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United States Court of Appeals for the Federal Circuit

 

 

03-1426,-1489

 

 

VASTFAME CAMERA, LTD.,

 

                                                                                                            Appellant,

 

and

 

ARGUS INDUSTRIES, INC.,

 

                                                                                                            Appellant,

 

v.

 

INTERNATIONAL TRADE COMMISSION,

 

                                                                                                            Appellee,

 

and

 

FUJI PHOTO FILM CO., LTD.,

 

                                                                                                            Intervenor.

 

 

 

            Joseph W. Bain, Akerman Senterfitt, of West Palm Beach, Florida, argued for VastFame Camera, Ltd.

 

            Jean H. Jackson, Attorney, Office of the General Counsel, U.S. International Trade Commission, of Washington, DC, argued for appellee.  With her on the brief were Lyn M. Schlitt, General Counsel, and James M. Lyons, Deputy General Counsel. 

 

            Lawrence Rosenthal, Stroock & Stroock & Lavan LLP, of New York, New York, argued for intervenor.  With him on the brief were Matthew W. Siegal, Lisa A. Jakob, Angie M. Hankins and Howard D. Shatz.  Of counsel were Will E. Leonard and Michael L. Doane, Adduci, Mastriani & Schaumberg, L.L.P., of Washington, DC.

 

Appealed from:   United States International Trade Commission

 

 

United States Court of Appeals for the Federal Circuit

 

03-1426, -1489

 

VASTFAME CAMERA, LTD.,

                                                                                                            Appellant,

and

ARGUS INDUSTRIES, INC.,

                                                                                                            Appellant,

v.

INTERNATIONAL TRADE COMMISSION,

                                                                                                            Appellee,

and

FUJI PHOTO FILM CO., LTD.,

                                                                                                            Intervenor.

_____________________________

 

DECIDED:  October 7, 2004

 

_____________________________

 

Before CLEVENGER, BRYSON, and LINN, Circuit Judges.

 

LINN, Circuit Judge.

 

            This appeal is one of two related appeals from a decision of the International Trade Commission (“Commission”) involving “single-use” or “disposable” 35 mm film cameras, more formally known as “lens-fitted film packages” (“LFFP”).  VastFame Camera, Ltd. (“VastFame”) appeals from the Commission’s determination that importation of VastFame’s LFFPs violates a pre-existing general exclusion order.  In re Certain Lens-Fitted Film Packages, Inv. No. 337-TA-406 (Int’l Trade Comm’n May 2, 2002) (“Initial Determination”).  Because the Commission’s decision refusing to allow VastFame to present its invalidity defense was contrary to 19 U.S.C. § 1337(c), we vacate the Commission’s infringement determination with respect to VastFame and remand for further proceedings consistent with this opinion. 

BACKGROUND

This proceeding arises out of the Commission’s investigation, entitled In re Certain Lens-Fitted Film Packages, which resulted in the issuance of a general exclusion order on June 9, 1999.  Inv. No. 337-TA-406 (Int’l Trade Comm’n June 9, 1999) (“Initial Investigation”).  The Initial Investigation involved newly made and refurbished LFFPs.  The Initial Investigation also involved numerous Fuji Photo Film Co., Ltd. (“Fuji”) patents, including U.S. Patent No. 4,884,087 (“the ’087 patent”).  At least one party in the Initial Investigation raised an invalidity defense with respect to the ’087 patent, but the defense was abandoned before any judgment on the merits. 

VastFame was not a party to the Initial Investigation, and its VN99 and VN991 cameras were not at issue in that investigation.  Although VastFame was not a named respondent in the Initial Investigation, it knew that the proceedings were taking place.  VastFame was notified of the proceedings in a March 25, 1998 letter from Fuji.  The letter informed VastFame that it had been identified as a potential respondent, offered to supply VastFame with a copy of the supplemented complaint, and advised VastFame that whether or not it joined, it would be bound by the decision.  VastFame refused to join the proceedings. 

After the general exclusion order issued, VastFame obtained a ruling from the U.S. Customs Service[1] (“Customs”) that the VN99 and VN991 cameras did not violate the general exclusion order.  Lens-Fitted Film Packages, Pub. No. 468780, ITC Inv. No. 337-TA-406 (Customs Serv. Mar. 27, 2000).  Customs only considered one of the fifteen patents upon which the general exclusion order was based.  Nevertheless, having concluded that VastFame’s LFFPs did not violate the general exclusion order, Customs allowed the importation of VastFame’s VN99 and VN991 cameras beginning in early 2000. 

In June 2001, Fuji filed a complaint with the Commission requesting enforcement and advisory proceedings to determine whether VastFame and others had violated the general exclusion order.  In those proceedings, VastFame pled as a defense that claim 15 of the ’087 patent was invalid under 35 U.S.C. §§ 102 and 103(a) in view of certain prior art references.  Vastfame fully briefed the invalidity defense and was prepared to put on its case at the trial, but the Administrative Law Judge (“ALJ”) refused to consider invalidity, ruling that the defense could not be raised in the enforcement proceeding.  Initial Determination, slip op. at 64 n.33.  The ALJ explained his position at a pretrial conference.  At that conference, he advised the parties that the Commission’s order directing the ALJ to conduct the proceedings did not permit him to entertain a validity challenge to the patents underlying the general exclusion order.  The ALJ expressed the view that the Commission’s order limited him to determining only whether the importation of the enforcement respondents’ cameras violated the general exclusion order. 

In February 2002, the ALJ conducted an evidentiary hearing on the issues raised in Fuji’s complaint.  On May 2, 2002, the ALJ concluded that the VN99 and VN991 cameras infringed only one claim asserted by Fuji, namely, claim 15 of the ’087 patent.  Initial Determination.  Based on the finding of infringement, the ALJ held that the VN99 and VN991 cameras were in violation of the general exclusion order and could no longer be imported.  Because Fuji’s complaint sought both enforcement and advisory proceedings, the ALJ simultaneously issued separate opinions in the form of an initial determination on enforcement and an advisory opinion regarding violation of the general exclusion order.  See In re Certain Lens-Fitted Film Packages, Inv. No. 337-TA-406 (Int’l Trade Comm’n May 2, 2002) (advisory opinion).

Upon entry of the ALJ’s enforcement initial determination, VastFame petitioned the Commission to remand the case to the ALJ for consideration of the previously excluded invalidity defense.  The Commission declined to review the ALJ’s decision on this issue leaving the decision as the final determination of the Commission.  In re Certain Lens-Fitted Film Packages, Inv. No. 337-TA-406 (Int’l Trade Comm’n Aug. 7, 2002).  On May 15, 2003, the Commission finalized its proceedings.  In re Certain Lens-Fitted Film Packages, Inv. No. 337-TA-406 (Int’l Trade Comm’n May 15, 2003). 

VastFame timely appealed to this court.  We have jurisdiction under 28 U.S.C. § 1295(a)(6).

DISCUSSION

A.  Standard of Review

As the agency charged with the administration of § 1337, the Commission is entitled to appropriate deference to its interpretation of the statute.  See United States v. Mead Corp., 533 U.S. 218, 227 (2001); Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 844 (1984); Enercon GmbH v. Int’l Trade Comm’n, 151 F.3d 1376, 1381 (Fed. Cir. 1998).  Under Chevron, we must first look to “whether Congress has directly spoken to the precise question at issue.”  467 U.S. at 842.  As the Supreme Court explained, “If a court, employing traditional tools of statutory construction, ascertains that Congress had an intention on the precise question at issue, that intention is the law and must be given effect.”  Id. at 843 n.9.  However, “if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.”  Id. at 843.  In the latter case, this court will “uphold the [Commission’s] interpretation of [19 U.S.C. § 1337] if it is reasonable in light of the language, policies and legislative history of the statute.”  Enercon, 151 F.3d at 1381; see also San Huan New Materials High Tech, Inc. v. Int’l Trade Comm’n, 161 F.3d 1347, 1351 (Fed. Cir. 1998) (quoting Enercon, 151 F.3d at 1381).

B.  Statutory Basis of the Enforcement Proceeding

As a threshold matter, the parties disagree as to the statutory basis of the enforcement proceeding before the Commission.  This is an issue we must decide before we can determine if the Commission erred in not providing VastFame an opportunity to present its invalidity defense.  VastFame argues that the enforcement proceeding, which was expressly conducted under 19 C.F.R. § 210.75(b), constituted an investigation under § 1337(b) because that is the only provision that authorizes the type of inquiry engaged in by the Commission in this case.  The Commission argues that § 1337 provides the Commission with general authority to enforce its own exclusion orders.  It argues that multiple provisions in § 1337 indicate that Congress intended for the Commission to have a role in enforcing its own orders. 

Neither party cites express statutory authority for enforcement proceedings, and we have found none.  Because the statute is silent with respect to the Commission’s authority specifically to conduct enforcement proceedings, the Commission’s interpretation of § 1337 may be entitled to deference “if it is reasonable in light of the language, policies and legislative history of the statute.”  Enercon, 151 F.3d at 1381. 

The Commission is a creature of statute.  Sealed Air Corp. v. U.S. Int’l Trade Comm’n, 645 F.2d 976, 987 (CCPA 1981).  Thus, it must find authority for its actions in its enabling statute.  See Young Eng’rs, Inc. v. U.S. Int’l Trade Comm’n, 721 F.2d 1305, 1311-12 (Fed. Cir. 1983) (“5 C.F.R. § 211.57 cannot, and does not, provide greater authority than the statute.”).  The Commission cites 19 U.S.C. § 1335, which gives the Commission authority to “adopt such reasonable procedures and rules and regulations as it deems necessary to carry out its functions and duties.”  However, this provision does nothing more than provide the Commission with authority to promulgate rules.  It does not give the Commission the substantive right to go beyond the express powers provided in § 1337.  Similarly, the Commission cites Rule 210.75(b), under which the enforcement proceeding was conducted.  However, the Rule itself cannot provide the needed statutory authority.  See Young Eng’rs, 721 F.2d at 1312.  The Commission also cites § 1337(f); however, that section concerns only cease and desist orders and cannot provide the authority for Rule 210.75(b), at least to the extent that the rule relates to the enforcement of a general exclusion order.  As VastFame points out, a cease and desist order was not issued against it in this case. 

