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Mylan Institutional LLC v. Aurobindo Pharma Ltd.

United States Court of Appeals, Federal Circuit

May 19, 2017

MYLAN INSTITUTIONAL LLC, APICORE U.S. LLC, Plaintiffs-Appellees
v.
AUROBINDO PHARMA LTD., AUROBINDO PHARMA USA INC., AUROMEDICS PHARMA LLC, Defendants-Appellants

         Appeal from the United States District Court for the Eastern District of Texas in No. 2:16-cv-00491-RWS-RSP, Judge Robert Schroeder, III.

          Nicole W. Stafford, Wilson, Sonsini, Goodrich & Rosati, PC, Austin, TX, argued for plaintiffs-appellees. Plaintiff-appellee Mylan Institutional LLC also represented by David S. Steuer, Palo Alto, CA; Sami Sedghani, San Francisco, CA.

          Joanna Garelick Goldstein, Sharma & DeYoung LLP, New York, NY, for Apicore U.S. LLC. Also represented by Allen Gardner, Gillam, Smith & Gardner, Tyler, TX.

          Sailesh K. Patel, Schiff Hardin LLP, Chicago, IL, argued for defendants-appellants. Also represented by Cindy Ahn; George Chih-Lun Yu, San Francisco, CA.

          Before Lourie, Moore, and Reyna, Circuit Judges.

          Lourie, Circuit Judge.

         Aurobindo Pharma Ltd., Aurobindo Pharma USA Inc., and Auromedics Pharma LLC (together, "Aurobindo") appeal from a decision of the United States District Court for the Eastern District of Texas granting Mylan Institutional LLC's ("Mylan Inst.") and Apicore U.S. LLC's ("Apicore") (together, "Mylan") motion for a preliminary injunction precluding Aurobindo from making, using, selling, offering to sell, and importing the accused isosul-fan 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"). See Mylan Institutional LLC v. Aurobindo Pharma Ltd., No. 2:16-cv-00491, 2017 WL 497593 (E.D. Tex. Feb. 7, 2017) ("Order Adopting R&R"). Because the district court did not err in its grant of the preliminary injunction under the '050 patent, although it did err in granting the injunction under the '992 and '616 patents, we affirm.

         Background

         Apicore owns, and Mylan Inst. is the exclusive licensee of, the '992, '616, and '050 patents, which relate to ISB, a triarylmethane dye used to map lymph nodes. The '992 and '616 patents (together, "the process patents") are directed to a process for preparing ISB by reacting iso-leuco acid with silver oxide in a polar solvent, followed by reaction with a sodium solution. See, e.g., '992 patent col.

7 ll. 21-44.[1] The '992 patent further requires 2.0-3.0 equivalents of silver oxide. See id. col. 9 1. 65. Claim 1 of the '616 patent is representative of the process patents and reads as follows:
A process of preparing N-[4-[[4-(diethyl-amino)phenyl] (2, 5- disulfophenyl)methylene] -2, 5 -cyclohexadien-1-yhdene]-N-ethylethanaminium, sodium salt comprising combining a suspension of isoleuco acid of the formula
(Image Omitted)
in a polar solvent with silver oxide, recovering isosulfan blue acid, and treating the isosulfan blue acid with a sodium solution.
'616 patent col. 9 11. 38-64 (emphasis added). Claim 1 of the '992 patent adds the limitation that 2.0-3.0 equivalents of silver oxide are employed in the process, but otherwise resembles the claim shown above. See '992 patent col. 9 11. 41-67.

         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 high performance liquid chromatography ("HPLC"). See '050 patent col. 9 ll. 54-58. Claim 1 is illustrative and reads as follows:

A compound N-[4-[[4-(diethylamino)phenyl] (2, 5-disulfophenyl)methylene]-2, 5-cyclohexadien-1-ylidene]-N-ethylethanaminium, sodium salt having a purity of at least 99.0% by HPLC.

Id. col. 9 ll. 55-58 (emphasis added).

         Around 1981, Hirsch Industries ("Hirsch") developed a 1% injectable solution of ISB, which it commercialized under the trade name Lymphazurin®. Covidien Ltd. ("Covidien"), the successor-in-interest to Hirsch, held the original new drug application ("NDA") and was the sole supplier of Lymphazurin® for 30 years. From its inception, Lymphazurin®'s production had been plagued by difficulties in synthesizing and purifying ISB. Hirsch's original clinical trials described the mixture as containing 94.5% ISB as determined by HPLC, with the remaining 5.5% consisting of "closely related isomers" produced during synthesis. Mylan Institutional LLC v. Aurobindo Pharma Ltd., No. 2:16-cv-00491, 2016 WL 7587325, at *2 (E.D. Tex. Nov. 21, 2016) ("Report and Recommendation") (internal quotation marks omitted).

         For 26 years following the Food and Drug Administration's ("FDA") approval of ISB, Sigma-Aldrich Corp. ("Sigma") supplied Hirsch and its successors with ISB that was manufactured by Allied Chemical Corp. ("Allied"). Allied's manufacturing process was unknown, but analysis of its ISB indicated the presence of lead, which suggested the use of a lead compound in synthesis. Sigma developed an isolation process to remove the unwanted lead, but the ultimate purity of the ISB it sold was unknown. In 2000, Allied stopped supplying Sigma with ISB and, while Sigma was looking for a new supplier, Covidien was forced to notify its customers that it was "completely out of" Lymphazurin® until it could find a new supplier for ISB. Id. at *2 (internal quotation marks omitted). By 2008, Sigma had a new supplier, Inno-vassynth, which synthesized ISB using ammonium di-chromate, resulting in residual chromium impurities. Sigma reported numerous problems with the purity of Innovassynth's product and eventually developed its own manufacturing process for ISB sometime around 2010.

