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McNeil-PPC, Inc. v. Perrigo Co.

July 3, 2007

MCNEIL-PPC, INC. ET AL., PLAINTIFFS,
v.
PERRIGO COMPANY ET AL., DEFENDANTS.



The opinion of the court was delivered by: William H. Pauley III, District Judge

AMENDED OPINION AND ORDER

McNeil-PPC, Inc. ("McNeil"), Merck & Co., Inc. ("Merck") and Johnson & Johnson · Merck Consumer Pharmaceuticals Co. ("Johnson & Johnson · Merck") (collectively, the "Plaintiffs") bring this action pursuant to the Hatch-Waxman Act, 35 U.S.C. § 271(e)(2), against Perrigo Company, L. Perrigo Company and Perrigo Research & Development Company (collectively, the "Defendants" or "Perrigo"). Plaintiffs accuse Perrigo of infringing U.S. Patent No. 5,817,340 (the "'340 patent") by filing Abbreviated New Drug Application ("ANDA") No. 77-355 with the United States Food and Drug Administration (the "FDA"). Defendants assert that the '340 patent is invalid and that Plaintiffs committed inequitable conduct during the patent's prosecution. This Court conducted a nine-day bench trial in February 2007. Based on the credible evidence, this Court makes the following findings of fact and conclusions of law and invalidates the '340 patent as obvious pursuant to 35 U.S.C. § 103(a).*fn1

FINDINGS OF FACT

I. The Parties

McNeil, an operating unit of Johnson & Johnson, is a leading pharmaceutical company that sells over-the-counter pharmaceutical products. (Trial Transcript, dated Feb. 6-28, 2007 ("Tr.") at 7.) Johnson & Johnson · Merck is a joint venture company formed for the purpose of bringing Merck prescription pharmaceutical products over-the-counter. (Tr. at 7-8.) Perrigo is a leading global healthcare supplier. (Defendants' Trial Exhibit ("DX") DDD.)

II. The '340 Patent

The '340 patent claims a solid oral dosage of aluminum hydroxide or magnesium hydroxide (the "antacids") and famotidine. Famotidine is a bitter-tasting guanidinothiazole compound that inhibits acid secretion in the stomach by interfering with histamine receptors in the stomach lining. Aluminum hydroxide and magnesium hydroxide neutralize acid already present in the stomach. When combined in a solid oral dosage, famotidine and antacids are used to treat gastric disorders arising from acid secretion, such as acid indigestion.

McNeil filed the '340 patent application on December 1, 1992 with Edward John Roche ("Roche"), Susan Decoteau ("Decoteau") and Eleanor Freeman ("Freeman") as the named inventors. (DX L; Plaintiffs' Trial Exhibit ("PX") 1.) These inventors, along with McNeil employee John Dubek ("Dubek"), worked together on the Johnson & Johnson · Merck joint venture. The team purportedly discovered that famotidine degrades when exposed to antacids in a solid dosage form, yielding a therapeutically ineffective product with unknown properties.*fn2 (PX 1 col. 1, ll. 26-30; col. 2, ll. 41-49; col. 2, ln. 61 -- col. 3, ln. 2.) The '340 patent teaches a method for preventing famotidine degradation.

Independent composition claim 1 of the '340 patent recites as follows:

1. A solid oral dosage form for the treatment of gastrointestinal disorders comprising a therapeutically effective amount of impermeably coated famotidine granules for the treatment of gastric disorders and pharmacologically acceptable salts thereof; and a therapeutically effective amount of aluminum hydroxide or magnesium hydroxide wherein the oral dosage form has said coated famotidine granules and the aluminum hydroxide or magnesium hydroxide in contact with each other, but separated by said impermeable coating on the famotidine granules which is impermeable to the aluminum hydroxide or magnesium hydroxide. (PX 1 col. 14, ll. 39-49.) Independent method claim 5 recites as follows:

5. A method for manufacturing a solid oral dosage form comprising: a) forming granules containing famotidine for the treatment of gastric disorder; b) coating the granules with a coating impermeable to aluminum hydroxide or magnesium hydroxide to form impermeably coated famotidine granules; c) mixing a therapeutically effective amount of aluminum hydroxide or magnesium hydroxide with a therapeutically effective amount of impermeably coated famotidine granules and pharmaceutically acceptable excipients to form a compression mixture; then d) pressing the compression mixture to form a solid oral dosage form. (PX 1 col. 15, ln. 6 -- col. 16, ln. 2.) The specification details several embodiments of the invention. In the preferred embodiment, granulated famotidine is coated with an impermeable material that protects the famotidine from the antacids. (PX 1 col. 9, ll. 7-12.) The specification provides for two variations on this embodiment. In Examples I and V, the coated famotidine granules and the antacids are interspersed throughout a single-layer tablet. (PX 1 col. 9, ln. 39 -- col. 10, ln. 60; col. 13, ln. 52 -- col. 14, ln. 37.) Examples II and III depict two-layer embodiments in which the coated famotidine granules comprise one layer and the antacids comprise the other layer. (PX 1 col. 10, ln. 63 -- col. 12, ln. 51.) The specification identifies 23 coatings that are suitable for protecting the famotidine granules. (PX 1 col. 7, ln. 52 -- col. 8, ln. 27.) Four of these coatings contain polyvinylpyrrolidone ("PVP").

