Shire Development, LLC v. Watson Pharmaceuticals, Inc. ( 2017 )

United States Court of Appeals
for the Federal Circuit
______________________
SHIRE DEVELOPMENT, LLC, SHIRE
PHARMACEUTICAL DEVELOPMENT, INC.,
COSMO TECHNOLOGIES LIMITED, GIULIANI
INTERNATIONAL LIMITED, NKA NOGRA
PHARMA LIMITED,
Plaintiffs-Appellees
v.
WATSON PHARMACEUTICALS, INC., NKA
ACTAVIS, INC., WATSON LABORATORIES, INC. -
FLORIDA, NKA ACTAVIS LABORATORIES FL,
INC., WATSON PHARMA, INC., NKA ACTAVIS
PHARMA, INC., WATSON LABORATORIES, INC.,
Defendants-Appellants
______________________
2016-1785
______________________
Appeal from the United States District Court for the
Southern District of Florida in No. 0:12-cv-60862-DMM,
Judge Donald M. Middlebrooks.
______________________
Decided: February 10, 2017
______________________
EDGAR HAUG, Frommer Lawrence & Haug LLP, New
York, NY, argued for plaintiffs-appellees. Also represent-
ed by ELIZABETH MURPHY, ERIKA SELLI, JASON AARON
LIEF, ANDREW S. WASSON.
2 SHIRE DEV., LLC v. WATSON PHARM., INC.
STEVEN ARTHUR MADDOX, Maddox Edwards, PLLC,
Washington, DC, argued for defendants-appellants. Also
represented by JEREMY J. EDWARDS, KAVEH SABA.
______________________
Before PROST, Chief Judge, TARANTO and HUGHES, Circuit
Judges.
HUGHES, Circuit Judge.
Plaintiffs (collectively, Shire) sued Defendants (collec-
tively, Watson) for infringing claims 1 and 3 of U.S.
Patent No. 6,773,720 by filing Abbreviated New Drug
Application No. 203817 with the Food and Drug Admin-
istration seeking to market a generic version of Shire’s
mesalamine drug, LIALDA®. Because Watson’s ANDA
Product does not satisfy the Markush group requirements
in claim 1(b), we reverse and remand with instructions to
enter judgment of non-infringement.
I
A
The ’720 patent is directed to a controlled-release oral
pharmaceutical composition of mesalamine (also known
as mesalazine or 5-amino-salicylic acid) used to treat
certain inflammatory bowel diseases. Shire Dev., LLC v.
Watson Pharm., Inc., 787 F.3d 1359, 1361 (Fed. Cir. 2015)
(2015 Decision). That composition includes the mesala-
mine active ingredient; an inner, lipophilic matrix; an
outer, hydrophilic matrix; and other optional excipients.
’720 patent col. 2 ll. 36–44.
When a matrix is hydrophilic, it “has an affinity for
water” and therefore “readily dissolves in” it. 2015 Deci-
sion, 787 F.3d at 1362 n.1; see Shire Dev. LLC v. Watson
Pharm., Inc., No. 12-60862-CIV, 2016 WL 1258885, at *6
(S.D. Fla. Mar. 28, 2016) (2016 Trial Decision) (noting the
parties’ stipulated-to definition of “hydrophilic” as “having
SHIRE DEV., LLC v. WATSON PHARM., INC. 3
an affinity to water”). Conversely, when a matrix is
lipophilic, it “has an affinity for lipids” and therefore
“resists dissolving in water.” 2015 Decision, 787 F.3d at
1362 n.1; see id. at 1365 (noting the parties’ stipulated-to
definition of “lipophilic” as “poor affinity towards aqueous
fluids”).
Shire asserts claims 1 and 3 of the ’720 patent. In
relevant part, claim 1 reads:
1. Controlled-release oral pharmaceutical compo-
sitions containing as an active ingredient 5-
amino-salicylic acid, comprising:
a) an inner lipophilic matrix consisting of
substances selected from the group consist-
ing of unsaturated and/or hydrogenated
fatty acid, salts, esters or amides thereof,
fatty acid mono-, di- or triglycerids, waxes,
ceramides, and cholesterol derivatives
with melting points below 90° C., and
wherein the active ingredient is dispersed
both in said [sic] the lipophilic matrix and
in the hydrophilic matrix;
b) an outer hydrophilic matrix wherein the
lipophilic matrix is dispersed, and said
outer hydrophilic matrix consists of com-
pounds selected from the group consisting
of polymers or copolymers of acrylic or
methacrylic acid, alkylvinyl polymers, hy-
droxyalkyl celluloses, carboxyalkyl cellu-
loses, polysaccharides, dextrins, pectins,
starches and derivatives, alginic acid, and
natural or synthetic gums;
c) optionally other excipients . . . .