The Commission also cites § 1337(k)(1), which provides that exclusion orders shall remain in effect until the Commission determines otherwise; and § 1337(k)(2), which provides that a party previously found in violation of § 1337 may petition for a change of an exclusion order.  Section 1337(k)(1) says nothing about the Commission’s authority to conduct enforcement proceedings.  Moreover, it was Fuji, not the Commission, that initiated the present proceedings when it filed its complaint.  Section 1337(k)(2) is inapplicable because VastFame had not “previously been found by the Commission to be in violation of” § 1337.  19 U.S.C. § 1337(k)(2) (2000).  And that would be true even if VastFame had requested the proceedings.  Finally, the Commission cites § 1337(i), which provides that the Commission may order the seizure of goods previously adjudged to be in violation of § 1337 and previously denied entry.  But the Commission does not argue that any of these statutory provisions, including § 1337(i), expressly authorizes the enforcement proceeding conducted in this case.  The Commission uses § 1337(i) to buttress its argument made with respect to each of these statutory provisions that the authority to promulgate Rule 210.75(b) emanates from the penumbra of § 1337.  We cannot agree with the Commission that, if no specific statutory authority exists, the Commission has the inherent authority to conduct enforcement proceedings.  Such a view is not reasonable in light of the express powers provided in § 1337 and the fact that the Commission is a creature of statute.  Sealed Air Corp., 645 F.2d at 987.  Because the Commission’s proffered interpretation of the statute is unreasonable, we reject it.

While no statutory provision of § 1337 expressly refers to enforcement proceedings, § 1337(b) gives the Commission general authority to investigate violations of the statute.  Section 1337(b)(1) provides, “The Commission shall investigate any alleged violation of this section on complaint under oath or upon its initiative.”  Section 1337(b), by its language, is not limited to initial complaints and authorizes the Commission to conduct proceedings, including proceedings for the enforcement of general exclusion orders, to “investigate any alleged violation of this section on complaint under oath.”  In this case, the Commission began its investigation as a result of Fuji’s complaint.  Initial Determination, slip op. at 1.  The statute further provides that “the Commission shall publish notice thereof in the Federal Register.”  19 U.S.C. § 1337(b)(1) (2000).  Consistent with this requirement, the Commission, in this case, published notice of its investigation in the Federal Register.  In re Certain Lens-Fitted Film Packages, 66 Fed. Reg. 40,721 (Int’l Trade Comm’n Aug. 3, 2001) (notice of investigation). 

Although the Commission seeks to avoid basing its enforcement proceeding on § 1337(b), we hold that the Commission has authority to conduct proceedings to enforce general exclusion orders, and that its authority to conduct such proceedings arises under and is subject to the provisions of § 1337(b).

C.  “All Cases”

Having determined that the Commission’s authority to conduct an enforcement proceeding is found generally in § 1337(b), we next consider whether the Commission violated § 1337 in not allowing VastFame to present its invalidity defense.  The language of § 1337(b)(1) states:  “The Commission shall investigate any alleged violation of this section on complaint under oath or upon its initiative.”  19 U.S.C. § 1337(b)(1) (2000) (emphasis added).  Investigations are governed by § 1337(c), which states:

The Commission shall determine, with respect to each investigation conducted by it under this section, whether or not there is a violation of this section . . . .  Each determination under subsection (d) or (e) of this section shall be made on the record after notice and opportunity for a hearing in conformity with the provisions of subchapter II of chapter 5 of title 5.  All legal and equitable defenses may be presented in all cases.

Id. § 1337(c) (emphases added).

On its face, the statute appears to require the Commission to allow the presentation of all defenses in its investigations.  The Commission contends, however, that the nature of a general exclusion order and the considerable burden in establishing the need for such an order support the Commission’s view that general exclusion orders may not be collaterally attacked.  The Commission argues that § 1337(d)(2) is a codification of the Commission’s balancing of the burden on domestic patentees of repeated litigation and the effects on legitimate foreign trade of erroneous determinations as laid down in Certain Airless Paint Spray Pumps and Components Thereof, USITC Pub. No. 1199, Inv. No. 337-TA-90 (Nov. 1981).  Section 1337(d)(2), however, only addresses the criteria for issuance of general exclusion orders.  It does not address whether general exclusion orders may be subject to collateral attack.  Section 1337(d)(2), then, provides no support for the Commission’s position.  Moreover, Congress’s intent in adding § 1337(d)(2) was to comply with its obligations under the General Agreement on Tariffs and Trade, not to adopt the Commission’s policy objectives as announced in Certain Airless Paint Spray Pumps.  See S. Rep. No. 103-412, at 120 (1994); H.R. Rep. No. 103-826, at 140-42 (1994) (“The amendments are necessary to ensure that U.S. procedures for dealing with alleged infringements by imported products comport with GATT 1994 ‘national treatment’ rules, while providing for the effective enforcement of intellectual property rights at the border.”).

The Commission argues that general exclusion orders are like district court injunctions in that they must be obeyed until they are modified, reversed, or vacated.  Thus, in the Commission’s view, a general exclusion order, like a district court injunction, should not be subject to collateral attack.  However, a general exclusion order is not like a district court injunction with respect to the parties affected.  A general exclusion order broadly prohibits entry of articles that infringe the relevant claims of a listed patent without regard to whether the persons importing such articles were parties to, or were related to parties to, the investigation that led to issuance of the general exclusion order.  See 19 U.S.C. § 1337(d)(2) (2000) (“The authority of the Commission to order an exclusion from entry of articles shall be limited to persons determined by the Commission to be violating this section unless the Commission determines that . . . .”); Hyundai Elecs. Indus. Co. v. U.S. Int’l Trade Comm’n, 899 F.2d 1204, 1210 (Fed. Cir. 1990) (stating that “in an appropriate case the Commission can impose a general exclusion order that binds parties and nonparties alike and effectively shifts to would-be importers of potentially infringing articles, as a condition of entry, the burden of establishing noninfringement”).  By contrast, district court injunctions are generally limited to the parties entering appearances before the court or those aiding and abetting or acting in concert or participation with a party before the court.  Additive Controls & Measurement Sys., Inc. v. Flowdata, Inc., 96 F.3d 1390, 1394 (Fed. Cir. 1996) (“Courts do not write legislation for members of the public at large; they frame decrees and judgments binding on the parties before them.”).  Because of the differing nature of general exclusion orders and district court injunctions, the justification for the prohibition against collateral challenges to injunctions is not directly applicable to general exclusion orders.  Thus, the Commission’s analogy to district court injunctions is inapposite and unhelpful.

Additionally, the Commission cites Multi-Level Touch Control Lighting Switches, Inv. No. 337-TA-225 (Int’l Trade Comm’n July 16, 1987), as evidence of its long standing policy of not hearing challenges to the validity of a patent underlying a general exclusion order in enforcement or advisory proceedings.  It sets forth three public policy arguments to support this position:  (1) the difficulty in administering the statute if general exclusion orders are subject to repeated challenges; (2) the necessity of preserving the original complainant’s remedy once it has been issued; and (3) the public interest in avoiding uncertainty in the market place.  One can argue that all of these policies would be similarly served by preventing subsequent accused infringers in district courts from challenging the validity of a patent that had been previously adjudicated to be not invalid.  However, that is not the law.  These policies do not justify the Commission’s interpretation in the absence of a showing that the statute may be fairly read the way the Commission interprets it.  To the contrary, the intent of Congress with respect to this issue is quite clear.

Nevertheless, the Commission argues that the “all cases” language of § 1337(c) only applies to original investigations, not advisory and enforcement proceedings.  The Commission argues that the following language of § 1337(c) indicates that the statute only provides for presentation of all defenses in proceedings that lead to determinations under § 1337(d) or (e):

The Commission shall determine, with respect to each investigation conducted by it under this section, whether or not there is a violation of this section . . . .  Each determination under subsection (d) or (e) of this section shall be made on the record after notice and opportunity for a hearing in conformity with the provisions of subchapter II of chapter 5 of title 5.  All legal and equitable defenses may be presented in all cases. 

19 U.S.C. § 1337(c) (2000).  Because subsections (d) and (e) both relate to the issuance of exclusion orders, the Commission’s interpretation would require the Commission to first determine whether a complainant was likely to prevail before deciding whether all defenses may be presented.  Moreover, the second sentence quoted above specifically refers to determinations “under subsection (d) or (e),” whereas the “all defenses” rule applies to “all cases.”  If Congress had intended the “all defenses” provision to only apply to proceedings that lead to determinations under subsections (d) and (e), or even to original proceedings, it could have easily said so.  The Commission’s proffered interpretation contravenes the clear language of the statute.

VastFame is correct that the “all defenses” provision at least applies to investigations under § 1337(b).  The opening sentence of § 1337(c) plainly indicates that investigations under § 1337(b) are governed by § 1337(c).  No other language in § 1337(c) modifies the broad reference to “all cases.”  Thus, we hold that the phrase “all cases” clearly encompasses investigations under § 1337(b).  The necessary result, then, is that participants in a proceeding under § 1337(b) must be permitted to raise all defenses.[2] 

The Commission argues that an interpretation of § 1337(c) that makes every Commission proceeding subject to the “all defenses” rule is inconsistent with § 1337(i).  Section 1337(i) provides authority for the Commission to issue an order requiring articles imported in violation of § 1337 to be seized and forfeited to the United States if the article was previously the subject of an attempted importation that was denied by reason of an order issued under subsection (d) and upon such denial the party seeking to import was informed of the exclusion order and that any further attempts to import such articles would result in seizure and forfeiture.  The Commission’s argument misses the mark, however, because VastFame has not asked us to hold that the “all defenses” provision applies to all proceedings in the Commission.  VastFame argues that the “all defenses” provision applies to § 1337(b) at a minimum.  Thus, whether the “all defenses” provision applies to § 1337(i) is not before us.  We hold only that the phrase “all cases” encompasses investigations under § 1337(b).  We need not and do not decide what other proceedings may fall within the scope of “all cases.”   

D.  Due Process

Because we hold that the Commission erred by not allowing VastFame to present its invalidity defense based on the clear language of § 1337(c), we do not reach the issue of whether VastFame’s due process rights were violated in this case.

E.  VastFame’s Invalidity Defense

As an alternative argument, VastFame asks this court not merely to vacate but to reverse the Commission’s final determination if we find, without further need of evidence, that claim 15 of the ’087 patent is invalid.  The Commission declined to entertain VastFame’s invalidity defense; it has not ruled on the merits of this defense.  In Beloit Corp. v. Valmet Oy, 742 F.2d 1421, 1423 (Fed. Cir. 1984), this court held that it “does not sit to review what the Commission has not decided.”  Accordingly, the court will not consider the merits of the validity defense that was neither heard nor decided by the Commission.  Instead, having determined that the Commission erred in excluding the validity challenge, we remand the case to the Commission for consideration of VastFame’s invalidity defense in the first instance.

