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Indivior Inc. v. Dr. Reddy's Laboratories, S.A.

United States Court of Appeals, Federal Circuit

July 12, 2019

INDIVIOR INC., FKA RECKITT BENCKISER PHARMACEUTICALS INC., INDIVIOR UK LIMITED, FKA RB PHARMACEUTICALS LIMITED, AQUESTIVE THERAPEUTICS, INC., FKA MONOSOL RX, LLC, Plaintiffs-Cross-Appellants
v.
DR. REDDY'S LABORATORIES, S.A., DR. REDDY'S LABORATORIES INC., WATSON LABORATORIES INC., ACTAVIS LABORATORIES UT, INC., TEVA PHARMACEUTICALS USA, INC., Defendants-Appellants PAR PHARMACEUTICAL, INC., INTELGENX TECHNOLOGIES CORP., Defendants INDIVIOR INC., FKA RECKITT BENCKISER PHARMACEUTICALS INC., INDIVIOR UK LIMITED, FKA RB PHARMACEUTICALS LIMITED, AQUESTIVE THERAPEUTICS, INC., Plaintiffs-Appellants
v.
ALVOGEN PINE BROOK, LLC, Defendant-Cross-Appellant

          Appeals from the United States District Court for the District of Delaware in Nos. 1:13-cv-01674-RGA, 1:14-cv-00422-RGA, 1:14-cv-01451-RGA, 1:14-cv-01574-RGA, 1:16-cv-00178-RGA, 1:15-cv-00477-RGA, 1:15-cv-01016-RGA, Judge Richard G. Andrews.

          Jeffrey B. Elikan, Covington & Burling LLP, Washington, DC, argued for all plaintiffs-cross-appellants in 2017-2587 and for all plaintiffs-appellants in 2018-1949. Indivior Inc., Indivior UK Limited also represented by Erica Nicole Andersen, Beth S. Brinkmann, Robert Jason Fowler, Matthew Aaron Kudzin, Jeffrey Howard Lerner, Ashley Kwon; Dustin B. Weeks, Troutman Sanders LLP, Atlanta, GA; Daniel Ladow, James M. Bollinger, Magnus Essunger, Katherine Harihar, Timothy P. Heaton, Gerald Eames Porter, New York, NY; Charanjit Brahma, San Francisco, CA.

          James Francis Hibey, Steptoe & Johnson, LLP, Washington, DC, for plaintiff-cross-appellant Aquestive Therapeutics, Inc. in 2017-2587 and for plaintiff-appellant Aquestive Therapeutics, Inc. in 2018-1949. Also represented by Jamie Lucia, San Francisco, CA.

          Kevin Paul Martin, Goodwin Procter LLP, Boston, MA, argued for defendants-appellants Dr. Reddy's Laboratories, S.A., Dr. Reddy's Laboratories Inc. in 2017-2587. Also represented by Elaine Blais, Edwina Clarke, Robert Frederickson, III, Alexandra Lu; Robert V. Cerwinski, Ira J. Levy, New York, NY.

          Stephen R. Smerek, Winston & Strawn LLP, Los Angeles, CA, argued for defendants-appellants Watson Laboratories Inc., Actavis Laboratories UT, Inc., Teva Pharmaceuticals USA, Inc. in 2017-2587. Also represented by Jason Craig Hamilton; George C. Lombardi, Michael Keenan Nutter, Chicago, IL; Geoffrey P. Eaton, Washington, DC.

          Steven H. Sklar, Leydig, Voit & Mayer, Ltd., Chicago, IL, argued for defendant-cross-appellant in 2018-1949. Also represented by David Airan, Gregory Bays, Nicole Kopinski, James Sanner.

          Before Newman, Mayer, and Lourie, Circuit Judges.

          OPINION

          LOURIE, CIRCUIT JUDGE.

