HZNP MEDICINES LLC, HORIZON PHARMA USA, INC., Plaintiffs-Appellants
ACTAVIS LABORATORIES UT, INC., Defendant-Cross-Appellant
Appeals from the United States District Court for the
District of New Jersey in Nos. 1:14-cv-07992-NLH-AMD,
1:16-cv-00645-NLH-AMD, Judge Noel Lawrence Hillman.
Borg-Breen, Green, Griffith & Borg-Breen LLP, Chicago,
IL, argued for all plaintiffs-appellants. Also represented by
Robert Fritz Green, Jessica Mackay.
Michael E. Joffre, Sterne Kessler Goldstein & Fox, PLLC,
Washington, DC, argued for defendant-cross-appellant. Also
represented by John Christopher Rozendaal, Kristina Caggiano
Kelly, William H. Milliken.
Prost, Chief Judge, Newman and Reyna, Circuit Judges.
Medicines LLC and Horizon Pharma USA, Inc.
("Horizon") appeal from the U.S. District Court for
the District of New Jersey's judgment of invalidity and
noninfringement. Actavis Laboratories UT, Inc.
("Actavis") cross-appeals the district court's
judgment of nonobviousness. We affirm.
Horizon is the assignee of U.S.
Patent Nos. 8, 217, 078 ("the '078 patent"); 9,
132, 110 ("the '110 patent"); 8, 618, 164
("the '164 patent"); 9, 168, 304 ("the
'304 patent"); 9, 168, 305 ("the '305
patent"); 8, 546, 450 ("the '450 patent");
9, 101, 591 ("the '591 patent"); 8, 563, 613
("the '613 patent"); 9, 220, 784 ("the
'784 patent"); 8, 871, 809 ("the '809
patent"); 8, 252, 838 ("the '838 patent");
and 9, 066, 913 ("the '913 patent")
(collectively, "the patents-at-issue" or
"Horizon's patents"). The patents-at-issue
generally relate to methods and compositions for treating
osteoarthritis and can be divided into two groups, with the
patents in each group sharing a substantially similar
first group of patents consists of method-of-use patents,
including the '450, '078, '110, and '164
patents. (the "method-of-use patents"). Claim 10 of
the '450 patent is illustrative of the asserted claims of
the method-of-use patents:
method for applying topical agents to a knee of a patient
with pain, said method comprising:
applying a first medication consisting of a topical
diclofenac preparation to an area of the knee of said patient
to treat osteoarthritis of the knee of said patient, wherein
the topical diclofenac preparation comprises a
therapeutically effective amount of a diclofenac salt and
40-50% w/w dimethyl sulfoxide;
waiting for the treated area to dry;
subsequently applying a sunscreen, or an insect repellant to
said treated area after said treated area is dry, wherein
said step of applying a first medication does not enhance the
systemic absorption of the subsequently applied sunscreen, or
insect repellant; and
wherein said subsequent application occurs during a course of
treatment of said patient with said topical diclofenac
'450 patent col. 73 l. 35-col. 74 l. 11.
second group of patents consists of formulation patents,
including the '838, '591, '304, '305,
'784, '613, '809, and '913 patents. (the
"formulation patents"). Claim 49 of the '838
patent is illustrative of the asserted claims of the
topical formulation consisting essentially of:
1-2% w/w diclofenac sodium;
40-50% w/w DMSO;
23-29% w/w ethanol;
10-12% w/w propylene glycol;
hydroxypropyl cellulose; and
water to make 100% w/w, wherein the topical formulation has a
viscosity of 500-5000 centipoise.
'838 patent col. 30 ll. 60-67.
groups of patents are listed in the U.S. Food and Drug
Administration's ("FDA") Approved Drug
Products with Therapeutic Equivalence Evaluations
("Orange Book") for Horizon's PENNSAID® 2%
product. PENNSAID® 2% is a nonsteroidal anti-inflammatory
drug ("NSAID") and the first FDA-approved
twice-daily topical diclofenac sodium formulation for the
treatment of pain of osteoarthritis of the knees.
to the development of PENNSAID® 2% is prior art
PENNSAID® 1.5%. PENNSAID® 1.5% also treats
osteoarthritis knee pain but differs from PENNSAID® 2%
both in formulation and recommended dosage. As to dosage,
PENNSAID® 1.5% directs the user to administer the
formulation by applying 40 drops of PENNSAID® 1.5% on
each painful knee, four times a day. J.A. 6923. PENNSAID®
2% improved upon this dosing regimen by reducing the
frequency of application to a recommended dose of 40 mg of
the formulation, applied through "2 pump actuations on
each painful knee, 2 times a day." J.A. 6649-51.
sought to market a generic version of PENNSAID 2% and filed
Abbreviated New Drug Application ("ANDA") No.