CONCLUSION

Because the Commission’s decision precluding VastFame from raising its invalidity defense was not reasonable or supported by the language, policies, and legislative history of § 1337, we vacate the Commission’s enforcement decision and remand for further proceedings consistent with this opinion.

VACATED AND REMANDED

COSTS

No costs.

 

 

United States Court of Appeals for the Federal Circuit

 

 

 

02-1222, -1291

 

 

 

ALLOC, INC., BERRY FINANCE N.V., and VALINGE ALUMINIUM, AB,

 

Appellants,

 

v.

 

 

INTERNATIONAL TRADE COMMISSION,

 

Appellee,

and

 

PERGO, INC.,

 

and

 

ROYSOL,

 

and

 

AKZENTA PANEELE + PROFILE GmbH,

 

and

 

UNILIN DÉCOR N.V., BHK OF AMERICA, and MEISTER-LEISTEN SCHULTE, GmbH,

 

Intervenors.

 

 


United States Court of Appeals for the Federal Circuit

                                                                                                                                                                                                                                                                                                                                                                                                                                           

 

02-1222,-1291

 

ALLOC, INC., BERRY FINANCE N.V., and VALINGE ALUMINIUM, AB,

 

                                                                                                                                                                                                                                                                                                                                                                                                           Appellants,

 

v.

 

INTERNATIONAL TRADE COMMISSION,

 

                                                                                                                                                                                                                                                                                                                                                                                                             Appellee,

 

and

 

PERGO, INC.,

 

and

 

ROYSOL,

 

and

 

AKZENTA PANEELE + PROFILE GmbH,

 

and

 

UNILIN DÉCOR N.V., BHK OF AMERICA, and MEISTER-LEISTEN SCHULTE, GmbH,

 

                                                                                                                                                                                                                                                                                                                                                                                                          Intervenors.

 

___________________________

 

                                                                                                                                                      DECIDED:                       September 10, 2003

___________________________

 

Before MICHEL, RADER, and SCHALL, Circuit Judges.

 

Opinion for the court filed by Circuit Judge RADER.  Dissenting opinion filed by Circuit Judge SCHALL.

 

RADER, Circuit Judge.

 

In its Final Determination on Investigation No. 337-TA-443 under 19 U.S.C. § 1337 (section 337), the United States International Trade Commission (Commission) found no infringement of patent claims covering flooring products and methods of joining flooring products.  In the Matter of Certain Flooring Prods., Inv. No. 337-TA-443, Notice of Final Initial Determination (Nov. 2, 2001) (Initial Determination); In the Matter of Certain Flooring Prods., Inv. No. 337-TA-443, Notice of Final Determination (Mar. 22, 2002) (Final Determination).   Absent patent infringement, the Commission found no domestic injury under section 337 by the imported flooring products.  Because the domestic producers, Alloc, Inc., Berry Finance N.V., and Valinge Aluminum AB (collectively, Alloc), cannot prove infringement of the properly construed claims, this court affirms.

I.

Alloc filed a complaint with the Commission alleging the importation and sale of the accused flooring materials violated section 337.  To show a violation of section 337(a)(1)(B) or section 337(a)(2), a complainant can prove three elements:  (1) the importation of goods into the United States or sales of imported goods within the United States; (2) infringement by those goods or sales of a valid and enforceable United States patent; and (3) an industry in the United States marketing the patented articles.  19 U.S.C. §§ 1337(a)(1)(B) & 1337(a)(2) (2000). 

Alloc owns the rights to U.S. Patent Nos. 5,860,267 (the ’267 patent)[3], 6,023,907 (the ’907 patent), and 6,182,410 (the ’410 patent), which claim systems and methods of joining floor panels.  Alloc alleged violation of section 337 by reason of infringement of these patents’ claims.  The asserted patents share the identical specification and all claim priority from the same Patent Cooperation Treaty (PCT) application, filed April 29, 1994, and a continuation of this PCT application, U.S. Application No. 08/436,224, filed May 17, 1995, now issued U.S. Patent No. 5,706,621.

Alloc asserted that Intervenors Pergo, Inc. (Pergo), Roysol, Akzenta Paneele + Profile, GmbH (Akzenta), Unilin N.V. (Unilin), and Meister-Leisten Schulte, GmbH (Meister) all imported flooring products that infringe claims in the ’267, ’907, and ’410 patents. With the exception of Roysol, the Intervenors admitted importation of the accused flooring products, but denied infringing the asserted patents.  By order dated July 10, 2001, the administrative judge made an initial determination, which found that Alloc had shown the existence of a domestic industry marketing the patented products – the third requirement under section 337.  The administrative judge convened an evidentiary hearing on patent infringement. 

Claim 19 of the ’267 patent, claim 1 of the ’907 patent, and claim 1 of the ’410 patent are representative of the asserted claims from each patent and state (emphases added)[4]:

Claim 19 of the ’267 patent

 

A method for laying and mechanically joining rectangular building panels in parallel rows, the method comprising the steps of:

 

a)      placing a new one of the panels adjacent to a long edge of a previously laid first one of the panels in a first row and to a short edge of a previously laid second one of the panels in an adjacent second row, such that the new one of the panels is in the second row, while holding the new one of the panels at an angle relative to a principal plane of the first panel, such that the new one of the panels is spaced from its final longitudinal position relative to said second panel and such that a long edge of the new panel is provided with a locking groove which is placed upon and in contact with a locking strip at the adjacent long edge of the first panel;

b)      subsequently angling down the new one of the panels so as to accommodate a locking element of the strip of the first panel in the locking groove of the new panel, whereby the new panel and the first panel are mechanically connected with each other in a second direction with respect to the thus connected long edges, wherein the long edges, in the angled down position of the new panel, are in engagement with each other and thereby mechanically locked together in a first direction also; and

 

c)      displacing the new one of the panels in its longitudinal direction relative to the first panel towards a final longitudinal position until a locking element of one of the short edges of the new one of the panels and the second panel snaps up into a locking groove of the other one of the short edges, whereby the new one of the panels and the second panel are mechanically connected with each other in both in the first direction and in the second direction with respect to the thus connected short edges.

 

Claim 1 of the ’907 patent

 

A method of laying and mechanically joining floor panels in parallel rows, wherein relative positions of the panels during the method can be defined as including first and second mutual positions, a first mutual position in which (i) the two panels are held in an angled position relative to each other and (ii) upper portions of adjacent edges of the two panels are in mutual contact, and a second mutual position in which the two panels are (i) located in a common plane, (ii) mechanically locked to each other in a first direction that is at right angles to the common plane, (iii) mechanically locked to each other in a second direction, that is at right angles to said first direction and to the adjacent  joint edges, as a result of a first locking member disposed at one of the adjacent edges being connected to a second locking member disposed at the other one of the adjacent edges, and (iv) being displaceable in relation to each other in the direction of the adjacent joint edges, wherein said method comprises the steps of:

 

a)      bringing a new one of the panels into an intermediary position where (i) a previously laid first one of the panels is located in a first row, (ii) a second one of the panels is located in a second row and is in said first mutual position in relation to the first panel, and (iii) the new panel is located in the second row and is in said second mutual position in relation to the second panel and is in a position relative to the first panel such that a mutual distance is present between the upper portions of the adjacent joint edges of the new panel and the first panel;

b)      while maintaining said second mutual position between the new panel and the second panel, displacing the new panel relative to the second panel into said first mutual position in relation to the first panel; and

c)      angling the new panel and the second panel together into said second mutual position in relation to the first panel.

Claim 1 of the ’410 patent

 

An edge lock for use in a flooring system having a plurality of floor panels, the edge lock for mechanically and releasably locking together adjacent edges of pairs of adjacent floor panels during assembly of the flooring system and when said adjacent floor panels are laying flat on a subfloor with upper corner portions of said adjacent edges being mutually spaced apart, said edge lock comprising:

locking means for forming a first mechanical connection for locking said adjacent edges to each other in a vertical direction, and for forming a second mechanical connection for locking said adjacent  edges to each other in a horizontal direction at right angles to said edges, said locking means including:

 

(i)                  a locking groove extending parallel to and spaced from a first one of the adjacent edges of one of the adjacent floor panels and being open at a rear side of said one adjacent floor panel, and

(ii)                a flexible and resilient locking strip integrated with another of the adjacent floor panels, said locking strip extending throughout substantially an entire length of an edge of the another adjacent floor panel, said locking strip being provided with a locking element projecting from the locking strip,

said locking means being constructed so as to operate as a one-way

snap lock in said horizontal direction during the assembly of said flooring system when displacing said adjacent edges towards each other by resiliently urging the flexible locking strip downwards until the upper portions of said adjacent edges have been brought into complete engagement with each other and the locking element thereby snaps into the locking groove to prevent drifting apart of said adjacent edges, and

said locking means also being constructed so as to enable said

adjacent panels, while they are mechanically connected to each other by said first and second mechanical connections, to be turned in relation to each other about said upper corner portions of their locked-together edges in an angular direction so as to move the locking element out of the locking groove in order to unlock said one-way snap lock.

 

After considering the specification, prosecution history, and other relevant evidence, the administrative judge construed the claims to require “play” or a space between a locking groove on a first panel and the locking element of a panel adjacent to the first panel.  The administrative judge construed the claim terms “locking means,” “locking element,” and “locking member” in view of 35 U.S.C. § 112, ¶ 6 to have structures requiring play.  The administrative judge also construed the claims independently of § 112, ¶ 6 and arrived at essentially the same claim construction.  In view of this construction, the administrative judge found no literal infringement by the imported products because he found that their locking systems did not include play.  Without infringement, the administrative judge found that Alloc did not meet the domestic injury requirement of section 337.  Therefore, the administrative judge absolved the intervenors of any violation of section 337 on November 2, 2001.  

Alloc and the Commission’s investigative staff filed petitions for review, contending the administrative judge erred in construing the claims.  The Commission reviewed portions of the Initial Determination, and then issued a Final Determination, which agreed that all of Alloc’s claims required the limitation of play.  Alloc timely appealed to this court, and this court has jurisdiction under 28 U.S.C. § 1295(a)(6).

II.