         Dr. Reddy's Laboratories, S.A. and Dr. Reddy's Laboratories Inc. (collectively, "DRL"); Watson Laboratories Inc. and Actavis Laboratories UT, Inc. (collectively, "Watson"); and Teva Pharmaceuticals USA, Inc. ("Teva") appeal from several decisions of the United States District Court for the District of Delaware pertaining to U.S. Patents 8, 603, 514 (the "'514 patent"), 8, 900, 497 (the "'497 patent"), and 8, 017, 150 (the "'150 patent"). Specifically, DRL appeals from two decisions holding the asserted claims of the '514, '497, and '150 patents not invalid as obvious. Reckitt Benckiser Pharm. Inc. v. Dr. Reddy's Labs. S.A., Nos. 14-1451-RGA, 14-1573-RGA, 14-1574-RGA, 2017 WL 3837312 (D. Del. Aug. 31, 2017) ("DRL '514 Decision"); Reckitt Benckiser Pharm. Inc. v. Dr. Reddy's Labs. S.A., No. 14-1451-RGA, 2017 WL 3782782 (D. Del. Aug. 31, 2017) ("DRL '150 Decision"). Watson and Teva appeal from the court's judgment in a third decision that the '514 patent is not invalid as indefinite. Reckitt Benckiser Pharm. Inc. v. Watson Labs., Inc., Nos. 13-1674-RGA, 14-422-RGA, 2016 WL 3186659 (D. Del. June 3, 2016) ("Watson Decision"); J.A. 212-14.[1] Watson also appeals from the court's finding in that decision that Watson infringes the '514 patent, as well as the court's subsequent order denying it relief from the infringement judgment under Rule 59. Reckitt Benckiser Pharm. Inc. v. Watson Labs., Inc., Nos. 13-1674-RGA, 14-422-RGA, 2017 WL 3820943 (D. Del. Aug. 31, 2017) ("Rule 59 Decision").

         Indivior Inc., Indivior UK Limited, and Aquestive Therapeutics, Inc. (collectively, "Indivior") cross-appeal from the district court's findings in the two DRL decisions that DRL does not infringe either the '514 or the '150 patent. Indivior also appeals from a fourth decision by the same court finding that Alvogen Pine Brook, LLC ("Alvogen") does not infringe the '514 patent. Indivior Inc. v. Mylan Techs. Inc., 298 F.Supp.3d 775 (D. Del. 2018) ("Alvogen Decision"). Finally, Indivior requests that the court's judgment in the Watson case of invalidity of claims 15-19 of U.S. Patent 8, 475, 832 (the "'832 patent") be vacated as moot.

         We vacate as moot the district court's decision holding claims 15-19 of the '832 patent invalid as obvious. We affirm the court on all other issues.

         I. Background

         Indivior markets and holds the New Drug Application ("NDA") for Suboxone® sublingual film ("Suboxone Film"), an opioid addiction treatment that combines two active ingredients: the opioid buprenorphine and the opioid antagonist naloxone. Suboxone Film is applied below a patient's tongue, where it then rapidly dissolves to release the active ingredients. In 2010, the Food and Drug Administration ("FDA") approved Indivior's film product, the first such product to gain FDA approval. Previously, Indivior sold buprenorphine/naloxone only in a tablet form.

         These appeals involve issues of infringement and invalidity of four patents covering pharmaceutical films and methods of making them. However, the parties' substantive disputes focus on only two patents, the '514 and '150 patents. Both patents claim pharmaceutical films and are listed in the Orange Book[2] as covering Suboxone Film. Representative claims of the two patents are set forth in the Appendix. The '497 patent is directed to film manufacturing methods, and the parties do not distinguish it from the '514 patent with respect to the issues on appeal. Aquestive Therapeutics, Inc. ("Aquestive") owns these three patents and exclusively licenses them to Indivior.[3] The fourth patent, the '832 patent, claims film formulations and is owned by Indivior.

         A. The Patents in Suit

         1. The '514 and '497 Patents

         The '514 patent claims pharmaceutical films with a uniform distribution of active ingredient. As described in the specification, drug content uniformity is required by regulatory authorities yet difficult to achieve in practice because of problems in manufacturing the films. '514 patent col. 2 ll. 18-21, 42-46, 57-59. Generally, a film may be made by mixing an active compound with a solvent to form a flowable matrix, casting the mixture onto a planar surface, and then drying the film to produce a solid sheet. Id. col. 5 ll. 41-54, col. 6 ll. 49-60.

