By Pamela Winston Bertani

Last month in a patent infringement suit involving SmithKline Beecham’s patent for the active ingredient in its antidpressent drug Paxil^��, the Federal Circuit affirmed judgment in defendant’s favor where SmithKline Beecham’s patent was held invalid as anticipated under 35 U.S.C. Section 102 – for being inherently disclosed in a prior part patent. (SmithKline Beecham Corp. v. Apotex Corp., 403 F.3d 1331 (Fed. Cir. April 8, 2005).)

In 1980, SmithKline licensed from the British company Ferrosan, U.S. Patent No. 4,007,196 (‘196 Patent) and related technology for a compound called paroxetine hydrochloride (“PHC”). PHC is the active ingredient in SmithKline’s Paxil^�� product. At issue in this case are two forms of PHC, namely the anhydrous form (“PHC anhydrate”) and the hemihydrous form (“PHC hemihydrate”). The ‘196 Patent disclosed PHC anhydrate. In 1985, a SmithKline Beecham scientist discovered PHC hemihydrate, which proved to be more stable, and thus more easily packaged and preserved than PHC anhydrate.

On October 25, 1985, SmithKline Beecham filed a patent application in the British Patent Office for crystalline PHC, its preparation and its uses as a therapeutic agent. The British application identified the invention as covering PHC anhydrate, PHC hemihydrate, and mixtures containing a major portion of either form. One year later, on October 23, 1986, SmithKline filed a United States patent application claiming priority to the British application filing date – for the PHC invention that ultimately issued as U.S. Patent No. 4,721,723 (‘723 Patent), which is at issue in this case. The ‘723 Patent does not claim PHC anhydrate and does not claim mixtures of the two PHC forms – but rather claims only PHC hemihydrate.

After obtaining FDA approval, in 1993 SmithKline placed Paxil^�� on the market, containing the active ingredient PHC hemihydrate. In 1998, an Apotex affiliate filed an Abbreviated New Drug Application (“ANDA”) with the FDA, seeking approval to market its own generic PHC antidepressant drug, containing the active ingredient PHC anhydrate. Apotex’s application stated the company’s intent to market the generic drug before SmithKline’s ‘723 Patent expired because the generic drug would not infringe the ‘723 Patent, since it would not contain PHC hemihydrate, but rather PHC anhydrate, which was covered by the soon to be expired ‘197 Patent.

Later in 1998, SmithKline filed this patent infringement suit against Apotex. Interestingly, SmithKline did not allege that the ‘723 Patent covers PHC anhydrate (Apotex’s active ingredient), since PHC anhydrate – the Ferrosan technology – constituted prior art for the ‘723 Patent. Rather, SmithKline argued that the Apotex antidepressant drug would infringe the ‘723 Patent because Apotex’s PHC anhydrate tablets necessarily contain, by a conversion process, at least trace amounts of PHC hemihydrate – SmithKline’s invention. The District Court ruled that, based on its construction of SmithKline’s ‘723 Patent claim at issue, the claim must be construed only to cover products containing “commercially significant amounts” of hemihydrate – and that Apotex’s generic drug would not infringe the ‘723 Patent, because Apotex’s drug would contain only trace amounts – but not “commercially significant amounts” – of PHC hemihydrate. In other words, the District Court limited and narrowed the ‘723 Patent claim to cover only products containing “commercially significant amounts” of PHC hemihydrate in finding noninfringement.

Not surprisingly, the Federal Circuit disagreed with the District Court’s claim interpretation, and held that the claim was not limited to “commercially significant amounts” of PHC hemihydrate, but encompassed – without limitation – any amount of the compound. Under this broad construction of SmithKline’s ‘723 claim, Apotex’s drug, which by conversion would ultimately contain trace amounts of PHC hemihydrate, would indeed infringe the ‘723 Patent.

In an interesting twist, however, the Federal Circuit ruled that the ‘723 Patent claim, while infringed by Apotex’s product, was nonetheless invalid. Why? Because based on SmithKline’s own argument, Apotex’s product, containing the active ingredient PHC anhydrate, undergoes conversion and ultimately contains trace amounts of PHC hemihydrate, which is covered by SmithKline’s ‘723 Patent. But the prior art – the licensed ‘196 Ferrosan Patent – covered PHC anhydrate – which by SmithKline’s own admission, ultimately converts to include at least trace amounts of PHC hemihydrate – the ‘723 patented invention. In other words, the prior art invention ultimately converted into SmithKline’s PHC hemihydate invention, albeit unknowingly at the time of the ‘196 Patent, and therefore anticipated SmithKline’s ‘723 Patent invention. Put another way, the ‘196 Patent inherently disclosed PHC hemihydrate, rendering the ‘723 Patent invalid and anticipated under 35 U.S.C. 102, which precludes patentability for inventions that have already been patented our published more than one year before the patent application filing date for a new invention. In fact, SmithKline’s PHC hemihydrate was serendipitously made while SmithKline’s chemist was actually attempting to make the licensed PHC anhydrate under the ‘196 Ferrosan Patent – the prior art. Thus, while the ‘196 Patent did not literally disclose PHC hemihydrate – it inherently disclosed the compound because the compound is naturally and necessarily present as a result of the conversion process SmithKline explained in detail to the District Court.

The Federal Circuit identified the real bottom line of this case, and unequivocally stated that SmithKline sued Apotex for infringement of the’723 Patent in an express attempt to prevent Apotex from practicing the ‘196 Patent upon its expiration. However, this doctrine of inherent anticipation served its function here, which, according to the Court, is:

[T]o ensure that the public remains free to make, use or sell prior art compositions or processes, regardless of whether or not they understand their complete makeup or the underlying scientific principles which allow them to operate. Invalidating claim 1 of the ‘723 Patent furthers this policy of allowing the public to practice expired patents.

This case represents a significant win for generic drug manufacturers, which rely on the opportunity to practice expired inventions in the production and sale of previously patented pharmaceutical products. Consumers, and the market in general, benefit from product diversity resulting from generic drug availability.

From a practitioner’s point of view, the take home message here is to be careful of what you ask for in court – because you just might get it. Here, SmithKline aggressively pursued its “compound conversion” theory in the District Court to argue that Apotex’s product ultimately converted into a product containing SmithKline’s patented compound. This came back to haunt SmithKline on appeal, since the Federal Circuit relied on that very argument to show that not only Apotex’s product – but the ‘196 Patent prior art invention as well – underwent the asserted conversion, which inherently anticipated SmithKline’s ‘723 Patent. There was simply no credible way for SmithKline to neutralize this argument on appeal. The fall-out from this case may be considerable, given the value of SmithKline’s Paxil^�� product – which may very well now be subject to generic manufacture. We will keep an eye on related developments as the market adjusts to the Federal Court’s ruling.