Judges: Rader (author), Linn, Prost

[Appealed from S.D.N.Y., Judge Lynch]

In Eisai Co. v. Dr. Reddy’s Laboratories, Ltd., Nos. 07-1397, -1398 (Fed. Cir. July 21, 2008), the Federal Circuit affirmed the district court’s findings that Dr. Reddy’s Laboratories, Ltd. and Dr. Reddy’s Laboratories, Inc. (collectively “Dr. Reddy’s”) and Teva Pharmaceuticals USA, Inc. (“Teva”) infringed Eisai Co., Ltd. and Eisai, Inc.’s (collectively “Eisai”) U.S. Patent No. 5,045,552 (“the ’552 patent”). The Court also affirmed the district court’s finding that the ’552 patent is not obvious over the prior art and that Eisai’s alleged acts during prosecution did not rise to the level of inequitable conduct.

The ’552 patent claims rabeprazole and its salts. Rabeprazole is a proton pump inhibitor, which suppresses gastric acid production. Rabeprazole’s sodium salt is the active ingredient in Aciphex, a pharmaceutical approved for the treatment of duodenal ulcers, heartburn, and associated disorders.

Dr. Reddy’s and Teva each filed ANDAs seeking to manufacture a generic version of Aciphex before the expiration of the ’552 patent. Eisai sued Dr. Reddy’s and Teva. Dr. Reddy’s and Teva conceded infringement, but asserted that the ’552 patent was unenforceable for inequitable conduct. Moreover, Teva argued that the claims were invalid for obviousness.

On SJ, the district court ruled in favor of Eisai on validity and enforceability, and after a bench trial found that Dr. Reddy’s and Teva had failed to prove inequitable conduct. Teva appealed the district court’s judgment on validity, and Dr. Reddy’s and Teva appealed the district court’s judgments of enforceability.

Teva asserted obviousness over a combination of three references: a European patent claiming the anti-ulcerative compound lansoprazole; a U.S. patent claiming proton pump inhibitor omeprazole; and an article by Brändström describing a class of anti-ulcerative compounds having a particular core structure, which is shared by rabeprazole, lansoprazole, and omeprazole.

The Federal Circuit agreed with the district court that the European patent teaches that the fl uorinated substituent of lansoprazole provides “a special path to achieving lipophilicity.” The Federal Circuit then explained that, under KSR, in cases involving new chemical compounds, it was necessary to identify some reason that would have led a chemist to modify a known compound in a particular manner to establish prima facie obviousness of a new claimed compound. Thus, the Court stated that “post-KSR, a prima facie case of obviousness for a chemical compound still, in general, begins with the reasoned identification of a lead compound.” Slip op. at 8. Accordingly, the Federal Circuit concluded that the record contained no reasons a skilled artisan would have considered modifying lansoprazole by removing the lipophilicity-conferring fl uorinated substituent as an identifiable, predictable solution. The Federal Circuit therefore agreed with the district court that the record did not support a case of obviousness of the ’552 patent as a matter of law.

The Federal Circuit then considered the district court’s rulings on inequitable conduct.

Specifically, Teva and Dr. Reddy’s alleged on appeal that Eisai misled the PTO in five ways: (1) failing to disclose Eisai’s own copending ’013 application, which claimed the “ethyl homolog” of rabeprazole; (2) withholding rejections from the ’013 application’s prosecution that also would have been applicable to the ’552 patent’s prosecution; (3) failing to disclose the prior art “Byk Gulden patent” (WO 8602646); (4) submitting a misleading declaration (the “Fujisaki Declaration”); and (5) concealing lansoprazole from the examiner. The district court rejected the last assertion on SJ and the other four after a bench trial.

In considering the failure to disclose the copending ’013 application, the Federal Circuit held that while disclosure would have been prudent, it agreed with the district court’s finding that the level of materiality of the ’013 application was low and that the record is devoid of any real suggestion of intent to deceive the PTO, much less the clear and convincing evidence required to support a finding of inequitable conduct.

In considering the failure to disclose the rejections made in the ’013 application prosecution while prosecuting the ’552 patent, the district court did not reach materiality because it found insufficient proof of intent to deceive based on the credibility of Eisai’s fact witnesses. The Federal Circuit agreed that the facts did not rise to the level of culpability required to establish intent to deceive, or even a level suggesting gross negligence.

Further, the district court rejected Teva’s theory that Eisai deliberately “hid the ball” from the PTO by filing separate applications because it would have been “implausibly risky,” given that similar applications are usually assigned to the same examiner in the same art unit. Thus, the Federal Circuit held that the district court had ample bases from which to conclude that Eisai’s failure to disclose its copending ’013 application along with the rejections issued in its prosecution, while not completely forthcoming, did not rise to the level of inequitable conduct.

With respect to the Byk Gulden patent, the Federal Circuit agreed with the district court that the reference was not material as it was cumulative to references already disclosed to the PTO. Further, even if it had been material, the Federal Circuit concluded that the lack of clear and convincing evidence of intent to deceive “would nonetheless have imposed an insurmountable bar to finding inequitable conduct.” Id. at 13.

The Federal Circuit also rejected the argument that the data presented by Eisai in the Fujisaki Declaration were misleading because the declaration did not discuss the ethyl homolog of rabeprazole. The Court held that Eisai had no obligation to include additional, unnecessary data. Thus, even though the submission to the PTO was highly material to prosecution, “the lack of deceptive intent rendered stillborn yet another allegation of inequitable conduct.” Id. at 14.

Finally, the Federal Circuit rejected the assertion that Eisai deceptively declined to inform the examiner of a patent application for lansoprazole. The strongest evidence was a vague, subjective statement that was not sufficient to establish materiality, let alone intent. Thus, the Federal Circuit affirmed the district court’s determination of enforceability.