         Multiple factors in the film-making process can affect uniformity. "By avoiding the introduction of and eliminating excessive air in the mixing process, selecting polymers and solvents to provide a controllable viscosity and by drying the film in a rapid manner from the bottom up, such [uniform] films result." Id. col. 23 ll. 16-20. Claim 62, the sole independent claim at issue from the '514 patent, is representative and recites "a cast film comprising a flowable water-soluble or water swellable film-forming matrix," "wherein the uniformity subsequent to casting and drying of the matrix is measured by . . . unit doses which do not vary by more than 10%" of the amount of active. Id. col. 73 ll. 49-50, col. 74 ll. 6-9 (emphases added). The claim identifies two parameters-viscosity and drying-that contribute to film uniformity: (1) the viscosity of the matrix must be "sufficient to aid in substantially maintaining non-self-aggregating uniformity" of the active (the "viscosity limitation"); and (2) the matrix must be "capable of being dried without loss of substantial uniformity of the active" (the "drying limitation"). Id. col. 73 l. 53-col. 74 l. 5. The other asserted claims of the '514 patent all depend from claim 62.[4]

         The drying limitation is central to several of the issues on appeal. The specification teaches that using conventional drying methods, which apply hot air to the top of the film, produces nonuniform films. E.g., id. col. 8 ll. 56-64, col. 22 ll. 41-60. As hot air strikes the surface of the film, water at the surface evaporates, forming a polymer skin that seals the aqueous composition below. Id. col. 3 ll. 37- 42. But as heating continues, the vapor pressure of the underlying aqueous composition builds, causing the film surface to stretch and ultimately break to allow the vapor to escape. Id. col. 3 ll. 45-49. The polymer skin then reforms, and the cycle of surface destruction and reformation continues until drying is complete. Id. col. 3 ll. 49-52. Undesirably, this cycle produces a dried film that is uneven and nonuniform, which the patent refers to as the "ripple effect." Id. col. 3 ll. 51-54.

         To produce a uniform film, the specification discloses controlled drying processes that differ from conventional techniques. In a section titled "Drying Wet Cast Films," id. col. 28 l. 51, the specification states that "[t]he wet film may be dried using controlled bottom drying or controlled microwave drying, desirably in the absence of external air currents or heat on the top (exposed) surface of the film," id. col. 28 ll. 52-55 (emphasis added). Such methods allow for vapor release without the disadvantages described above. Id. col. 28 ll. 55-57. In contrast, "[c]onventional convection air drying from the top is not employed" because it produces the ripple effect. Id. col. 28 ll. 57-64 (emphasis added). If some top air is used, "it is balanced with the bottom air drying to avoid non-uniformity." Id. col. 29 ll. 1-3.

         In addition to controlling the location of the source of air, the specification teaches a "zone drying procedure" in which the film is dried along a belt with different drying zones that may vary in temperature, humidity, or other atmospheric conditions. Id. col. 32 ll. 38-67. The specification does not specify whether the air comes from the top or bottom during zone drying but does indicate that zone drying "dries the film without surface skinning." Id. col. 32 ll. 49-50. Zone drying may be supplemented with additional processes such as lamination "so long as controlled drying is maintained in accordance with the invention." Id. col. 33 ll. 1-4.

         Claim 62 also recites that the flowable matrix has a viscosity "sufficient to aid" in maintaining film uniformity. Id. col. 73 ll. 53-55. The specification provides suitable ranges of matrix viscosity, which are "generally" 400- 100, 000 centipoise, "preferably" 800-60, 000 centipoise, and "most preferably" 1, 000-40, 000 centipoise. Id. col. 11 ll. 26-29. The choice of polymer has an important role in affecting viscosity and hence film uniformity. See id. col. 11 ll. 15-24.