207238. The ANDA included a certification under 21
U.S.C. § 355(j)(2)(A)(vii)(IV) ("Paragraph IV
certification"), stating that the patents-at-issue were
invalid or would not be infringed by Actavis's generic
product. The filing of an ANDA with a Paragraph IV
certification constitutes an act of artificial patent
infringement under 35 U.S.C. § 271(e)(2)(A), which
allows litigation to commence before actual sale of an
accused product has occurred. Vanda Pharm. Inc. v.
West-Ward Pharm. Int'l Ltd., 887 F.3d 1117, 1126
(Fed. Cir. 2018).
December 23, 2014, after receiving notice of Actavis's
Paragraph IV certification, Horizon filed suit in the
District of New Jersey, alleging infringement of the
pa-tents-at-issue under § 271(e)(2)(A).
district court, the parties disputed the construction of
various terms in the asserted claims. Both sides filed claim
construction briefs. The district court conducted
Markman hearings on March 3, 2016, and June 7, 2016.
On August 17, 2016, the district court issued its
Markman order, finding three terms in the asserted
claims of the formulation patents to be indefinite.
the district court found that the term "the topical
formulation produces less than 0.1% impurity A after 6 months
at 25°C and 60% humidity" was indefinite because the
identity of "impurity A" is unknowable to a person
of ordinary skill in the art ("POSITA").
the district court found that the term "the formulation
degrades by less than 1% over 6 months" was indefinite
because neither the claims nor the specification disclose the
means to evaluate degradation.
the district court found that the term "consisting
essentially of" was indefinite. In that regard, the
district court began by recognizing that the phrase
"consisting essentially of," when used in a
formulation patent, reflects that the recited formulation
includes (a) the listed ingredients that follow the phrase,
and (b) unlisted ingredients that do not materially affect
the basic and novel properties of the invention. See
J.A. 14-15 (citing PPG Indus. v. Guardian Indus.
Corp., 156 F.3d 1351, 1354 (Fed. Cir. 1998)). Because
the parties disputed the basic and novel properties, the
district court determined that in this case identification of
those properties was required. The district court therefore
concluded that "[b]ecause the basic and novel properties
of an invention are part of the construction of a claim
containing the phrase 'consisting essentially of,'
the Nautilus standard applies to the assessment of
an invention's basic and novel properties." J.A.
22-23 (citing Nautilus, Inc. v. Biosig Instruments,
Inc., 572 U.S. 898, 910 (2014)).
to the basic and novel properties of the invention, the
district court noted that the specification identified five
properties: (1) better drying time; (2) higher viscosity; (3)
increased transdermal flux; (4) greater pharmacokinetic
absorption; and (5) favorable stability. The district court
focused on the "better drying time" property and
held that this basic and novel property was indefinite. In
doing so, the district court emphasized that the
specification described two different methods for evaluating
"better drying time." Those two methods, however,
did not provide consistent results at consistent times. Faced
with this inconsistency, the district court was persuaded by
expert testimony that a POSITA would not know under which
standard to evaluate the drying rate of the claimed
invention. According to the district court, this prevented a
POSITA from being able to have "reasonable
certainty" about the scope of the basic and novel
properties of the invention, thereby rendering the term
"consisting essentially of" indefinite. J.A. 27.
August 30, 2016, Horizon filed a motion for reconsideration
of the claim construction. Horizon argued that the district
court erred by failing to consider indefiniteness on a
claim-by-claim basis. Horizon also contended that it had been
prevented from fully developing the record in relation to the
"better drying time" property. On January 4, 2017,
the district court conducted a hearing on the motion for
reconsideration, and on January 6, 2017, it issued an opinion
denying Horizon's motion for reconsideration and
maintaining its initial claim constructions and
district court concluded that Horizon's arguments on
reconsideration lacked merit. As to the claim-by-claim
argument, the district court noted that Horizon chose to
address the issue in relation to the formulation patents as a
whole, and that this was a new argument raised for the first
time in a motion for reconsideration, which is improper. The
district court also found that Horizon had ample notice and
opportunity to present evidence and develop the record during
the two Markman hearings, the supplemental briefing
in between those hearings, and during the ten weeks between
the second hearing and the Markman order.
district court bolstered its conclusion that the basic and
novel properties were indefinite by analyzing the
"favorable stability" property, which had not been
addressed in the initial Markman order. Because the
specification failed to provide the requisite guidance for a
POSITA to evaluate stability, the district court found that
the "favorable stability" property was indefinite
which in this case, by extension, rendered the phrase
"consisting essentially of" indefinite.
