IP Law Daily Shire again stops Watson/Actavis from making generic Lialda drug
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Tuesday, March 29, 2016

Shire again stops Watson/Actavis from making generic Lialda drug

By Peter Reap, J.D., LL.M.

On remand from the U.S. Court of Appeals for the Federal Circuit, the federal district court in Miami has again determined that Watson Pharmaceuticals (now known as Actavis) and its affiliated entities (together, “Watson”), infringed a patent asserted by, among others, Shire Development (collectively, “Shire”) when Watson filed an Abbreviated New Drug Application (“ANDA”) seeking approval to market Watson’s generic version of an ulcerative colitis drug sold by Shire under the brand name Lialda (Shire Development LLC v. Watson Pharmaceuticals, Inc., March 28, 2016, Middlebrooks, D.). Thus, Shire was entitled to its requested injunctive relief stopping the introduction of Watson’s generic version of Lialda.

Shire is the owner of U.S. Patent 6,773,720 (the “’720 Patent”) and filed suit against Watson for infringement following the submission of Watson’s ANDA. Following a 2013 trial, the district court entered an opinion and order finding that Watson infringed claims 1 and 3 of the ’720 patent and that Shire was entitled to injunctive relief.

On appeal, Watson challenged the 2013 constructions of the claim terms “inner lipophilic matrix” and “outer hydrophilic matrix,” and, the court’s subsequent infringement finding. On March 28, 2014, the Federal Circuit issued an opinion, affirming the district court’s construction of the term “matrix,” but reversing its construction of “inner lipophilic matrix” and “outer hydrophilic matrix,” (hereinafter “Watson I”).

Shire appealed the Federal Circuit's order in Watson I to the U.S. Supreme Court. The Supreme Court granted Shire's petition for certiorari, vacated Watson I, and remanded for proceedings consistent with Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831 (2015).

The parties engaged in supplemental briefing on remand to the Federal Circuit, and the Federal Circuit re-issued its opinion on June 3, 2015 (hereinafterWatson II). In Watson II, the Federal Circuit held that Watson I did not implicate factual findings to which it owed deference under Teva. The Federal Circuit then reaffirmed its reversal of the district court’s construction of “inner lipophilic matrix” and “outer hydrophilic matrix,” as well as the reversal of the associated infringement finding.

Subsequently, the district court held a bench trial on January 25 through January 27, 2016. Governed by the Federal Circuit's mandate on remand, the court faced a limited task, it noted. Here, the Federal Circuit's mandate stated:

[W]e reverse the district court's constructions of ‘inner lipophilic matrix’ and 'outer hydrophilic matrix,' and its subsequent infringement determination, and we remand for proceedings consistent with this opinion.

Thus, the “proceedings” described by the mandate required the district court to determine whether the Watson ANDA product contains an “inner lipophilic matrix” and an “outer hydrophilic matrix,” consistent with the Federal Circuit's opinion.

At the 2016 trial, Shire argued that the proper construction of “inner lipophilic matrix” and “outer hydrophilic matrix” were apparent from the Federal Circuit's opinion. In contrast, Watson urged the court to adopt an entirely new construction of those terms. The district court rejected Watson's argument that newly-proposed constructions should be adopted. Here, the remand was narrow, and for the purpose of determining whether Watson's ANDA product met the Federal Circuit's requirements that: (1) the inner lipophilic matrix exhibit lipophilic characteristics, (2) the outer hydrophilic matrix exhibit hydrophilic characteristics, and (3) the matrices be separate, the court said.

Infringement analysis. In determining whether Watson's ANDA product contained an “inner lipophilic matrix” and “outer hydrophilic matrix,” the court was required to consider whether the ANDA product had: (1) two separate matrices; (2) an inner lipophilic matrix that exhibited lipophilic characteristics; and (3) an outer hydrophilic matrix that exhibited hydrophilic characteristics.

The court previously found that Watson's ANDA product contained two volumes: (1) granules, and (2) the space outside of the granules (the “extragranular space'”). At the 2016 Trial, Dr. Steven Little testified that Dr. Bugay's images depicted inner and outer volumes that were spatially separate. Additionally, Shire presented evidence from Dr. Yang that further showed that Watson's ANDA product contained two separate volumes. Accordingly, Shire's proposed inner lipophilic and outer hydrophilic matrices were defined by mutually exclusive spatial characteristics, as the volume making up the inner lipophilic matrix—the interior of the granules—was spatially separate from the volume making up the outer hydrophilic matrix—the extragranular space, the court determined.