         Similar to the '514 patent, the '497 patent claims processes for making pharmaceutical films. Claim 24, the sole asserted claim, depends from claim 1, which recites a drying limitation similar to claim 62 of the '514 patent: a "drying" step to form a film "having a substantially uniform distribution" of an active compound. '497 patent col. 57 ll. 8-10. The specification of the '497 patent is also substantively similar to that of the '514 patent.

         2. '150 Patent

         Like the '514 patent, the '150 patent is directed to uniform pharmaceutical films, but it claims them somewhat differently. Rather than identifying process parameters relevant to film uniformity, as in the '514 patent, the asserted claims of the '150 patent claim pharmaceutical films by their components. Claim 1 is representative of the asserted claims and recites a film comprising an active ingredient and a water-soluble polymer component containing certain proportions of polyethylene oxide ("PEO"), including both low molecular weight PEO ("L-PEO") and high molecular weight PEO ("H-PEO"), and a hydrophilic cellulosic polymer. '150 patent col. 57 ll. 35-54. The specification lists various "useful water[-]soluble polymers," including PEO, hydrophilic cellulosic polymers, and a separate compound, polyvinyl pyrrolidone. Id. col. 15 ll. 47- 52. The other asserted claims-4, 5, 8, and 9-each depend from claim 1. DRL '150 Decision, 2017 WL 3782782, at *1.

         The '150 patent claims priority from an earlier provisional application, U.S. Patent Application 60/473, 902 (the "'902 application").

         B. The Decisions on Appeal

         Several generic drug companies filed Abbreviated New Drug Applications ("ANDAs") to market generic versions of Suboxone Film prior to the expiration of the patents in suit. Indivior then brought several actions for patent infringement, accusing DRL of infringing the '514 and '150 patents, and both DRL and Watson of infringing the '497 patent; Watson of infringing the '514 and '832 patents; and Alvogen of infringing the '514 and '497 patents.[5]

         The district court held four bench trials and decided multiple issues of infringement and validity concerning the asserted patents. We discuss only the issues pertinent to these appeals.

         1. Watson '514 Decision

         The first trial over the '514 patent involved Indivior's claim that Watson infringed the '514 patent. Watson did not request construction of the drying limitation. The court found that Watson infringed the '514 patent and that Watson did not meet its burden to prove the asserted claims invalid as indefinite. Watson Decision, 2016 WL 3186659, at *16, *21.

         Indivior also asserted the '832 patent against Watson. The district court concluded that claims 15-19 of the '832 patent are invalid as obvious. Id. at *11. In a parallel inter partes review proceeding, the Patent Trial and Appeal Board held claims 15-19 unpatentable as anticipated and obvious. BioDelivery Scis. Int'l, Inc. v. RB Pharm. Ltd., No. IPR2014-00325, 2015 WL 4045328, at *16 (P.T.A.B. June 30, 2015), aff'd, 667 Fed.Appx. 997 (Fed. Cir. 2016).

         After trial, Watson modified its film manufacturing process and requested relief under Rule 59 from the district court's infringement judgment. The court denied relief, finding no manifest injustice in upholding its final judgment. Rule 59 Decision, 2017 WL 3820943, at *3.

         2. DRL '514 Decision and the Related Appeal

         In a second trial over the '514 patent, the district court considered Indivior's claims that DRL infringed the '514 patent and that DRL and Watson infringed the '497 patent. Unlike in the previous case, the parties (including Watson) disputed the meaning of the drying limitation. The court construed the drying limitation of the '514 patent to mean "dried without solely employing conventional convection air drying from the top," because it concluded that the specification disclaimed such conventional top drying techniques. DRL '514 Decision, 2017 WL 3837312, at *4; see Reckitt Benckiser Pharm. Inc. v. Teva Pharm. USA, Inc., Nos. 14-1451-RGA, 14-1573-RGA, 14-1574-RGA, 2016 WL 3621632, at *10-11 (D. Del. June 29, 2016) ("Claim Construction Order"). The court found that DRL's drying process uses dryers where the sole source of heat comes from the top and thus does not infringe the asserted claims of the '514 patent. DRL '514 Decision, 2017 WL 3837312, at *5-6. For similar reasons, the court found that neither DRL nor Watson infringed the asserted claim of the '497 patent. DRL '514 Decision, 2017 WL 3837312, at *5-6, *9.