January 27, 2017, after the district court reaffirmed its
claim constructions and related indefiniteness
determinations, Actavis filed a motion for summary judgment
of noninfringement. Actavis argued that there was no dispute
that Actavis did not directly infringe the patents-at-issue,
and that, while Horizon premised its allegations of induced
infringement upon the labeling of Actavis's ANDA product,
there was also no material factual dispute that Actavis's
proposed label does not induce infringement.
evaluating the inducement argument, the district court
considered, among other things, the asserted claims of the
method-of-use patents and the respective labels for both
Horizon's and Actavis's products. As to the asserted
claims of the method-of-use patents, the district court found
that Horizon's claimed methods required the following
steps: (1) application of the medication to knee, (2) waiting
for the area to dry, and (3) application of sunscreen, insect
repellant, or a second topical medication. To perform
Horizon's claimed methods, all the steps must be
to the parties' respective labels, according to the
district court, both were essentially the same; the main
distinction being that Actavis's proposed ANDA label
replaced "PENNSAID" with "diclofenac sodium
topical solution." In relevant part, the parties'
labels warn to "[w]ait until the treated area is
dry" before applying a second topical agent, such as
sunscreen, insect repellant, or covering the area with
clothing. The district court held that this warning was
insufficient to show induced infringement because
Horizon's claimed method requires application of
a second topical agent whereas the label merely
permits, without encouraging, post-product application
of sunscreen, insect repellant, or a second topical
medication. The district court thus granted summary judgment
in Actavis's favor, concluding that Horizon had not met
its burden to show that Actavis's label induced
infringement of the method-of-use patents.
district court's Markman and summary-judgment
orders disposed of most of the asserted claims of the
pa-tents-at-issue. At trial, only one claim remained-claim 12
of the '913 patent. Actavis maintained that claim 12 of
the '913 patent was invalid as obvious. Actavis
stipulated that if the claim was found not invalid at trial,
its ANDA product would infringe the claim. The stipulation
thus narrowed the trial court's focus to obviousness.
obviousness theory was that the changes made to PENNSAID®
1.5%, which resulted in the PENNSAID® 2% formulation,
would have been obvious to a POSITA based upon the prior art
available at the time of the invention.
formulation differences between PENNSAID® 1.5% and
PENNSAID® 2% (as recited in claim 12 of the '913
patent) are as follows:
15915 (table generated by the district court). Each of the
ingredients listed above performs a specific function.
Diclofenac sodium is the active ingredient. Dimethyl
sulfoxide ("DMSO") is a penetration enhancer, which
enhances absorption of the drug into the skin. Ethanol is
both a solvent, which dissolves the active ingredient for
absorption of the drug into the skin, and a penetration
enhancer. Propylene glycol is a solvent. Hydroxypropyl
cellulose ("HPC") is a thickening agent, which
increases the viscosity of a formulation. Glycerin is a
humectant, which is a nonvolatile substance that holds water
onto the skin. And water is a solvent.
contended that the drawbacks to PENNSAID® 1.5%-frequent
application and vulnerability to run-off- were known, and
that a POSITA would have been motivated to modify
PENNSAID® 1.5% to address these drawbacks by: (a)
increasing the absorption to reduce application frequency;
(b) thickening the formulation; and (c) reducing the drying
time to prevent run-off. Actavis proposed that a POSITA would
have had a reasonable expectation that these modifications
would address the known drawbacks. Actavis also pointed out
that PENNSAID® 1.5% included all of the ingredients
required by claim 12 of the '913 patent except for a
thickener (the HPC), in addition to the claimed amounts of
DMSO, pro-pylene glycol, and water. As to the remaining
limitations in claim 12, Actavis maintained that they were
disclosed in the prior art. Actavis argued that all the
changes were obvious optimizations of result-effective
variables that produced a predictable result in relation to
absorption, thickness, and drying times.