’720 patent col. 6 ll. 7–30 (emphases added). Dependent
claim 3 limits the composition to “the form of tablets,
capsules, [or] mintablets [sic].” Id. col. 6 ll. 34–35.
4 SHIRE DEV., LLC v. WATSON PHARM., INC.
B
In 2013, following a bench trial, the district court re-
jected Watson’s invalidity arguments that the ’720 patent
lacked written description and enablement, and held that
Watson infringed claims 1 and 3. Shire Dev. LLC v.
Watson Pharm., Inc., No. 12-60862-CIV, 2013 WL
1912208, at *16 (S.D. Fla. May 9, 2013) (2013 Trial Deci-
sion).
On appeal, and again after remand from the Supreme
Court, we held that the ’720 patent matrices are “defined
by mutually exclusive spatial characteristics—one inner,
one outer—and mutually exclusive compositional charac-
teristics—one hydrophilic, one lipophilic.” 2015 Decision,
787 F.3d at 1366, remanded by 135 S. Ct. 1174 (2015),
granting cert. to and vacating 746 F.3d 1326 (Fed. Cir.
2014). Thus we concluded that a “matrix—not just an
excipient within the matrix”—must exhibit the appropri-
ate characteristic. Id. at 1365 (emphasis omitted). We
further explained that the matrix compositions are “lim-
ited by the Markush groups” added during prosecution “to
overcome the examiner’s rejection of the claims as obvi-
ous.” Id. at 1367.
Summarizing the operation of the Markush groups in
the ’720 patent, we determined that “the correct construc-
tion requires that the inner volume contain substances
from the group described for the inner lipophilic matrix
(which are all lipophilic substances), and that the outer
volume separately contain substances from the group
described for the outer hydrophilic matrix (which are all
hydrophilic).” Id.
On remand, the district court concluded that Watson’s
ANDA Product satisfied the “inner lipophilic matrix” and
“outer hydrophilic matrix” limitations. See 2016 Trial
Decision, 2016 WL 1258885, at *4, *15. The court also
determined that Watson’s ANDA Product satisfied the
Markush limitations because the excipients falling out-
SHIRE DEV., LLC v. WATSON PHARM., INC. 5
side the respective Markush groups were “unrelated” to
the invention since they did not drive the water-affinity
property of their respective matrices. Id. at *15. Watson
appeals the district court’s constructions of “inner lipo-
philic matrix” and “outer hydrophilic matrix” and its
findings of infringement. We have jurisdiction under 28
U.S.C. § 1295(a)(1).
II
“Following a bench trial, we review a district court’s
conclusions of law de novo and its findings of fact for clear
error.” Allergan, Inc. v. Sandoz Inc., 796 F.3d 1293, 1303
(Fed. Cir. 2015).
“A Markush claim is a particular kind of patent claim
that lists alternative species or elements that can be
selected as part of the claimed invention.” Multilayer
Stretch Cling Film Holdings, Inc. v. Berry Plastics Corp.,
831 F.3d 1350, 1357 (Fed. Cir. 2016). This typically
appears in the form: “a member selected from the group
consisting of A, B, and C.” 2015 Decision, 787 F.3d at
1363 n.3 (quoting Gillette Co. v. Energizer Holdings, Inc.,
405 F.3d 1367, 1372 (Fed. Cir. 2005)).
Here, claim 1’s (a) and (b) limitations use the phrase
“consisting of,” or “consists of,” to characterize the matrix,
and “consisting of” to define the groups, which “creates a
very strong presumption that that claim element is
‘closed’ and therefore ‘exclude[s] any elements, steps, or
ingredients not specified in the claim.’” Multilayer Stretch
Cling Film Holdings, 831 F.3d at 1358 (quoting AFG
Indus., Inc. v. Cardinal IG Co., 239 F.3d 1239, 1245 (Fed.