This court reviews legal determinations in section 337 investigations, such as claim construction, without deference.  Checkpoint Sys., Inc. v. United States Int’l Trade Comm’n, 54 F.3d 756, 760 (Fed. Cir. 1995).  This court reviews factual determinations for substantial evidence.  19 U.S.C. § 1337(c) (2000); 5 U.S.C. § 706 (2000).  Infringement, whether literal or under the doctrine of equivalents, is a question of fact.  Warner-Jenkinson Co. v. Hilton Davis Chem. Co., 520 U.S. 17, 28 (1997); Tanabe Seiyaku Co. v. United States Int’l Trade Comm’n, 109 F.3d 726, 731 (Fed. Cir. 1997).  Thus, an infringement determination will be upheld if supported by substantial evidence of record, which is defined to be “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.”  Enercon GmbH v. Int’l Trade Comm’n, 151 F.3d 1376, 1381 (Fed. Cir. 1998).

A. Claim Construction

In determining patent infringement, this court first examines the scope and meaning of the asserted patent claims.  Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1454 (Fed. Cir. 1998).  After all, the claims define the scope of an invention.  SRI Int'l v. Matsushita Elec. Corp., 775 F.2d 1107, 1121 (Fed. Cir. 1985) (en banc).  “Claim language generally carries the ordinary meaning of the words in their normal usage in the field of invention” at the time of invention.  Invitrogen Corp. v. Biocrest Mfg., L.P., 327 F.3d 1364, 1367 (Fed. Cir. 2003).  Thus, to determine claim meaning, a court immerses itself in the specification, the prior art, and other evidence, such as the understanding of skilled artisans at the time of invention, to discern the context and normal usage of the words in the patent claim.  See, e.g., Hoechst Celanese Corp. v. BP Chems., Ltd., 78 F.3d 1575, 1579 (Fed. Cir. 1996).  Dictionaries and scientific treatises may also help supply the pertinent context and usage for claim construction.  Tex. Digital Sys., Inc. v. Telegenix, Inc., 308 F.3d 1193, 1201, 1202 (Fed. Cir. 2002); Pitney Bowes, Inc. v. Hewlett-Packard Co., 182 F.3d 1298, 1309 (Fed. Cir. 1999)Search Term End.  Of course, a court must resist relying on any of these sources in a vacuum because they each influence the understanding of one of skill in the art at the time of invention – the standard for assessing claim meaning.  DeMarini Sports, Inc. v. Worth, Inc., 239 F.3d 1314, 1324 (Fed. Cir. 2001).  Moreover, the specification or the prosecution history of a patent may alter the meaning of a claim term from its conventional usage.  A patent applicant may consistently and clearly use a term in a manner either more or less expansive than its general usage in the relevant art, thereby expanding or limiting the scope of the term in the context of the patent claims.  Middleton, Inc. v. Minn. Mining & Mfg. Co., 311 F.3d 1384, 1388 (Fed. Cir. 2002) (explaining that in order to disavow claim scope, a patent applicant must clearly and unambiguously express surrender of subject matter during prosecution); SciMed Life Sys., Inc. v. Advanced Cardiovascular Sys., Inc., 242 F.3d 1337, 1342 (Fed. Cir. 2001).

Turning to the Commission’s finding that the claims include a “play” limitation, none of the asserted patent claims recites the term play.[5]  Even so, the claims recite floor system features, which are emphasized in the claim language above, in which play is necessarily present.  These features, and their associated claim terms, relate to “displacement” and “disassembly.”

The ’907 specification describes “the invention” under the heading “Technical Problems and Objects of the Invention,” as “provid[ing] a system for making a joint along adjacent joint edges of two building panels, especially floor panels . . . said system being characterized in that . . . the panels, when joined together, can occupy a relative position in said second direction where a play exists between the locking groove and a locking surface on the locking element that is facing the joint edges and is operative in said second mechanical connection.”  ’907 patent, col. 3, ll. 59-61; col. 4, ll. 6, 15-19 (emphasis added).  Notably, the “objects of the invention are achieved by means of a panel‑joining system having the features recited in the appended claims.” ’907 patent, col. 3, ll. 56-58.  The ’907 specification repeats this point:  “The above and other features and advantages of the invention will appear from the appended claims and the following description of embodiments of the invention.”  ’907 patent, col. 6, ll. 15-17.  Thus, the specification teaches that the invention as a whole, not merely a preferred embodiment, provides for play in the positioning of floor panels.

The specification also teaches that play between components of the locking joint permits displacement, i.e., allows connected panels to slide relative to one another.  ’907 patent, Figure 1.  Thus, the play in the joint enables displacement of floor panels to permit assembly of the panels in accordance with the installation method in Alloc’s patents.  According to the description of Figure 1, “[w]hen the panels 1 and 2 are joined together, they can however occupy such a relative position in the direction D2 that there is a small play D between the locking surface 10 and the locking groove 14.  This mechanical connection in the direction D2 allows mutual displacement of the panels 1, 2 in the direction of the joint, which considerably facilitates the laying and enables joining together the short sides by snap action.”  ’907 patent, col. 7, ll. 38-45.  Thus, displacement, facilitated by play, permits assembly via snap action.

According to the ’907 specification, play in the joint also permits “disassembly and reassembly of a floor previously laid without causing damage to the panels.”  ’907 patent, col. 3, ll. 48-50.  In addition to minimizing the risk of damage to the panels, the system of the invention “can be assembled and disassembled much faster than in present‑day systems, and any damaged or worn‑out panels can be replaced by taking up and re‑laying parts of the floor.”  ’907 patent, col. 4, ll. 54-57.  The patent teaches that the preferred method of disassembly is to rotate the panels at an angle to one another without contact between their components.  This method achieves disassembly “even if the aforementioned play between the locking groove and the locking surface is not greater than 0.2 mm.”  ’907 patent, col. 5, ll. 28-29.  In addition to a first mechanical connection, the specification states that “the invention” provides for a second mechanical connection wherein “a play exists between the locking groove and a locking surface on the locking element that is facing the joint edges and is operative in said second mechanical connection.”  ’907 patent, col. 4, ll. 16-19.  The second mechanical connection “is so conceived as to allow the locking element to leave the locking groove if the groove panel is turned about its joint edge angularly away from the strip.”  ’907 patent, col. 4, ll. 23-26.  Thus, the second mechanical connection, in which play exists, permits release of the locking element upon turning the groove panel away from the strip projecting from the groove panel, essentially unlocking the snap lock assembly.

The ’907 specification further criticizes prior art floor systems without play.  ’907 patent, col. 3, ll. 1-21.  The specification teaches that displacement of prior art panels is a “complicated operation” in systems having panels “tightly urged against each other,” meaning displacement is hard to achieve in systems without play.  ’907 patent, col. 3, ll. 10-12.  Furthermore, disassembly and reassembly, which play facilitates, is unfeasible with these prior art systems.  As the ’907 specification explains, “it is not possible to disassemble a glued floor panel once laid, without having to break up the joints.  Floor panels that have been taken up cannot therefore be used again. . . .  Nor can damaged or worn-out panels be replaced without extensive efforts.”  ’907 patent, col. 2, ll. 26-32. 

Moreover, all the figures and embodiments disclosed in the asserted patents imply play, or, as in the case of Figure 1b, expressly disclose play.  Indeed, the patents do not show or suggest any systems without play.  Thus, the ’907 family of patents describe only flooring systems and methods of joining these flooring systems with play between the locking groove and the locking element.

In so concluding, this court recognizes that it must interpret the claims in light of the specification, Markman v. Westview Instruments, Inc., 52 F.3d 967, 979 (Fed. Cir. 1995) (en banc), aff’d 517 U.S. 370 (1996), yet avoid impermissibly importing limitations from the specification.  Comark Communications v. Harris Corp., 156 F.3d 1182, 1186 (Fed. Cir. 1998).  That balance turns on how the specification characterizes the claimed invention.  SunRace Roots Enters. Co. v. SRAM Corp., 336 F.3d 1298, 1305 (Fed. Cir. 2003).  In this respect, this court looks to whether the specification refers to a limitation only as a part of less than all possible embodiments or whether the specification read as a whole suggests that the very character of the invention requires the limitation be a part of every embodiment.  For example, it is impermissible to read the one and only disclosed embodiment into a claim without other indicia that the patentee so intended to limit the invention.  Teleflex, Inc. v. Ficosa N. Am. Corp., 299 F.3d 1313, 1327 (Fed. Cir. 2002).  On the other hand, where the specification makes clear at various points that the claimed invention is narrower than the claim language might imply, it is entirely permissible and proper to limit the claims.  SciMed Life Sys., Inc. v. Advanced Cardiovascular Sys., Inc., 242 F.3d 1337, 1345 (Fed. Cir. 2001). 

Because the present case is factually similar to SciMed, this court’s analysis in that case is instructive here.  In SciMed, the court identified the sole claim construction issue to be “whether the common specification of the three patents limits the scope of the claims to catheters with coaxial lumens.”  Id. at 1340.  The patentee argued that the claims should have been construed to include catheters with not only coaxial but also dual or side‑by‑side lumens.  Id.  But this court disagreed, finding:

At various points, the common specification of the three patents indicates that the claimed invention uses coaxial, rather than side‑by‑side lumens, i.e., that the guide wire lumen is contained within the inflation lumen and that the inflation lumen is annular.  Read together, these portions of the common specification lead to the inescapable conclusion that the references in the asserted claims to an inflation lumen “separate from” the guide wire lumen must be understood as referring to coaxial lumens, and thus that the asserted claims read only on catheters having coaxial lumens.

Id. at 1342.  Here too, the ’907 specification read as a whole leads to the inescapable conclusion that the claimed invention must include play in every embodiment.

This court’s analysis in SunRace is similarly instructive, as the present facts are distinguishable.  The parties’ dispute centered on whether the claims included a cam as part of a shift actuator.  In that case, the court found that the specification as a whole did not mandate that the claimed invention include a particular feature; instead, the court found that the patentee had clearly contemplated a shift actuator without a cam.  SunRace, 336 F.3d at 1304-5.  It stated: “[N]othing in the written description indicates that the invention is exclusively directed toward cams or suggests that systems employing cams are outside the scope of the invention.  Thus, while it is clear that the patentee was primarily focused on an embodiment of the invention using a cam, nothing in the patent limits the claims to that embodiment.”  Id. at 1305.  Here, the ’907 specification indicates that the invention is indeed exclusively directed toward flooring products including play.  Moreover, unlike the patent‑at‑issue in SunRace, the ’907 specification also distinguished the prior art on the basis of play.  Id.