The Patent Office repeatedly rejected McNeil's original claims, primarily on grounds of obviousness. (DX L, Paper Nos. 5, 9, 16, 20, 24, 29.) On September 18, 1997, Roche submitted a declaration to the Examiner setting forth the results of a test he conducted exposing famotidine to antacids. (DX L, Paper No. 32.) By combining 10mg of uncoated famotidine granules with 200mg of aluminum hydroxide or magnesium hydroxide in a single layer tablet, Roche observed a 25-70% degradation in the famotidine. (DX L, Paper No. 32.) When impermeably coated famotidine granules were substituted for the uncoated granules, approximately 2% degradation occurred. (DX L, Paper No. 32.) The Patent Office deemed the Roche declaration "persuasive as to unexpected results in stability over the prior art for the dosage form tested therein, i.e., coated granule solid oral dosage form containing famotidine and aluminum or magnesium hydroxide." (DX L, Paper No. 33 at 2.) The '340 patent issued on October 6, 1998. (Joint Pretrial Order, dated Jan. 25, 2007 ("JPTO") ¶ VI.A.2.)

Merck holds approved new drug application ("NDA") No. 20-958 for a single-layer tablet containing, inter alia, 10mg of coated famotidine and 165mg of magnesium hydroxide. (JPTO ¶ VI.A.1.) The tablets are marketed over-the-counter under the trade name Pepcid Complete. (JPTO ¶ VI.A.1.) On October 29, 2004, Perrigo filed ANDA No. 77-355 with the FDA requesting permission to market a generic version of Pepcid Complete containing, inter alia, 10mg of coated famotidine in one layer and 165mg of magnesium hydroxide in a separate layer. (JPTO ¶ VI.A.4, 9.) Perrigo certified that the '340 patent was invalid and would not be infringed by Perrigo's proposed tablet. (JPTO ¶ VI.A.4-5.)

III. Litigation History

On February 3, 2005, Plaintiffs filed this action alleging that the ANDA willfully infringes the '340 patent and requesting attorneys' fees pursuant to 35 U.S.C. § 285. On December 2, 2005, Defendants moved for summary judgment on grounds of non-infringement and invalidity. This Court held a Markman hearing and oral argument concerning Defendants' motion on April 25, 2006. In a Memorandum and Order dated July 27, 2006, this Court construed the '340 patent's claims, denied Defendants' motion for summary judgment on invalidity, and awarded summary judgment to Plaintiffs on the issue of infringement. McNeil-PPC, Inc. v. Perrigo Co., 443 F. Supp. 2d 492 (S.D.N.Y. 2006) ("McNeil I"). The Court's claim construction was as follows: (1) "mixing" in claim 5 was found to mean "combining two or more ingredients into one mass"; (2) "compression mixture" in claim 5 was found to mean "one mass containing two or more ingredients that are compressed into a tablet"; (3) "in contact with" in claim 1 was found to mean "a union or junction of body surfaces, a touching or meeting"; (4) "impermeable" in claims 1 and 5 was found to refer to "a coating material that does not permit the passage of aluminum hydroxide or magnesium hydroxide"; and (5) "impermeably coated famotidine granules" in claims 1 and 5 was found to refer to "famotidine granules that are coated with a material that is impermeable to the aluminum or magnesium hydroxide, using Wurster coating, rotocoating or another coating process acceptable to a person of ordinary skill in the art."*fn3 McNeil I, 443 F. Supp. 2d at 503-512.

Defendants moved for reconsideration of the Court's decision granting summary judgment to Plaintiffs on infringement and requested that this Court withdraw and reserve its Markman determination pending trial. By Order dated January 17, 2007, the Court declined to withdraw its Markman rulings. McNeil-PPC, Inc. v. Perrigo Co., No. 05 Civ. 1321 (WHP), 2007 WL 104513 (S.D.N.Y. Jan. 17, 2007) ("McNeil III"). Regarding infringement, the Court noted Defendants' apparent concession at the April 25, 2006 hearing that there were no disputed issues of fact with respect to how Perrigo's tablet is constructed. Nevertheless, affording Defendants the benefit of the doubt, the Court withdrew its summary judgment determination on the issue of infringement and agreed to hear evidence on the issue at trial. McNeil III, 2007 WL 104513, at *1-2.