Cir. 2001)). Overcoming this presumption requires “the
specification and prosecution history” to “unmistakably
manifest an alternative meaning,” such as when the
patentee acts as its own lexicographer. Id. at 1359; see
Conoco, Inc. v. Energy & Envtl. Int’l, 460 F.3d 1349, 1359
n.4 (Fed. Cir. 2006).
6 SHIRE DEV., LLC v. WATSON PHARM., INC.
Though the “consisting of” presumption is very strong,
we permit the rare exception for “aspects unrelated to the
invention.” Norian Corp. v. Stryker Corp., 363 F.3d 1321,
1331 (Fed Cir. 2004). In Norian, we considered whether
adding a spatula to a calcium phosphate chemical kit
designed to repair teeth and bones took the accused
product outside the scope of the asserted patent. Id. at
1324, 1331–32. The claim at issue contemplated only
aspects of the chemicals themselves:
8. A kit for preparing a calcium phosphate miner-
al, said kit consisting of:
at least one calcium source and at least
one phosphoric acid source free of uncom-
bined water as dry ingredients; and
a solution consisting of water and a sodi-
um phosphate, where the concentration of
said sodium phosphate in said water
ranges from 0.01 to 2.0 M and said solu-
tion has a pH in the range of about 6 to
11.
Id. at 1324–25. We concluded that “[i]nfringement is not
avoided by the presence of a spatula, for the spatula has
no interaction with the chemicals, and is irrelevant to the
invention.” Id. at 1332.
Here, Watson’s ANDA Product does not facially satis-
fy the claim 1(b) Markush limitation. The Watson ANDA
Product’s extragranular space—which the district court
recognized is the outer hydrophilic matrix—contains the
following excipient composition and properties:
SHIRE DEV., LLC v. WATSON PHARM., INC. 7
Watson’s Opening Br. at 16, see J.A. 2162, 2209. 1 As the
district court concluded, “[m]agnesium stearate, an excip-
ient not within the claim 1(b) Markush group, is present
within the extragranular space.” See 2016 Trial Decision,
2016 WL 1258885, at *15. So the claim 1(b) limitation is
literally violated.
Nonetheless, the district court found that Watson in-
fringed because the component outside of the Markush
group—i.e., the lipophilic magnesium stearate in the
hydrophilic outer matrix—is unrelated to the inven-
tion. Therefore, the district court held that the lipophilic
component in the outer hydrophilic matrix fell within the
exception announced in Norian. Id. at *14–15. We disa-
gree with the district court’s interpretation of Norian and
what constitutes a component unrelated to the invention.
The putative invention of the ’720 patent is a multi-
matrix system that relies on the hydrophilic and lipophilic
characteristics of the matrices to release mesalamine in
the colon “in a sustained and uniform manner.” 2015
Decision, 787 F.3d at 1362. When the outer, hydrophilic
matrix interacts with a person’s digestive fluids, the
matrix creates a swollen barrier preventing aqueous
solution from reaching the inner, lipophilic matrix. See
’720 patent col. 2 ll. 60–64. This delay permits the prod-
uct to proceed through the digestive system until the
water breaks apart the outer matrix, releasing the lipo-
philic granules. See id. col. 3 l. 57–col. 4 l. 5.
Here, the district court concluded that the “magnesi-
um stearate in the extragranular space is overwhelmed by
the hydrophilic properties of the sodium starch glycolate
in the extragranular space” and credited expert testimony
that the hydrophilic “sodium starch glycolate is more
1 SSG is an abbreviation for sodium starch glyco-
late.
8 SHIRE DEV., LLC v. WATSON PHARM., INC.
potent than the mag stearate” when “outside” the gran-
ules. 2016 Trial Decision, 2016 WL 1258885, at *15
(emphases added) (internal quotation marks omitted).