Although the specification alone is sufficiently clear, the prosecution history of this patent family confirms the description in the specification of each patent, namely, that play is a key feature of the claimed invention.  The PCT priority application included claims to a “system for providing a joint along adjacent joint edges . . . of two building panels,” the system having panels, when joined together, that “can occupy a relative position in said second direction (D2) where play (D) exists.”  The International Preliminary Examination Report (IPER) issued in the PCT application states that none of the documents cited in the International Search Report “describe a system where a play exists between the locking groove (14) and the locking element (8), where the connection allows mutual displacement of the panels in the direction of the joint edges and where the connection is so conceived as to allow the locking element to leave the groove (14) if the groove panel (2) is turned about its joint edge angularly away from the strip.  The device is therefore novel.”  Thus, the IPER based its conclusion of novelty on the claim’s recitation of play in the system joint.

During prosecution of the U.S. parent ’621 patent application, the patentee represented to the United States Patent and Trademark Office (USPTO) that play is “important” because it enables displacement and disassembly of connected panels.  Specifically, in response to a prior art rejection under 35 U.S.C. § 102(b), the patentee stated:

The claimed “play” of the present invention is important for two reasons.  One, it enables the panels to slide movably with respect to each other along the direction of the joint edge, which is specifically claimed in the penultimate paragraph of claim 1.  This movability allows the short ends of the panels to be placed adjacent each other when installing the floor.  Second, the play further enables disassembly of the floor when required.  . . .  Trotter [the prior art] also does not teach or suggest the feature of the present invention that is defined in the last claim of claim 1, i.e., that the second mechanical connection enables the locking element to leave the locking groove if the groove panel is turned about its joint edge angularly way from the strip.

 

In response, the USPTO examiner allowed the claims over the Trotter reference, noting (emphases added):

The prior art of record fails to teach the use of adjacent joint floor paneling wherein the floor panels are interconnected by a locking element located within a groove formed on the underside in such a way so as to allow for displacement of the panels in a direction toward the joints and to allow for the locking member to be released from the groove when the panel is rotated about the joint.  

 

Thus, like in the IPER, the USPTO relied on the patentee’s statement distinguishing the invention from the prior art based on the invention’s ability to displace panels (“slide movably”) and to release adjacent panels by rotation about the joint.  The applicant persuaded the USPTO that play enables these features.  After gaining allowance of these claims, the patentee added new claims nearly identical to those allowed, except without the term play.  The applicant did not, however, retract or modify the representations that secured allowance of the original claims.  Instead, the applicant acknowledged:

New independent claim 22 is substantially the same as independent claim 1 except that it does not define the play that exists between the locking groove and the locking surface.  As such, displacement of the panels is still facilitated in a direction along the joints which is what is believed to be meant by the Examiner’s Statement of Reasons for the indication of allowable subject matter.  (Emphasis added.)

 

As such, the applicant represented to the USPTO examiner that play facilitated its novel system set forth in the revised claims.  Because the applicant invoked play to overcome the prior art, which lacked displacement and disassembly, Alloc cannot now contend that the ’621 patent claims a flooring system and method for installing that system without play.  The applicant expressly disavowed systems without play during prosecution of the parent ’621 application.  See Middleton, 311 F.3d at 1388.

Likewise, the independent claims of the ’907, ’410, and ’267 patents incorporate the same limitations adopted by the applicant to secure allowance of the parent ’621 patent.  Augustine Med., Inc. v. Gaymar Indus., Inc., 181 F.3d 1291, 1300 (Fed. Cir. 1999) (noting that the prosecution history of a parent patent application may limit the scope of a later patent application using the same claim term).  The critical features of the parent ’621 patent claims are also recited in the claims of its offspring.  Each of the asserted patent claims recite locking members, locking elements, or locking means that permit displacement of panels or release of panels during disassembly.  Specifically, the asserted ’907, ’410, and ’267 patent claims require the displacement of floor panels, or floor panels that are displaceable in relation to each other.

Moreover, the system claims of the ’410 patent require locking means that unlock adjacent floor panels by turning the panels in an angular direction to move the locking element out of its locking groove.  To gain allowance of the parent patent claims over the prior art, the applicant insisted that play enables displacement and disassembly.  Moreover, this feature distinguished the claimed flooring system over systems without play.  All of the asserted child patents have specifications identical to the parent ’621 specification.  Thus, the limitations of the parent, as dictated by the specification’s disclosure, apply as well to each of its children.  Because play facilitates displacement and disassembly, as stated in the parent ’621 patent file history, the asserted claims all require that feature.

The parties disagree as to whether this court should construe certain features of claims 1-3 of the ’907 patent, claims 1, 26, 41 and 48 of the ’410 patent, and claims 19, 23, and 39 of the ’267 patent under 35 U.S.C. § 112, ¶ 6 as means-plus-function limitations.  Claims 1-3 of the ’907 patent recite the terms “first locking member” and “second locking member.”  The claims of the ’410 patent recite the terms “locking means,” “locking element,” and “means for mechanically locking.”  The claims of the ’267 patent recite the terms “first locking member,” “second locking member,” and “locking element.”  35 U.S.C. § 112, ¶ 6 states:

An element in a claim for a combination may be expressed as a means or step for performing a specified function without the recital of structure, material or acts in support thereof, and such claim shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof.

 

35 U.S.C. § 112, ¶ 6 (2000).  While typically considered in light of apparatus claims, § 112, ¶ 6 is also applicable to steps in a process claim.  O.I. Corp. v. Takmar Co., 115 F.3d 1576, 1583 (Fed. Cir. 1997).

In this case, the outcome does not hinge on whether or not the claims are interpreted under 35 U.S.C. § 112, ¶ 6, as the critical factor, play, applies to claims of either flavor.  The applicant emphasized the criticality of play during prosecution of the parent ’621 application.  This record informs the claims of its children as well.  Whether those claims fall under the § 112, ¶ 6 regime or not, the patent applicant tethered the displacement and disassembly features of the claims to the play feature.  Alloc cannot now obtain a claim construction under § 112, ¶ 6 disregarding play.


B. Infringement

After construing the claims of the ’907, ’410, and ’267 patents, the Commission compared the claims to the imported floor systems.  Because the Commission correctly construed the claims to require play, Alloc relied on its expert, Mr. Limbert, to show play in the imported flooring systems.  Nonetheless, the administrative judge found that none of the imported products exhibited play.   

With respect to Unilin’s system, the administrative judge discounted Mr. Limbert’s analysis as flawed due to his reliance on drawings not depicting Unilin’s product and faulty mathematical calculations.  Initial Determination, slip op. at 90-92.  The administrative judge rejected Alloc’s arguments regarding play in Pergo’s product because Alloc’s sole basis for making these arguments was that Pergo’s product contained the same joint as Unilin’s product.  Initial Determination, slip op. at 93.     Thus, the reasons for rejecting Alloc’s assertions against Unilin are equally applicable to Pergo.  Alloc did not allege that Roysol’s products possessed play.  Initial Determination, slip op. at 94.  

Alloc argued that manufacturing tolerances may result in pretension or play in Akzenta’s flooring products.  However, the administrative judge rejected this argument, because the design specifications and quality control practices of Akzenta prevent the introduction of play during manufacturing.  According to Akzenta’s expert, Dr. Blair, physical inspection of Akzenta’s product confirmed the absence of play.  Initial Determination, slip op. at 97.  

Thus, the administrative judge carefully weighed the evidence of record, and found the Intervenor’s arguments and expert testimony more persuasive than Alloc’s.  Based on this evidence, the administrative judge found no literal infringement of Alloc’s claims by the imported flooring systems, as each system lacks the requisite play.  This court generally defers to an agency as fact-finder in assessing the credibility of witnesses.  See Hambsch v. Dep’t of Treas., 796 F.2d 430, 436 (Fed. Cir. 1986).  Because the record supplies substantial evidence to support the administrative judge’s factual findings, this court affirms the determination of no literal infringement.  See Enercon, 151 F.3d at 1376.

Alloc contended that at least some of the Intervenors induced customers to install their imported flooring systems in manners resulting in infringement of the ’907 and ’267 patents.  For example, Alloc argued that Unilin, Pergo, and Roysol provided installation instructions that require customers to follow the steps of Alloc’s claimed methods.  Alloc asserts that the Intervenors specifically intended to induce infringement of the ’907 and ’267 method claims.

Under principles of indirect infringement, “[w]hoever actively induces infringement of a patent shall be liable as an infringer.”  35 U.S.C. § 271(b) (2000).  However, a patentee must show that an alleged infringer knowingly induced another to commit an infringing act to establish induced infringement under section 271(b).  Manville Sales Corp. v. Paramount Sys., Inc., 917 F.2d 544, 553 (Fed. Cir. 1990); C.R. Bard Inc. v. Advanced Cardiovascular Sys., Inc., 911 F.2d 670, 674-75 (Fed. Cir. 1990) (“A person induces infringement under § 271(b) by actively and knowingly aiding and abetting another's direct infringement.”).  Here, the administrative judge found no evidence that the Intervenors intended to induce others to infringe the asserted patents.  More importantly, the administrative judge found no evidence of direct infringement, which is a prerequisite to indirect infringement.  Moba, B.V. v. Diamond Automation, Inc., 325 F.3d 1306, 1318 (Fed. Cir. 2003) (“Because this court upholds the verdict that claim 28 of the '494 patent is not directly infringed, the trial court correctly determined that FPS does not indirectly infringe that claim.”); Met-Coil Sys. Corp. v. Korners Unlimited, Inc., 803 F.2d 684, 687 (Fed. Cir. 1986) ("[T]here can be no inducement of infringement without direct infringement by some party.").  This court finds no reason to disturb the administrative judge’s conclusion on inducement.

Contributory infringement prohibits importation into the United States of a component or apparatus for use in a patented process that “has no use except through practice of the patented method.”  C.R. Bard, 911 F.2d at 674.  The statute sets forth contributory infringement in section 271(c):

Whoever offers to sell or sells within the United States or imports into the United States a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer.