The court next considered whether the spatially separate volumes, the inner granules and the extragranular space, exhibited separate characteristics. Evidence presented at trial showed that the separate inner and outer volumes contained different distributions of excipients that resulted in separate characteristics. The evidence showed that the inner volume of the granules and the extragranular volume, which made up the volume of Shire's proposed “inner lipophilic matrix” and “outer hydrophilic matrix,” respectively, exhibited compositionally separate characteristics, the court held.

The court next turned to an analysis of whether the Watson ANDA product contained an inner lipophilic matrix that exhibited lipophilic characteristics. The Federal Circuit explained that the ’720 Patent described “lipophilic properties” as “some resistance to the penetration of the solvent due to the poor affinity towards aqueous fluids.” The inquiry, therefore, was whether the inner volume of the granules—which was the volume that meets the “separate” requirement—exhibited the lipophilic characteristics. The court’s undisturbed findings of fact supported that the distribution of magnesium stearate in the volume of the granules exerted resistance to the penetration of solvent, the court observed.

The court rejected Watson’s arguments that: (1) there was not enough lipophilic substance in the inner volume of the granules to produce lipophilic characteristics; and (2) that the lipophilic or hydrophilic substance must constitute the “main component” of the respective lipophilic or hydrophilic matrix, and that the “main component” should be understood quantitatively. To the contrary, the Federal Circuit only held that the inner lipophilic matrix must exhibit lipophilic characteristics and be separate from the outer hydrophilic matrix, according to the district court. Defining the claims according to specific percentages of individual ingredients would contravene the Federal Circuit's emphasis on the characteristics of the matrices themselves, as opposed to the characteristics of the excipients, the court reasoned. Magnesium stearate was the “main component” of the inner lipophilic matrix. Thus, the “main component” of the inner lipophilic matrix, the magnesium stearate, exhibited the required lipophilic characteristics. Accordingly, the Watson ANDA product contained an inner lipophilic matrix, the volume within the granules, which exhibited lipophilic characteristics.

The court next turned to whether the Watson ANDA product also contained an outer hydrophilic matrix that exhibited hydrophilic characteristics. The specification described “hydrophilic characteristics” such as “remarkably increase[d] viscosity inside the hydrated layer” or “a high viscosity swollen layer.” Additionally, the parties stipulated that “hydrophilic”' meant “having an affinity to water.” Here, the volume of the hydrophilic matrix, the extragranular space, displayed the characteristics described by the ’720 Patent, the court found. These characteristics were due to sodium starch glycolate's affinity towards aqueous fluids.

The extragranular volume exhibited hydrophilic characteristics and did not exhibit lipophilic characteristics, according to the court. This outer volume was separate from the inner volume. Accordingly, the Watson ANDA product contained an outer hydrophilic matrix which exhibited hydrophilic characteristics.

Finally, Watson’s contention that the Federal Circuit found that claim 1 excluded excipients from the inner volume of the granule (or, lipophilic matrix) that were not listed in the Markush group in claim 1(a), and that claim 1 similarly excluded excipients from the outer volume (or, hydrophilic matrix) that were not listed in in the Markush group in claim 1(b), was without merit, the court ruled. The Federal Circuit's mandate did not necessitate that hydrophilic excipients cannot be in the lipophilic matrix, or that lipophilic excipients cannot be in the hydrophilic matrix, the court explained.

Shire established, by a preponderance of evidence, that the Watson ANDA product met the additional requirements established by the Federal Circuit for the claim constructions of “inner lipophilic matrix” and “outer hydrophilic matrix.” Thus, the defendants infringed claims 1 and 3 of the ’720 Patent. Each of the defendants induced or contributed to the construction of the Watson ANDA product and the filing of the ANDA, and Shire was therefore entitled to the requested injunctive relief.

The case is No. 0:12-cv-60862-DMM.

Attorneys: Caroline Bercier (Frommer Lawrence & Haug, LLP) for Shire Development LLC, Shire Pharmaceutical Development Inc., Cosmo Technologies Ltd., and Giuliani International Ltd. Janet T. Munn (Rasco, Klock, Perez & Nieto, P.L.) for Watson Pharmaceuticals, Inc., Watson Laboratories, Inc., Watson Pharma, Inc., and Watson Laboratories, Inc.

Companies: Shire Development LLC; Shire Pharmaceutical Development Inc.; Cosmo Technologies Ltd.; Giuliani International Ltd.; Watson Pharmaceuticals, Inc.; Watson Laboratories, Inc.; Watson Pharma, Inc.; Watson Laboratories, Inc.

MainStory: TopStory Patent FloridaNews

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