         The court also held that DRL failed to prove by clear and convincing evidence that the asserted claims of either the '514 or the '497 patent would have been obvious over the cited prior art. Id. at *20.

         After the district court's judgment of noninfringement, Indivior amended claims of a pending continuation application that ultimately issued as U.S. Patent 9, 931, 305 (the "'305 patent"). The amendment removed the words "dried" and "drying" from the language of claim 62, instead reciting that the film be "capable of being continuously cast . . . without loss of substantial uniformity" and that "uniformity of the-continuously cast film is measured by . . . unit doses cut from the continuously cast film which do not vary by more than 10%" of the amount of the active. '305 patent col. 73 ll. 21-29 (emphases added). The '305 patent shares a specification with, and is terminally disclaimed to, the '514 patent.

         Soon after the '305 patent issued, Indivior again sued DRL for patent infringement, this time asserting the '305 patent in the District of New Jersey. DRL had since launched its competing generic product, and Indivior moved for a temporary restraining order and preliminary injunction at the New Jersey court. DRL argued that Indivior's New Jersey action was barred as claim precluded by the Delaware court's judgment. The New Jersey court concluded that claim preclusion likely would not apply and that Indivior would likely be able to prove infringement. Indivior Inc. v. Dr. Reddy's Labs. S.A., No. 17-CV-7111, 2018 WL 3496643, at *8, *11 (D.N.J. July 20, 2018). Consequently, the court entered a temporary restraining order and then a preliminary injunction against DRL's generic product. Id. at *14.

         DRL appealed to this court. Despite the claim amendments, the panel majority held that the cast films claimed in the '305 patent still had to be dried and were subject to the same specification disclaimer as the '514 patent. Indivior Inc. v. Dr. Reddy's Labs., S.A., 752 Fed.Appx. 1024, 1031-32 (Fed. Cir. 2018) ("Indivior"). Under the proper construction, we concluded that the asserted claims of the '305 patent were materially identical to those of the '514 patent already adjudicated. Id. at 1034-35. Accordingly, we held that Indivior's New Jersey action was likely claim precluded, vacated the court's preliminary injunction, and remanded for further proceedings. Id. at 1035.

         3. Alvogen '514 Decision

         In the third trial over the '514 patent, the district court considered Indivior's claim that Alvogen infringed the '514 patent. The court construed the drying limitation as it did in the DRL '514 Decision. Alvogen Decision, 298 F.Supp.3d at 779. And as in the DRL case, the court found that Alvogen's film manufacturing process dries the films primarily from the top and thus does not meet the drying limitation and does not infringe the asserted claims. Id. at 784-85.

         4. DRL '150 Decision

         In addition to the '514 patent, Indivior asserted that DRL infringed the '150 patent under the doctrine of equivalents. The district court held a separate trial on the '150 patent and found that DRL does not infringe any of the asserted claims. DRL '150 Decision, 2017 WL 3782782, at *4-5. The court also held that DRL did not prove that the asserted claims of the '150 patent would have been obvious. Id. at *7-8.

         C. The Appeals

         DRL appeals from the district court's judgments that the asserted claims of the '514, '497, and '150 patents are not invalid as obvious. Watson and Teva appeal from the court's judgments that the '514 patent is not invalid as indefinite, that Watson infringes the '514 patent, and that Watson is not entitled to Rule 59 relief from the infringement judgment.

         Indivior cross-appeals from the district court's determinations that DRL does not infringe either the '514 or the '150 patent and that Alvogen does not infringe the '514 patent. Indivior also requests vacatur of the court's judgment that certain claims of the '832 patent would have been obvious over the cited prior art.

         We have jurisdiction over each appeal under 28 U.S.C. § 1295(a)(1). We first address the parties' disputes concerning the '514 patent and then turn to the '150 and '832 patents.