 

35 U.S.C. § 271(c) (2000).  In this case, the administrative judge found that the imported flooring had substantial noninfringing uses.  The record showed that the accused flooring products could be installed by methods not claimed in the ’267 and ’907 patents.  Initial Determination, slip op. at 104-07.  For instance, the installation instructions for Unilin’s floor product are a noninfringing “snap-snap” method.  Alloc’s expert, Mr. Wennerth, admitted that Pergo’s installation instructions describe a noninfringing method of installing Pergo flooring.  Akzenta’s published PCT application also discloses noninfringing methods of installing its floor products.  After weighing this evidence, the administrative judge found no basis for contributory infringement.  Initial Determination, slip op. at 107.  The record amply supports the administrative judge‘s determination of noninfringement, and this court finds no reason to alter the decision of the administrative judge.

C. Validity

The criteria set forth in section 337 require not only proof of patent infringement, but also a showing that the infringed patent is valid and enforceable.  19 U.S.C. § 1337(a)(1)(B)(i) (2000).  Akzenta argued that Alloc’s ’907, ’410, and ’267 patents would be invalid if construed not to require play.  In addition, Roysol argued that Alloc’s patents are unenforceable due to misuse.  Initial Determination, slip op. at 118-19.   Because the claims were construed to require play, the administrative judge did not reach the issue of invalidity over the cited art.  With respect to the misuse allegation, the administrative judge found that Roysol did not meet its burden in establishing the elements of patent misuse by Alloc.  Id.  This court affirms those rulings.

D. Domestic Industry

A requirement of a patent-based section 337 action is that a domestic industry “relating to the articles protected by the patent . . . exist[] or [be] in the process of being established.” 19 U.S.C. § 1337(a)(2).  To determine whether an industry relates to the protected articles (the “technical prong” of the domestic industry requirement), the Commission examines whether the industry produces articles covered by the asserted claims.  The test for satisfying the “technical prong” of the industry requirement is essentially same as that for infringement, i.e., a comparison of domestic products to the asserted claims.  Corning Glass Works v. United States Int’l Trade Comm’n, 799 F.2d 1559, 1563 (Fed. Cir. 1986).   

The administrative judge found that Alloc satisfied the economic prong of domestic industry.  Initial Determination, slip op. at 2.  However, based on the claim construction of the patents at issue, the administrative judge concluded that Alloc did not practice the patents at issue.  The products sold by Alloc in the relevant United States market are not covered by any of the asserted patent claims because Alloc sells flooring systems without play.  Initial Determination, slip op. at 110-15. 

Alloc does not contend on appeal that its products exhibit play.  Instead, Alloc presents arguments that three of its products marketed in the United States can be installed using a hammer and tapping block, which eliminates play.  Thus, Alloc makes no attempt to establish a domestic industry in light of claim construction requiring play.  Alloc essentially concedes that it cannot show a domestic industry exists under a claim construction requiring its flooring systems to have play.  Therefore, Alloc cannot make out a section 337 violation in the instant case for lack of the domestic injury component of the charge.

CONCLUSION

 

The Commission properly construed the asserted claims of the ’267, ’907, and ’410 patents.  Because that construction precludes Alloc from showing infringement by the Intervenors, no injury to a domestic industry has occurred.  Therefore, this court affirms the Commission’s final determination.

COSTS

            Each party shall bear its own costs.

AFFIRMED

 

United States Court of Appeals for the Federal Circuit

05-1433

ABBOTT LABORATORIES,

Plaintiff-Appellee,

v.

ANDRX PHARMACEUTICALS, INC.,

and ROXANE LABORATORIES, INC.,

Defendants,

and

TEVA PHARMACEUTICALS USA, INC.,

Defendant-Appellant.

Jeffrey I. Weinberger, Munger, Tolles & Olson LLP, of Los Angeles, California, argued for plaintiff-appellee. With him on the brief were Ted G. Dane and Andrea Weiss Jeffries. Of counsel on the brief were Jennifer L. Polse and Jason Rantanen, of San Francisco, California. Of counsel were Todd J. Ehlman and R. Mark McCareins, Winston & Strawn LLP, of Chicago, Illinois.

James Galbraith, Kenyon & Kenyon, of New York, New York, argued for defendant-appellant. With him on the brief were Maria Luisa Palmese and Robert V. Cerwinski.

Appealed from: United States District Court for the Northern District of Illinois

Judge David H. Coar 

 

United States Court of Appeals for the Federal Circuit

05-1433

ABBOTT LABORATORIES,

Plaintiff-Appellee,

v.

ANDRX PHARMACEUTICALS, INC.,

and ROXANE LABORATORIES, INC.,

Defendants,

and

TEVA PHARMACEUTICALS USA, INC.,

Defendant-Appellant.

__________________________

DECIDED: June 22, 2006

__________________________

Before NEWMAN, GAJARSA, and PROST, Circuit Judges.

Opinion for the court filed by Circuit Judge PROST. Dissenting opinion filed by Circuit Judge NEWMAN.

PROST, Circuit Judge.

Abbott Laboratories (“Abbott”) brought suit against Teva Pharmaceuticals USA, Inc. (“Teva”) alleging infringement of its patents relating to extended release formulations of clarithromycin. Abbott moved for a preliminary injunction against Teva on the grounds that Teva was infringing claims 2, 4, and 6 of U.S. Patent No. 6,010,718 (“’718 patent”) and claim 2 of U.S. Patent No. 6,551,616 (“’616 patent”). Teva resisted 

 

the motion primarily by arguing that substantial questions existed as to the validity of Abbott’s asserted claims under 35 U.S.C. § 103. The district court agreed that Teva had raised a substantial question as to the validity of claim 2 of the ’616 patent but it rejected Teva’s invalidity arguments as to the asserted claims of the ’718 patent. Accordingly, the district court granted Abbott’s motion for a preliminary injunction. Teva appealed. We have jurisdiction to review the district court’s order under 28 U.S.C. § 1292(c)(1).

On appeal, Teva has raised substantial issues as to the validity of each of the asserted claims relied upon for the preliminary injunction. We vacate the preliminary injunction.

I.

Clarithromycin is a broad spectrum antibiotic from the macrolide family of antibiotics, all of which are derived from erythromycin A. Taisho Pharmaceuticals Ltd. received U.S. Patent No. 4,331,803 (“’803 patent”) for clarithromycin in 1982. In 1991, Abbott, the exclusive licensee of the ’803 patent, introduced Biaxin, an immediate release dosage form of clarithromycin. The ’803 patent expired on May 23, 2005.

In 1997, Abbott filed for a patent claiming an extended release formulation of clarithromycin. The patent describes and claims extended release (“ER”) formulations comprising erythromycin derivatives combined with a pharmaceutically acceptable polymer. The resulting drug-polymer matrix leads to the extended release properties of the formulation. The ER formulation enabled patients to take one pill per day rather than twice, as had been required with the immediate release (“IR”) formulation. That patent issued on January 4, 2000 as the ’718 patent. Further, based on the ’718 patent 

05-1433 2

application, Abbott filed a continuation-in-part application that claims a method of reducing adverse gastrointestinal (“GI”) side effects of erythromycin-derived drug formulations by using extended release formulations. This continuation-in-part issued as the ’616 patent. In 2000, Abbott introduced its ER clarithromycin formulation, Biaxin XL. As of May 2005, Abbott estimated that, as between Biaxin and Biaxin XL, Biaxin XL accounted for 70% of sales in the Biaxin market. As the original patent on clarithromycin expired on May 23, 2005, generic competitors entered the market for immediate release clarithromycin on May 24, 2005.

In December 2002, Teva filed an Abbreviated New Drug Application (“ANDA”) seeking approval to market an extended release form of clarithromycin similar to Abbott’s ER clarithromycin drug, Biaxin XL. On March 14, 2005, Abbott sued Teva for infringement of the ’718 and ’616 patents.1 On May 18, 2005, Abbott moved for a preliminary injunction against Teva.

On May 26 and June 1, 2005, the district court held oral argument on Abbott’s motion for the preliminary injunction and thereafter, on June 3, issued its memorandum opinion. It listed the four factor test for the grant of a preliminary injunction, namely that the party seeking the preliminary injunction must show

(1) the movant has some likelihood of success on the merits of the underlying litigation; (2) immediate irreparable harm will result if the relief is not granted; (3) the balance of hardships to the parties weighs in the movant’s favor; and (4) the public interest is best served by granting the injunctive relief.

1 Abbott also alleged infringement of U.S. Patent No. 6,872,407 and U.S. Patent 4,680,386 but as this case is a limited appeal of the district court’s grant of a preliminary injunction under 28 U.S.C. § 1292(c)(1) and that preliminary injunction did not extend to the claims of the 6,872,407 or 4,680,386 patent, those two patents are not before us today and will not be discussed. 

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Abbott Labs. v. Andrx Pharms., Inc., No. 05-1433, slip op. at 3 (N.D. Ill. June 3, 2005) (citing Polymer Techs., Inc. v. Bridwell, 103 F.3d 970, 973 (Fed. Cir. 1996)). The district court began its analysis and evaluated Abbott’s likelihood of success on the merits by considering Abbott’s infringement contentions and Teva’s invalidity defenses. Teva did not dispute that its generic ER formulation of clarithromycin infringed Abbott’s ’718 and ’616 patent claims. Rather, Teva alleged that the asserted patent claims were invalid for obviousness under 35 U.S.C. § 103. The court focused on Teva’s invalidity arguments and concluded that Teva had raised a substantial question as to the validity of claim 2 of the ’616 patent but it “ha[d] not established that claims 2, 4, and 6 of the ’718 patent are invalid for obviousness.” Abbott Labs., slip op. at 32. Thus as to the asserted claims of the ’718 patent, Abbott had established a likelihood of success on the merits. As to irreparable harm, the district court first noted that because of its finding that Abbott had proved a likelihood of success on the merits of infringement for the ’718 patent claims, there was a presumption of irreparable harm that Teva had to rebut. Furthermore, Abbott contended that it will face “irreversible market share losses [if] . . . it loses its preferred position on pharmacy and insurance formularies.” Abbott Labs., slip op. at 25. As a result, the district court concluded that “entry of the generic extended release formulation competitor will likely crush the market” and therefore absent the preliminary injunction Abbott would suffer irreparable harm. Abbott Labs., slip op. at 27. As to the third factor, the district court stated that Teva was “reluctan[t] or inab[le] to quantify the hardship, if any, it will face if an injunction is incorrectly entered” and “there is little choice but to conclude that the balance of hardships favors [Abbott].” Abbott Labs., slip op. at 30-31. Lastly, the district court determined that “[t]o the extent 

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that this court has found that the patents in suit are valid, the public interest is best served by enforcing them.” Id. Based on these considerations, the court issued its order entering the preliminary injunction with respect to the asserted claims of the ’718 patent.