The district court thereby found that the magnesium
stearate exerted lipophilic influence in the outer matrix,
and that finding is well supported: Shire’s expert
acknowledged that “the magnesium stearate in the spaces
between the granules is no less lipophilic than the mag-
nesium stearate in the granules,” see J.A. 1157, and the
court found that magnesium stearate is so strongly lipo-
philic that it may “impart lipophilic characteristics to a
composition even in low concentrations,” 2016 Trial
Decision, 2016 WL 1258885, at *11; see id. at *11–12
(crediting expert testimony that magnesium stearate “is
one of the most lipophilic things [the expert could] imag-
ine,” and explaining that a concentration of 0.5% magne-
sium stearate could increase dissolution time by more
than tenfold). No one has suggested that magnesium
stearate, when in the outer matrix, is neither lipophilic
nor hydrophilic. Thus, we conclude that, based on the
district court’s findings, the magnesium stearate retains
its lipophilic character in the extragranular space. Ac-
cordingly, the magnesium stearate structurally and
functionally relates to the invention, and its presence in
the outer matrix violates the “consisting of” requirement
in claim 1(b).
Shire argues, and the district court held, that the
magnesium stearate in Watson’s product—which Watson
includes as a lubricant rather than for its lipophilic prop-
erties—is unrelated to the invention because it is not
sufficiently lipophilic to render the outer matrix lipophilic.
But Norian did not restrict “related” components to only
those that advance or are intended to advance a Markush
group’s allegedly inventive elements. And we decline to
impose such a requirement, which would in effect equate
the scope of a Markush group’s “consisting of” language
with either “comprising” or “consisting essentially of”
SHIRE DEV., LLC v. WATSON PHARM., INC. 9
language. See CIAS, Inc. v. Alliance Gaming Corp., 504
F.3d 1356, 1360 (Fed. Cir. 2007) (“‘[C]omprising’ . . . is
inclusive or open-ended and does not exclude additional,
unrecited elements or method steps . . . .” (quoting Geor-
gia-Pacific Corp. v. U.S. Gypsum Co., 195 F.3d 1322,
1327–28 (Fed. Cir. 1999)); AK Steel Corp. v. Sollac &
Ugine, 344 F.3d 1234, 1239 (Fed. Cir. 2003) (“The phrase
‘consisting essentially of’ . . . permit[s] inclusion of compo-
nents not listed in the claim, provided that they do not
‘materially affect the basic and novel properties of the
invention.’” (quoting PPG Indus. v. Guardian Indus.
Corp., 156 F.3d 1351, 1354 (Fed. Cir. 1998)).
Shire also argues that we must interpret claim 1(b) to
cover products with magnesium stearate in the extra-
granular space because the ’720 patent examples disclose
magnesium stearate in the outer matrix. Assuming that
Shire is correct about the content of the examples, we still
find that Shire has not “overcome the exceptionally strong
presumption” that Markush groups are closed. Multilayer
Stretch Cling Film Holdings, 831 F.3d at 1359 (holding
that a patent specification’s listing of components not
listed in a Markush group was insufficient to overcome
the presumption created by “consisting of” claim lan-
guage). Shire does not challenge the district court’s
construction of “consisting of,” and neither the ’720 patent
specification nor the prosecution history reflect intent to
adopt a meaning of “consisting of” other than the well-
established, limited definition. Thus, we apply the plain
claim language. 2
2 The district court’s reliance on claim 1(c), which
recites “optionally other excipients,” is erroneous. 2016
Trial Decision, 2016 WL 1258885, at *15 n.15. Claim 1(c)
plainly falls under the preamble’s “comprising” transi-
tional phrase and outside of claim 1’s (a) and (b) Markush
10 SHIRE DEV., LLC v. WATSON PHARM., INC.
Accordingly, we conclude that Watson’s ANDA Prod-
uct does not satisfy the claim 1(b) Markush limitation,
and, by extension, does not satisfy dependent claim 3. See
Ferring B.V. v. Watson Labs., Inc.-Florida, 764 F.3d 1401,
1411 (Fed. Cir. 2014) (“One who does not infringe an
independent claim cannot infringe a claim dependent [on]
(and thus containing all the limitations of) that claim.”
(quoting Wahpeton Canvas Co. v. Frontier, Inc., 870 F.2d
1546, 1552 n.9 (Fed. Cir. 1989)). 3 We reverse the district
court’s judgment and remand for entry of judgment of
non-infringement and other proceedings consistent with
this opinion.
REVERSED AND REMANDED
groups. Claim 1(c) therefore does not present a permis-
sive catch-all to those closed Markush groups.
3 Because this conclusion resolves the appeal, we do
not address Watson’s other claim construction or non-
infringement arguments.