on the other hand, argued that the changes made to
PENNSAID® 1.5% were not routine optimizations, and that
the results of the various changes could not be predicted by
the prior art. According to Horizon, the prior art reflects
that the field of topical pharmaceutical formulations is
complex and unpredictable. And to arrive at the formulation
recited in claim 12 of the '913 patent, Horizon maintains
that a POSITA would have had to:
(1) increase the diclofenac concentration from 1.5% to
exactly 2%, (2) increase the concentration of ethanol from
11% to exactly the range of 23-29%, (3) add a thickening
agent, (4) choose the thickening agent to be HPC, (5)
identify the concentration of HPC to be exactly 2.5%, (6)
select a viscosity range of between 500 and 5000 cps, and
then (7) decide not to change the concentrations of DMSO or
pro-pylene glycol, but instead (8) remove or reduce glycerin
and/or water to account for the increases in diclofenac,
ethanol and thickening agent concentrations and still total
100%, and the [POSITA] would also have had to change the
method of administration from 3-4 times per day to twice a
day [despite knowing that increasing viscosity makes it
harder for drug molecules to penetrate the skin.]
began on March 21, 2017, and continued until March 30, 2017.
The parties filed post-trial submissions on April 20, 2017.
12, 2017, the district court found that Actavis had not
shown, by clear and convincing evidence, that claim 12 of the
'913 patent is invalid for obviousness. On May 22, 2017,
the district court entered a final judgment consistent with
its holdings and conclusions in the Mark-man order,
the summary-judgment order, and the post-trial findings of
fact and conclusions of law. Since claim 12 of the '913
patent was found to be nonobvious and Actavis had stipulated
to infringement of that claim if it was deemed not invalid at
trial, the district court ordered that Actavis be enjoined
from engaging in the commercial use, offer for sale, or sale
of its ANDA product until the expiration of the '913
appeals and Actavis cross-appeals the district court's
final judgment. We have jurisdiction under 28 U.S.C. §
first address Horizon's appeal and then Actavis's
appeal proceeds on two fronts. First, Horizon contests the
district court's holding on claim construction that the
terms "impurity A"; "degrades at less than 1%
over 6 months"; and "consisting essentially
of" are indefinite. Second, Horizon challenges the
district court's holding, on summary judgment, that
Actavis's ANDA label did not induce infringement. For the
reasons below, we affirm.
review indefiniteness determinations de novo. Interval
Licensing LLC v. AOL, Inc., 766 F.3d 1364, 1370 (Fed.
Cir. 2014). A claim is invalid for indefiniteness if its
language, read in light of the specification and prosecution
history, "fail[s] to inform, with reasonable certainty,
those skilled in the art about the scope of the
invention." Nautilus, Inc. v. Biosig Instruments,
Inc., 572 U.S. 898, 901 (2014). General principles of
claim construction apply to indefiniteness allegations.
Biosig Instruments, Inc. v. Nautilus, Inc., 783 F.3d
1374, 1377-78 (Fed. Cir. 2015). Accordingly, we review a
district court's determinations of subsidiary facts based
upon extrinsic evidence for clear error, and those based upon
intrinsic evidence (the patent claims, specification, and
prosecution history) de novo. Id.
district court found that a POSITA would not have understood,
with reasonable certainty, the scope of the claims reciting
(1) "impurity A," (claim 4 of the '913
pa-tent); (2) a formulation that "degrades at
less than 1% over 6 months" (asserted claims of the
'613 patent and claims 10-11 and 19 of the '591
patent); and (3) a formulation "consisting essentially
of" specified ingredients (asserted claims of the
'838, '304, '305, and '784 patents and claims
12-15, 17, 19, and 24-25 of the '591 patent). It thus
held that those claims were indefinite. We address each of
those conclusions in turn.
of the '913 patent recites a "topical formulation
produc[ing] less than 0.1% [of] impurity A after 6 months at
25° C and 60% humidity." '913 patent col. 30
ll. 22-24. The district court concluded that "impurity
A" is indefinite because a POSITA would not know, with
reasonable certainty, the identity of the substance as
claimed. We agree.
term "impurity A" only appears in claim 4 and
Example 6 of the '913 patent. Example 6 examines
"the stability of the compositions of the present
invention . . . at room temperature over a six month
period." '913 patent col. 25 ll. 36-38. To do so,
the example refers to a study where samples were placed into
sealed plastic screw cap bottles and then stored at 25°C
and 60% humidity for six months. Id. col. 25 ll.
47-49. After six months of storage, "the samples were
tested for impurities by high performance liquid
chromatography (HPLC)." Id. col. 25 ll. 49- 51.
to Example 6, this test revealed two unexpected findings: (1)
that the composition of the invention contained a higher
concentration of the active agent while resulting in a
"lower concentration of a degradation impurity";
and (2) "that compositions using hydroxypropylcellu-lose
(HPC) as the gelling agent had a significantly lower quantity
of this impurity as compared to compositions made using
carbomer gelling agents." Id. col. 25 ll.