II.

On appeal, Teva argues that the district court erred in holding that Abbott had demonstrated that Teva’s invalidity defense to claims 2, 4 and 6 of the ’718 patent lacked substantial merit. Teva also argues that the district court erred in finding that Abbott had established that it would suffer irreparable harm if Teva were not enjoined. As a result of those two errors, Teva alleges that the district court abused its discretion in granting Abbott’s motion for preliminary injunction.

In response, Abbott contends that, as to claims 2, 4, and 6 of the ’718 patent, it made a clear showing of likelihood of success on the merits and it is entitled to the presumption that it would suffer irreparable harm absent the preliminary injunction. Furthermore, Abbott argues that the preliminary injunction ruling could be affirmed on the alternate grounds that Teva failed to raise a substantial challenge to the validity of claim 2 of the ’616 patent.

The grant or denial of a preliminary injunction under 35 U.S.C. § 283 is within the sound discretion of the district court. Amazon.com, Inc. v. Barnesandnoble.com, 239 F.3d 1343, 1350 (Fed. Cir. 2001). As the Supreme Court recently held on the closely related topic of permanent injunctions, “[t]he decision to grant or deny permanent injunctive relief is an act of equitable discretion by the district court, reviewable on appeal for abuse of discretion.” eBay, Inc. v. MercExchange, L.L.C., 126 S. Ct. 1837, 

 

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1839 (2006). “These familiar principles apply with equal force to disputes arising under the Patent Act. . . . . [T]he Patent Act expressly provides that injunctions ‘may’ issue ‘in accordance with the principles of equity.’” Id. (quoting 35 U.S.C. § 283). As the moving party, Abbott had to establish its right to a preliminary injunction in light of four factors:

(1) the movant has some likelihood of success on the merits of the underlying litigation; (2) immediate irreparable harm will result if the relief is not granted; (3) the balance of hardships to the parties weighs in the movant’s favor; and (4) the public interest is best served by granting the injunctive relief.

Polymer Techs., Inc. v. Bridwell, 103 F.3d 970, 973 (Fed. Cir. 1996).

An abuse of discretion in granting or denying a preliminary injunction may be found “by showing that the court made a clear error of judgment in weighing relevant factors or exercised its discretion based upon an error of law or clearly erroneous factual findings.” Id. (quoting Novo Nordisk of N. Am., Inc. v. Genentech, Inc., 77 F.3d 1364, 1367 (Fed.Cir.1996)). We now turn to the factors relevant to a motion for a preliminary injunction.

III.

As to Abbott’s likelihood of success on the merits, “Teva does not dispute that its generic clarithromycin extended release formulation infringes Abbott’s ’718 and ’616 patents. Teva asserts that those patents . . . are invalid for obviousness under 35 U.S.C. § 103 (2004).” Abbott Labs., slip op. at 3. As a result, “if [the defendant] raises a substantial question concerning . . . validity, i.e. . . . [an] invalidity defense that the patentee cannot prove ‘lacks substantial merit’” then the patentee has not established a 

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likelihood of success on the merits.2 Amazon.com, 239 F.3d at 1350-51 (citing Genentech, Inc. v. Novo Nordisk, A/S, 108 F.3d 1361, 1364 (Fed. Cir. 1997)). Furthermore, as this case involves multiple patent claims, “the patentee must demonstrate that . . . at least one of [the] allegedly infringed claims will . . . likely withstand the validity challenges presented by the accused infringer.” Id. As to the burden regarding invalidity allegations, “[v]alidity challenges during preliminary injunction proceedings can be successful, that is, they may raise substantial questions of invalidity, on evidence that would not suffice to support a judgment of invalidity at trial.” Id. at 1358 (citing Helifix, 208 F.3d at 1352). As this court has stated

In resisting a preliminary injunction, however, one need not make out a case of actual invalidity. Vulnerability is the issue at the preliminary injunction stage, while validity is the issue at trial. The showing of a substantial question as to invalidity thus requires less proof than the clear and convincing showing necessary to establish invalidity itself.

2 The dissent appears to take issue with the conclusion that a likelihood of success on the merits is not found where there exists a substantial question of validity. The majority opinion, however, is duty bound by our precedent which states exactly this proposition. In Genentech, Inc. v. Novo Nordisk, A/S, this court stated that

In order to demonstrate that it has a likelihood of success, Genentech must show that, in light of the presumptions and burdens that will inhere at trial on the merits, (1) it will likely prove that Novo infringes the ’199 patent and (2) its infringement claim will likely withstand Novo’s challenges to the validity and enforceability of the ’199 patent. In other words, if Novo raises a ‘substantial question’ concerning validity, enforceability, or infringement (i.e., asserts a defense that Genentech cannot show ‘lacks substantial merit’) the preliminary injunction should not issue. More specifically, with regard to Novo’s validity defenses, the question on appeal is whether the [defenses have] substantial merit . . . .

108 F.3d 1361, 1364 (Fed. Cir. 1997); see also Tate Access Floors, Inc. v. Interface Architectural Res., Inc., 279 F.3d 1357, 1365 (Fed. Cir. 2002), Purdue Pharma L.P. v. Boehringer Ingelheim GMBH, 237 F.3d 1359, 1363 (Fed. Cir. 2001), Helifix Ltd. v. Blok-Lok, Ltd., 208 F.3d 1339, 1351 (Fed. Cir. 2000). 

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Id. at 1359. “When moving for the extraordinary relief of a preliminary injunction, a patentee need not establish the validity of a patent beyond question. The patentee must, however, present a clear case supporting the validity of the patent in suit.” Id. (citations omitted).

Turning to Teva’s invalidity contentions based on obviousness, “‘the first step is to determine the meaning and scope of each claim in suit.’” Id. (quoting Lemelson v. Gen. Mills, Inc., 968 F.2d 1202, 1206 (Fed. Cir. 1992)). “Only when a claim is properly understood can a determination be made . . . whether the prior art . . . renders obvious the claimed invention.” Id. We have stated that “[q]uite apart from the written description and the prosecution history, the claims themselves provide substantial guidance as to the meaning of particular claim terms.” Phillips v. AWH Corp., 415 F.3d 1303, 1314 (Fed. Cir. 2005). “First, we look to the words of the claims themselves, both asserted and nonasserted, to define the scope of the patented invention.” Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1582 (Fed. Cir. 1996). Where claim terms are ambiguous or disputed, then we turn to the specification as “the specification ‘is always highly relevant to the claim construction analysis. Usually, it is dispositive; it is the single best guide to the meaning of a disputed term.’’’ Phillips, 415 F.3d at 1315 (quoting Vitronics, 90 F.3d at 1582).

Once the scope of the claims are determined, the actual obviousness determination under 35 U.S.C. § 103 begins. Recently this court re-iterated the proper standards for making determinations under § 103. In re Kahn, 441 F.3d 977 (Fed. Cir. 2006). First, the court

determines the scope and content of the prior art, and ascertains the differences between the prior art and the claims at issue, and resolves the 

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level of ordinary skill in the pertinent art. Against this background, the [court] determines whether the subject matter would have been obvious to a person of ordinary skill in the art at the time of the asserted invention.

Id. at 985 (citing Dann v. Johnston, 425 U.S. 219, 226 (1976) and Graham v. John Deere Co., 383 U.S. 1, 13-14 (1966)). In making this determination, we noted in Kahn that “[m]ost inventions arise from a combination of old elements and each element may often be found in the prior art.” Id. at 986. The prior art that is considered is drawn from references “either in the field of the applicant’s endeavor or is reasonably pertinent to the problem with which the inventor was concerned.” Id. at 987.

However, mere identification in the prior art of each element is insufficient to defeat the patentability of the combined subject matter as a whole. Rather, a party alleging invalidity due to obviousness must articulate the reasons one of ordinary skill in the art would have been motivated to select the references and to combine them to render the claimed invention obvious.

Id. at 986.

This ‘motivation-suggestion-teaching’ test asks not merely what the references disclose, but whether a person of ordinary skill in the art, possessed with the understandings and knowledge reflected in the prior art, and motivated by the general problem facing the inventor, would have been led to make the combination recited in the claims.

Id. at 988.

In analyzing Teva’s obviousness contentions as to claims 2, 4, and 6 of the ’718 patent and Abbott’s alternative grounds for affirming the preliminary injunction under claim 2 of ’616 patent, we separate the analysis into two parts. Claim 2 and 4 of the ’718 patent are closely related and are addressed first. Claim 6 of the ’718 patent and claim 2 of the ’616 patent are dealt with next. For each pair of claims, we construe the claims and we determine if the allegations raise substantial questions of obviousness. 

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A.

We begin by examining claim 2 and 4 of the ’718 patent and the district court’s analysis regarding these claims. Claim 2 of the ’718 patent claims3

a pharmaceutical composition for extended release of an erythromycin derivative in the gastrointestinal environment, comprising

an erythromycin derivative and

from about 5 to about 50% by weight of a pharmaceutically acceptable polymer, wherein the polymer is a hydrophilic water-soluble polymer,

so that when ingested orally, the composition induces statistically significantly lower mean fluctuation index in the plasma than an immediate release composition of the erythromycin derivative while maintaining bioavailability substantially equivalent to that of the immediate release composition of the erythromycin derivative.

’718 patent, col. 11, ll. 28-40. In short, claim 2 has three basic elements. First, the extended release composition includes an erythromycin derivative. Second, it includes a polymer. Third, the claim includes specific pharmacokinetic parameters that the erythromycin derivative and polymer composition must meet.

Similarly, claim 4 claims

a pharmaceutical composition for extended release of an erythromycin derivative in the gastrointestinal environment, comprising

an erythromycin derivative and

from about 5 to about 50% by weight of a pharmaceutically acceptable polymer,

so that upon oral ingestion, maximum peak concentrations of the erythromycin derivative are lower than those produced by an immediate release pharmaceutical composition, and area under the concentration-time curve and the minimum plasma concentration are substantially equivalent to that of the immediate release pharmaceutical composition.

3 Claim 2 of the ’718 patent depends from independent claim 1. The language recited for claim 2 includes the combined limitations of claim 1 and claim 2. 

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’718 patent, col. 11, ll. 48-58. As can be seen, claim 4 also has three basic elements: the erythromycin derivative, the polymer, and specific (but different from claim 2) pharmacokinetic parameters.

