Shire Development, LLC v. Watson Pharms., Inc.

Case Name: Shire Development, LLC v. Watson Pharms., Inc., Civ. No. 12-60862-CIV-MIDDLEBROOKS/BRANNON, 2016 U.S. Dist. LEXIS 40360 (S.D. Fla. Mar. 25, 2016) (Middlebrooks, J.)

Drug Product and Patent(s)-in-Suit: Lialda® (mesalamine); U.S. Patent No. 6,773,720 (“the ’720 patent”)

Nature of the Case and Issue(s) Presented: The district court initially construed the claims of the ’720 patent and found that Watson’s ANDA product infringed the asserted claims. Watson appealed, challenging the 2013 constructions of the claim terms “inner lipophilic matrix” and “outer hydrophilic matrix,” and the district court’s infringement finding. The Federal Circuit then 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.” Shire appealed the Federal Circuit’s order to the U.S. Supreme Court, arguing that the Federal Circuit did not give proper deference to the district court’s factual findings underlying claim construction. The Supreme Court granted Shire’s petition for certiorari, vacated the Federal Circuit’s opinion, and remanded for proceedings consistent with Teva Pharms. 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, holding that its first opinion did not implicate factual findings to which it owed deference under Teva. The Federal Circuit then re-affirmed 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, and remanded. The district court held a 3-day bench trial to adjudicate the remaining issue—whether the accused Watson ANDA product infringes the claimed “inner lipophilic matrix” and “outer hydrophilic matrix” limitations of the asserted claims, when those terms are construed in accordance with the most recent Federal Circuit Mandate.

Shire argued that the Federal Circuit imposed two additional requirements on the previous constructions of “inner lipophilic matrix” and “outer hydrophilic matrix”: the two matrices must exhibit their respective lipophilic or hydrophilic characteristics, and the two matrices must be separate. Watson argued that “lipophilic matrix” means a “dispersion of an active ingredient within a continuous phase of water insoluble material which forms a lipophilic structure with an active ingredient packed into the interstices of that structure.” Similarly, Watson argues that “hydrophilic matrix” means a “dispersion of active ingredient and a sufficiently large amount of swelling hydrophilic materials known as hydrogels, which, upon coming into contact with liquid swell to form and maintain a gel layer around the dosage form.” Watson argued that those two constructions are consistent with the ordinary and customary meaning of “lipophilic matrix” and “hydrophilic matrix,” and that these constructions are consistent with the Federal Circuit’s requirements. The court found that the Federal Circuit’s treatment of the proper constructions of those terms foreclosed any new constructions, like those proposed by Watson. Applying these constructions to Watson’s ANDA product, the district court found that Watson’s ANDA product would infringe the patent-in-suit.

Why Shire Prevailed: The district court found that Watson’s ANDA product infringed the asserted claims because Shire presented more than sufficient evidence demonstrating that each matrix was its own separate volume and exhibited the claimed hydrophilic or lipophilic characteristics. The Court rejected Watson’s proposed claim constructions because Watson failed to identify why the prior constructions did not incorporate the plain and ordinary meaning. Moreover, Watson did not present such constructions to the Federal Circuit, and the constructions it did provide to the Federal Circuit were closer to those asserted by Shire.

After making fact findings associated with the application of the Federal Circuit’s construction to Watson’s ANDA product, the court next addressed Watson’s legal argument that the Federal Circuit found that claim 1 excludes excipients from the inner volume of the granule (or, lipophilic matrix) that are not listed in the Markush group in claim 1(a), and that claim 1 similarly excludes excipients from the outer volume (or, hydrophilic matrix) that are not listed in in the Markush group in claim 1(b). Watson argued that the Federal Circuit opinion foreclosed a finding of infringement when the volume of the inner lipophilic matrix contains one lipophilic substance and several hydrophilic substances. The Federal Circuit’s mandate did not necessitate the exclusion of hydrophilic excipients from the lipophilic matrix, or vice versa. The Federal Circuit’s finding was that the Markush-group limitations compel a claim construction that requires that the inner lipophilic matrix be separate from—without necessarily requiring excipients distinct from those in—the outer hydrophilic matrix. Indeed, reasoned the court, the Federal Circuit contemplated that there could be situations where the matrices contain excipients outside of their respective Markush groups.