained approximately .197%, rounded up to .2%, tetrasodium pyrophosphate. In January 1996, Perrigo commenced the manufacture and distribution of a reformulated product that contained only .03% by weight of a pyrophosphate ion concentration.


 A. Perrigo's Defenses of Invalidity and Unenforceability

 In contending that the '538 Patent is invalid and unenforceable, Perrigo makes seven separate arguments. The first four arguments are based on the concept of obviousness: Perrigo contends that the alleged innovations introduced by the '538 Patent were not entitled to patent protection because they were "obvious." 35 U.S.C. § 103. The fifth and sixth arguments are asserted under 35 U.S.C. § 112: Perrigo contends that the claims in the '538 Patent are invalid because they are broader than the subject matter that the inventors regarded as their invention and that the specifications of the '538 Patent do not enable one of ordinary skill in the art to practice the invention claimed. Finally, in its seventh argument, Perrigo alleges that, because Pfizer violated its duty of candor in prosecuting its application, the '538 Patent is unenforceable.

 1. Obviousness

 The '538 Patent is presumed valid. See 35 U.S.C. § 282; Custom Accessories, Inc. v. Jeffrey-Allan Indus., Inc., 807 F.2d 955, 961 (Fed. Cir. 1986). Perrigo thus has the burden of proving invalidity by clear and convincing evidence. Id.

 Section 103 of the Patent Act provides that a patent may not be obtained

if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains.

 In determining "obviousness," a court is to consider such factors as:

(1) the scope and content of the prior art; (2) the level of ordinary skill in the art; (3) the differences between the claimed subject matter and the prior art; and (4) the objective evidence of nonobviousness.

 Heidelberger Druckmaschinen AG v. Hantscho Commercial Prods., Inc., 21 F.3d 1068, 1071 (Fed. Cir. 1994). "Objective" -- or secondary -- evidence of nonobviousness includes evidence of copying, commercial success, failure of others, and a long felt but unresolved need for the product. Id. 87 F.3d at 1567 (citing Dennison Mfg. Co. v. Panduit Corp., 475 U.S. 809, 810-11, 89 L. Ed. 2d 817, 106 S. Ct. 1578 (1986)). Historical facts and circumstances also may shed light on the question of whether the subject matter of the invention would have been obvious.

 With these considerations in mind, I hold that Perrigo has not demonstrated by clear and convincing evidence that the '538 Patent is invalid for obviousness.

 (a) The Scope and Content of the Prior Art

 Perrigo's obviousness argument is based on six items of prior art that it contends were material and analogous but were not brought to the attention of the Patent Office: (i) original formula PLAX(R), (ii) the Colgate mouth rinse, (iii) the Procter & Gamble Prebrushing Rinse, (iv) the Nabi Patent, (v) the Gaffar Patent, and ...

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