         Apicore was founded in 2003 and began developing an improved process for synthesizing ISB. In 2004, Apicore partnered with Synerx Pharma LLC ("Synerx"), Mylan Inst.'s predecessor, to develop and market a generic version of Lymphazurin®. In 2007, Apicore filed a patent application that ultimately led to the process and '050 patents. Based on the claimed process, Synerx (acquired by Mylan Inst. in 2012) filed an abbreviated new drug application ("ANDA") seeking FDA approval to market a generic Lymphazurin®; the FDA approved the ANDA in 2010. By 2011, ISB sales were a significant portion of Apicore's revenue and in 2012, Covidien withdrew Lym-phazurin® from the market for "reasons other than safety or effectiveness." Id. at *3 (internal quotation marks omitted). Mylan Inst. became the sole supplier of the 1% ISB drug product until 2016, when Aurobindo entered the market.

         Aurobindo sought FDA approval for a generic Lym-phazurin®, 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." Id. (internal quotation marks omitted). Auro-bindo acknowledged to the FDA that it was looking for a reagent "other than silver oxide." Id. (internal quotation marks omitted). It eventually selected manganese diox- ide, 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.

         First, the district court[2] evaluated the likelihood of success on the merits and found that Aurobindo likely infringed the process patents under the doctrine of equivalents. Id. at *10-12. The court found that the difference in oxidation strength between silver oxide and manganese dioxide is "irrelevant" under both the "function-way-result" ("FWR") and "insubstantial differences" tests for equivalence, as applied to the "face of the claims, " because the claims do not specify a requirement of oxidation strength. Id. at *11. Further, the court explained that, even if oxidation strength were relevant, it "finds manganese dioxide to be a mild oxidant equivalent to silver oxide in the context of the [process patents]." Id. The court credited Dr. Sessler's (Mylan's expert) testimony in light of record evidence that the silver oxide and manganese dioxide processes produce crude ISB in similar yields. The court explained that if manganese dioxide were a substantially stronger oxidizing agent than silver oxide, a skilled artisan "would expect different results." Id. at *12.

         The district court found that Aurobindo did not raise a substantial question of validity of the '050 patent based on its arguments that the process patent is invalid: (1) under § 112 because the "by HPLC" limitation renders the claims indefinite; (2) under § 103 because the claims would have been obvious over various combinations of art; and (3) under § 102 because the claims are anticipated by Sigma's manufacture and sale of ISB.

         On the issue of indefiniteness, the district court credited Sessler's testimony and found that "by HPLC" was a common and well-understood way of designating or determining purity, as seen in "numerous sources, " including other patents and the scientific literature. Id. at *8-9. Thus, the court concluded that Aurobindo had not raised a substantial question of validity of the '050 patent under § 112. Id.

         The district court also rejected Aurobindo's obviousness argument, finding that Aurobindo did not raise a substantial question regarding motivation to combine the references or a reasonable expectation of success. See id. at *22. The court noted 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. Id. at *18 (citing Aventis Pharma Deutschland GmbH v. Lupin, Ltd., 499 F.3d 1293, 1301 (Fed. Cir. 2007)) (internal quotation marks omitted). The court concluded that Apicore's process leading to the purified compound claimed in the '050 patent constituted "an invention of patentable weight itself" and thus the purity claims would not necessarily have been prima facie obvious over the prior art mixture of (less pure) ISB and "closely related isomer[]" by-products. Id. at *18, *19 (internal quotation marks omitted).

         The district court credited Mylan's evidence of secondary considerations-specifically, long-felt but unmet need, commercial success, copying/praise of others, and unexpected results. Id. at *20-22. The court pointed to the failure of Allied, Sigma, Innovassynth, and others in the art to "reliably" produce "high-purity" ISB for 30 years. Id. at *20. And the court emphasized that Auro- bindo "admitted to the FDA" that it had copied the '992 patent. Id. at *21. Thus, the court concluded that Auro-bindo had not raised a substantial question that the '050 patent is invalid as obvious. Id.

         The district court also concluded that Aurobindo had not raised a substantial question that the '050 patent claims were anticipated under § 102(b) and § 102(g)(2) by Sigma's manufacture and sale of ISB. See id. at *13. Aurobindo argued that Sigma had made and sold ISB having a purity of greater than 99.0% six years before the '050 patent priority date. See id. Aurobindo supported its position by citing a Sigma Certificate of Analysis, which indicated that a compound named "Patent Violet Blue, " with a certain product number and Lot number, possessed a purity that was 100% by HPLC. Id. The court rejected Aurobindo's argument, finding that: (1) it is not clear that, at the time of the Certificate, Sigma's use of the term "Patent Violet Blue" referred to ISB because other Sigma documents indicate that "Patent Violet Blue" referred to several blue dye compounds with different structures; and (2) the record established that the Certificate is inaccurate because it "contradicts numerous other Sigma[] documents" that report a different purity for samples from the same Lot. Id. at *14. Thus, the court concluded that Aurobindo had not raised a substantial question that the '050 patent is invalid as anticipated. Id.

         Second, the district court found that Apicore[3] would be irreparably harmed without a preliminary injunction and identified four "hallmark examples" of irreparable harm that are demonstrated by the record: lost sales; lost R&D; price erosion; and that Apicore must now directly compete with an ...


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