On September 20, 2006, Perrigo filed its Amended Answer and Counterclaim, alleging that the '340 patent is invalid (1) as obvious under 35 U.S.C. § 103; (2) for failure to name Dubek as an inventor under 35 U.S.C. § 102(f); (3) for failure to disclose the rotogranulation method described in the '072 patent under the enablement and best mode requirements of 35 U.S.C. § 112; (4) because Plaintiffs failed to disclose the Yamanouchi report during patent prosecution; and (5) because the inclusion of PVP in the patent violates § 112's enablement requirement. Perrigo avers that all but the first of these items also constitutes inequitable conduct. On October 18, 2006, Plaintiffs moved for summary judgment on Defendants' inequitable conduct and related invalidity defenses. By Order dated January 12, 2007, the Court granted Plaintiffs' motion with respect to Defendants' '072 rotogranulation method enablement, Yamanouchi report and PVP-related counterclaims and defenses. McNeil-PPC, Inc. v. Perrigo Co., No. 05 Civ. 1321 (WHP), 2007 WL 81918, at *13 (S.D.N.Y. Jan. 12, 2007) ("McNeil II"). The Court denied Plaintiffs' motion with respect to Defendants' '072 rotogranulation best mode and inventorship-related counterclaims and defenses. McNeil II, 2007 WL 81918, at *13.

CONCLUSIONS OF LAW

I. Obviousness

Defendants assert that the '340 patent is invalid as obvious under 35 U.S.C. § 103.

This Court agrees.

A. Legal Standard

An issued patent is presumed valid. 35 U.S.C. § 282. Thus, the accused infringer bears the burden of proving invalidity by clear and convincing evidence. 35 U.S.C. § 282; Glaxo Group Ltd. v. Apotex, Inc., 376 F.3d 1339, 1348 (Fed. Cir. 2004); Oakley, Inc. v. Sunglass Hut Int'l, 316 F.3d 1331, 1339 (Fed. Cir. 2003).

A patent claim is invalid 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." 35 U.S.C. § 103(a); Merck & Co. v. Teva Pharm. USA, Inc., 395 F.3d 1364, 1372-77 (Fed. Cir. 2005); Ryko Mfg. Co. v. Nu-Star, Inc., 950 F.2d 714, 716 (Fed. Cir. 1991). In determining obviousness, the fact finder must consider the factors set forth in Graham v. John Deere Co., 383 U.S. 1 (1966): (1) the scope and content of the prior art; (2) the differences between the prior art devices and the claimed invention; (3) the level of ordinary skill in the art;*fn4 and (4) objective considerations, such as commercial success, long felt but unmet need, and unexpected results. Graham, 383 U.S. at 17-18; see also KSR Int'l Co. v. Teleflex Inc., __ U.S. __, 127 S.Ct. 1727, 2007 WL 1237837, at *6 (2007); Ecolochem, Inc. v. S. Cal. Edison Co., 227 F.3d 1361, 1371 (Fed. Cir. 2000). "While the sequence of these questions might be reordered in any particular case, the factors continue to define the inquiry that controls. If a court . . . conducts this analysis and concludes the claimed subject matter was obvious, the claim is invalid under § 103." KSR, 2007 WL 1237837, at *7.

Until recently, the Federal Circuit had employed an additional test for determining the obviousness of combining prior art references. That inquiry required the party seeking to invalidate a patent to establish "some teaching, suggestion, or motivation to combine the references." In re Rouffet, 149 F.3d 1350, 1355 (Fed. Cir. 1998) (citing In re Geiger, 815 F.2d 686, 688 (Fed. Cir. 1987)); see also ACS Hosp. Sys., Inc. v. Montefiore Hosp., 732 F.2d 1572, 1577 (Fed. Cir. 1984). The "teaching, suggestion or motivation" test was addressed by the Supreme Court in KSR International v. Teleflex Inc. While KSR recognized that the test "captured a helpful insight," the Supreme Court nevertheless cautioned that "[t]he obviousness analysis cannot be confined by a formalistic conception of the words, teaching, suggestion, and motivation." KSR, 2007 WL 1237837, at *14. Courts must avoid a "rigid approach" in determining whether an invention would have been obvious to a skilled artisan. KSR, 2007 WL 1237837, at *12. An "expansive and flexible approach" must instead be applied, and the courts may utilize "common ...


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