         II. Discussion

         On appeal from a bench trial, we review a district court's conclusions of law de novo and its findings of fact for clear error. Braintree Labs., Inc. v. Novel Labs., Inc., 749 F.3d 1349, 1358 (Fed. Cir. 2014). A factual finding is clearly erroneous if, despite some supporting evidence, we are left with the definite and firm conviction that a mistake has been made. United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948). "The burden of overcoming the district court's factual findings is, as it should be, a heavy one." Polaroid Corp. v. Eastman Kodak Co., 789 F.2d 1556, 1559 (Fed. Cir. 1986).

         A. Infringement of the '514 Patent

         Indivior challenges the district court's judgments that DRL and Alvogen do not infringe the '514 patent. Watson appeals from the court's separate judgment that it does infringe the '514 patent. We first consider Indivior's cross-appeal and appeal and then turn to Watson's appeal.

         An infringement analysis has two steps. Clare v. Chrysler Grp. LLC, 819 F.3d 1323, 1326 (Fed. Cir. 2016). First, the court construes the asserted claims. Claim construction is a question of law that may involve underlying factual questions. Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S.Ct. 831, 841 (2015). But when, as here, the court's construction of the relevant limitation is based solely on the intrinsic evidence, we review its construction de novo. HTC Corp. v. Cellular Commc'ns Equip., LLC, 877 F.3d 1361, 1367 (Fed. Cir. 2017). Second, the court determines whether the accused product meets each limitation of the claim as construed, which is a question of fact that we review for clear error. Wright Med. Tech., Inc. v. Osteonics Corp., 122 F.3d 1440, 1443 (Fed. Cir. 1997).

         1. Indivior's Appeal and Cross-Appeal

         Indivior's challenges to the district court's judgments of noninfringement largely turn on the proper construction of the drying limitation. In the DRL and Alvogen cases, the district court construed the drying limitation to mean "dried without solely employing conventional convection air drying from the top." Alvogen Decision, 298 F.Supp.3d at 779; DRL '514 Decision, 2017 WL 3837312, at *4; Claim Construction Order, 2016 WL 3621632, at *11. That construction rested on the court's conclusion that the patentee disclaimed drying wet cast films using solely conventional convection air drying from the top. The court's disclaimer conclusion was based on the '514 patent specification's express statements of what the invention is, its repeated disparagement of conventional top drying methods, and the patent applicant's characterization of the invention during prosecution. Claim Construction Order, 2016 WL 3621632, at *6, *11.

         In Indivior, we likewise concluded that the same specification in the related '305 patent disclaimed conventional top air drying. 752 Fed.Appx. at 1031-32. In addressing whether Indivior's assertion of the '305 patent raised the same cause of action as the '514 patent, we concluded:

[T]he specification limits the scope of the "continuously cast" limitation in the '305 claims as it limited the scope of the "drying" limitation in the '514 claims. Specifically, films formed with conventional top air drying methods are excluded from the scope of both claim terms.

Id. at 1034-35 (emphasis added). We explained that "[w]hile the language of the claim terms changed, the scope of the claims did not materially change." Id. at 1035 (emphasis added). Even where different patents are asserted between two suits, claim preclusion bars a patentee from bringing successive suits accusing the defendant's same product of infringing essentially the same patent claims. SimpleAir, Inc. v. Google LLC, 884 F.3d 1160, 1167 (Fed. Cir. 2018); see Acumed LLC v. Stryker Corp., 525 F.3d 1319, 1324 (Fed. Cir. 2008). Because-and only because- the asserted claims of the '305 patent were materially the same as those that were or could have been asserted in the '514 patent, we held that Indivior's action on the '305 patent was likely claim precluded and that the district court abused its discretion in entering a preliminary injunction. Indivior, 752 Fed.Appx. at 1035.

         In both the DRL and Alvogen appeals, Indivior argues that the district court erred in concluding that the '514 patent specification disclaimed drying methods that use solely conventional convection air drying from the top. Instead, Indivior contends that the drying limitation should be given its plain and ordinary meaning. To the extent that the specification did disclaim ...


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