38-46. In discussing the results of the study, the example
refers to "an impurity, termed 'impurity A,'
[which] was seen to elute at about 6.6 minutes in varying
amounts for the various [tested] compositions."
Id. col. 25 ll. 54-56. Table 13 shows the percentage
of "impurity A" in relation to the tested
Percent "impurity A" after 6 months of
1.5% diclofenac sodium as a
comparative liquid formulation solution
2.0% diclofenac sodium in 0.9% Carbopol gel
2.0% diclofenac sodium in 3.5% HPC gel
Id. col. 25 ll. 57-66.
example goes on to remark that the appearance of "a
lower percentage of 'impurity A'" in the
formulation "containing 3.5% HPC shows a higher degree
of stability." Id. col. 26 ll. 1-5. It also
states that the "reduction in the level of impurity
A" in the HPC gel formulation, as compared to the
formulation containing 0.9% Carbopol, shows that the former
"is more stable than" the latter. Id. col.
26 ll. 7-11. Because of that, it concludes that "the
present invention provides improved stability," which is
evidenced by the "degradation of] less than 0.034% or
0.09%" over the six-month period. Id. col. 26
ll. 11-16. Lastly, the example notes that "the amount of
'impurity A found [was] . . . well below [the] limits
that would require additional nonclinical testing of the
impurity." Id. col. 26 ll. 16-19.
the specification does not define "impurity A,"
Horizon argues that a POSITA would understand the term to
mean "USP Related Diclofenac Compound A."
("USP Compound A"). According to Horizon, a POSITA
versed in the pertinent prior art would be able to ascertain
the meaning of "impurity A" based on the intrinsic
evidence. It is undisputed that the intrinsic evidence does
not explicitly refer to USP Compound A, or its chemical
formulation, in relation to "impurity A." Still,
Horizon maintains that, consulting the available
pharmacopeias at the time, a POSITA would know "impurity
A" refers to a specific impurity of diclofenac sodium.
Horizon posits that because the specification refers to
"impurity A" as a degradation of diclofenac sodium,
which is the only component of the inventive formulation with
a known impurity, a POSITA would know this term refers to
"USP Related Diclofenac Compound A RS."
argues that the specification does not provide any clues as
to the identity of "impurity A," which implies that
"impurity A" is an unknown impurity. According to
Actavis's expert, a POSITA reading the specification
would read "impurity A" as referring to an unknown
impurity because the specification: (a) does not disclose the
chemical name of the impurity, which would be expected if
such were known; (b) uses quotes to refer to "impurity
A," suggesting that it is not the formal name of a known
impurity; and (c) justifies not conducting additional tests
to identify the impurity merely because it occurs in low
amounts. Actavis contends that the only relevant disclosure
in the specification about "impurity A" is in
relation to Example 6. But, citing to its expert's
declaration, Actavis maintains that the information in
Example 6 is insufficient to allow a POSITA to determine the
identity of "impurity A." For instance,
Actavis's expert opined that the specification offers no
information about the HPLC procedure used, including the
column type, mobile solvent, and temperature used for the
HPLC analysis reported. Moreover, Actavis contends that
Example 6's observation that the amount of "impurity
A" is so low that no "additional nonclinical
testing" is required implies further testing was
necessary to ascertain the identity of "impurity
Horizon's reliance on pharmacopeias, Actavis argues that
the district court did not clearly err in rejecting
Horizon's view on what a POSITA would have surmised from
those pharmacopeias. Actavis points out that the
specification never mentions USP Diclofenac Related Compound
A RS, which is a degradation of the active ingredient.
Actavis also states that the claims refer to the degradation
of the entire formulation-including other ex-cipients
(inactive ingredients)-as opposed to the degradation of the
diclofenac sodium, the active ingredient. Actavis argues that
even in light of the pharmacopeias, there is considerable
doubt as to whether a POSITA would read "impurity
A" to mean an impurity of the formulation as opposed to
that of the active ingredient.
no error in the district court's conclusion that
"impurity A" is indefinite. First, we look to the
language of the claims to evaluate if the meaning of
"impurity A" is reasonably clear. Berkheimer v.
HP Inc., 881 F.3d 1360, 1363 (Fed. Cir. 2018) ("We
look first to the language of the claim to determine whether
the meaning of [the term] is reasonably clear."). Claim
4 of the '913 patent depends upon claim 1. Claim 1
topical formulation comprising:
diclofenac sodium present at 2% w/w;
DMSO present at about 40 to about ...