From the specification, the district court defined erythromycin derivative in both claims as meaning “‘erythromycin having no substituent groups, or having conventional substituent groups, in organic synthesis, in place of a hydrogen atom of the hydroxy groups and/or a methyl group of the 3’-dimethylamino group, which is prepared according to the conventional manner.’” Abbott Labs., slip op. at 10 (quoting ’718 patent, col. 3, ll. 34-39). Notably, this definition of erythromycin derivative includes clarithromycin but excludes azithromycin, a related macrolide antibiotic sold by Pfizer as the drug Zithromax.

Then, construing “pharmaceutically acceptable polymer,” the district court again properly turned to the ’718 patent specification. The specification describes this as “a water-soluble hydrophilic polymer selected from the group consisting of polyvinylpyrrolidine, hydroxypropyl cellulose, hydroxypropylmethyl cellulose, methyl cellulose, vinyl acetate/crotonic acid copolymers, methacrylic acids copolymers, maleic anhydride/methyl vinyl ether copolymers and derivatives and mixtures thereof.” Id. (quoting ’718 patent, col. 3, l. 65 – col. 4, l. 4). Furthermore, the specification describes the “‘more preferabl[e]’” polymer as hydroxypropylmethyl cellulose (“HPMC”). Id. (quoting ’718 patent, col. 4, l. 7).

The district court also construed the more technical limitations in the claims. In claim 4 the pharmacokinetic limitations require that

upon oral ingestion, maximum peak concentrations of the erythromycin derivative are lower than those produced by an immediate release 

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pharmaceutical composition, and area under the concentration-time curve and the minimum plasma concentration are substantially equivalent to that of the immediate release pharmaceutical composition.

The district court elaborated on this language by stating that

[t]his means that the concentration-time curve representing the concentration of drug in blood plasma will be flatter and lower for the extended release formulation than for the immediate release formulation, but will have an area under the curve (“AUC”) that is substantially equivalent to that of its immediate release corollary. At the same time, the minimum plasma concentration for the extended release formulation will be substantially the same as that of the immediate release formulation, meaning that the drug will be present in the blood at the same minimum level at all times for both the immediate release and extended release formulations.

Id.

The district court did not address the pharmacokinetic limitations of claim 2 explicitly. Below, in our analysis, we turn to the specification to aid in defining the pharmacokinetic parameters of claim 2.

In making its invalidity contentions, Teva pointed to a number of prior art references. These included published Patent Cooperation Treaty application WO 95/30422 (“the ’422 publication”). It pertained to controlled-release dosage forms of azithromycin with HPMC that, among other things, was meant to address the GI side effects of azithromycin.

Teva also pointed to Abbott’s own U.S. Patent No. 5,705,190 (“’190 patent”) which disclosed a controlled release pharmaceutical formulation of clarithromycin combined with a water soluble alginate salt. Furthermore, Teva also cited a number of other prior art references including textbooks and government and trade publications that discussed controlled release pharmaceuticals. The district court characterized these more general sources as “sources in the prior art discussing extended release 

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formulations and seeking ways to develop formulations that achieved desirable pharmacokinetic goals.” Id.

Considering its tentative claim construction and after reviewing these prior art references, the district court determined that

Teva has failed to raise a substantial question as to the validity of Abbott’s claim 2 and 4. The prior art cited by Teva discloses discrete portions of the asserted claims, but Teva fails to demonstrate that this would be sufficient to give a person of ordinary skill in the art a reasonable expectation of success. Teva’s prior art references reveal that using HPMC was a logical line of inquiry but the dissimilarities between the drugs with which HPMC had been successfully combined and clarithromycin defeat Teva’s claim of obviousness. . . . Abbott has provided ample evidence that its invention was not obvious and that there were many other extended release formulations known in the prior art.

Abbott Labs., slip op. at 17-18.

1.

On appeal, we begin, as did the district court, with the claims. We agree with the district court’s preliminary claim construction as to “erythromycin derivative” and “pharmaceutically acceptable polymer” in both claims 2 and 4. Furthermore, we agree with the district court’s elaboration on the pharmacokinetic parameters of claim 4. In short, the parameters of claim 4 require three things:

[1] maximum peak concentrations of the erythromycin derivative are lower than those produced by an immediate release pharmaceutical composition, [2] area under the concentration-time curve are substantially equivalent to that of the immediate release pharmaceutical composition and, [3] the minimum plasma concentration are substantially equivalent to that of the immediate release pharmaceutical composition.

’718 patent, col. 11, ll. 48-58. In order to more fully understand these specific parameters, we turn to the specification. It defines a number of the relevant pharmacokinetic parameters used in these claims. The specification defines the “maximum plasma concentration of the erythromycin derivative, produced by the 

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ingestion of the composition of the invention or the IR comparator” as CMax. ’718 patent, col. 3, ll. 13-15. Likewise, the minimum plasma concentration is defined as CMin. ’718 patent, col. 3, ll. 15-19. The specification defines the area under the curve, AUC, “as the area under the plasma concentration-time curve, as calculated by the trapezoidal rule over the complete 24-hour interval for all the formulations.” ’718 patent, col. 3, ll. 26-29. From these definitions given in the specification, we can describe the three pharmacokinetic limitations of claim 4 as CMax_ER< CMax_IR , AUCER = AUCIR , and CMin_ER = CMin_IR.4

As to claim 2, the district court did not explicitly discuss that claim’s pharmacokinetic parameters. Nonetheless, just as with claim 4, the parameters in claim 2 are defined in the specification. Claim 2 requires that

the composition [1] induces statistically significantly lower mean fluctuation index in the plasma than an immediate release composition of the erythromycin derivative while [2] maintaining bioavailability substantially equivalent to that of the immediate release composition of the erythromycin derivative.

The specification defines the “degree of fluctuation” or DFL as, ’718 patent, col. 3, l. 33. CAv is the average concentration of the drug over a twenty-four hour interval, ’718 patent, col. 3, ll. 19-22, and generally is defined as CAv = AUC/τ where τ is twenty-four hours. See Shargel & Yu, Applied Biopharmaceutics and Pharmacokinetics 252 (3d ed. 1993). The ’718 patent specification defines “bioavailability” as the log-transformed AUC. ’718 patent, col. 7, l. 17. Based on this logarithm-based definition, it

4 There is little in the patent itself that establishes the differences (if any) between parameters that are simply “lower” rather than “statistically significantly lower” and the specification does not explicitly define when two parameters are “substantially equivalent.” For purposes of this preliminary injunction, we do not reach these more nuanced issues in claim construction. 

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follows that, at a minimum, where AUCER = AUCIR then the two compositions would have substantially equivalent bioavailability. Thus, sufficient conditions for satisfying claim 2’s pharmacokinetic parameters are that: DFLER < DFLIR and AUCER = AUCIR.

2.

We now turn to the relevant prior art and begin by focusing on the invalidty allegations surrounding claim 4. As described above, the prior art includes the ’190 patent owned by Abbott. The patent, inter alia, describes and claims compositions of clarithromycin in an alginate matrix. Abbott itself describes that “the formulations are administered once a day and are directed towards increasing the bioavailability of the active ingredient so that it is bioequivalent with the current immediate release, twice a-day compositions.” ’190 patent, col. 1, ll. 43-47. Several disclosures in this patent merit attention. Claim 4 of the ’190 patent claims “a controlled release, solid pharmaceutical composition . . . comprising: a therapeutically effective amount of a macrolide . . . [and] a water-soluble alginate salt . . . .” Furthermore, claim 5 of the ’190 patent claims “[t]he composition of claim 4 wherein the macrolide is clarithromycin.” Thus, the ’190 patent discloses an extended release formulation of clarithromycin wherein the polymer used is alginate as opposed to the polymers like HPMC claimed in the ’718 patent.

The ’190 patent also discloses particular pharmacokinetic parameters for its controlled release clarithromycin and alginate compositions. For example, as pointed out by Teva, a side-by-side comparison of Formula C of the ’190 patent with an IR formulation shows that Formula C exhibited a lower CMax (2.00 µg/mL) than the immediate release formulation (2.28 µg/mL) and substantially equivalent AUC (28.69 

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ranging from 24.61 to 32.74 µg h/mL vs. 32.16 ranging from 25.66 to 42.70 µ gh/mL ) and substantially equivalent CMin (0.66 ranging from 0.37 to 0.91 µg/mL vs. 0.72 ranging from .54 to 1.05 µg/mL). ’190 patent, col. 7, table 2. Thus, Teva makes substantial arguments that the ’190 patent discloses a clarithromycin composition with alginate (as opposed to a polymer like HPMC) that arguably has the pharmacokinetic parameters required in claim 4 of the ’718 patent.

Of the claim limitations in claim 4 of the ’718 patent, the ’190 patent does not disclose the claimed polymers of the ’718 patent. The ’190 patent only discloses the use of alginate in making controlled release formulations. Other prior art, though, does disclose extended release formulations with pharmaceutically acceptable polymers like HPMC. For example, the ’422 publication filed by Pfizer Inc., discloses controlled-release dosage forms of azithromycin. In particular, the application disclosed controlled release formulations created from combining azithromycin with HPMC. Abbott Labs., slip op. at 14.

On appeal, Teva argues that, based on the ’422 publication, a person of ordinary skill in the art would replace the alginate of the ’190 patent with HPMC because the ’422 publication disclosed using HPMC with azithromycin, a compound related to clarithromycin. In response, Abbott points out that most inventions arise from a combination of old elements and that “identification in the prior art of each individual part claimed is insufficient to defeat patentability of the whole claimed invention.” Abbott Labs., slip op. at 15 (quoting In re Kotzab, 217 F.3d 1365, 1370 (Fed. Cir. 2000)).

As mentioned above, there must be some motivation, suggestion, or teaching of the desirability of making the specific compound. Abbott argues that such a motivation 

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is lacking here because the compounds azithromycin and clarithromycin are so different that the ’422 publication would not reasonably motivate a person of skill in the art to interchange the components of the formulations in the ’422 publication with those of the ’190 patent with a reasonable expectation of success. The district court agreed with Abbott and found that because of the chemical and metabolic differences between azithromycin and clarithromycin, “a person of ordinary skill in the art would not have had a reasonable expectation that the azithromycin formulation in the ’422 publication . . . would lead to the features claimed in the ’718 patent.” Id. at 16. It is in this conclusion that the district court erred.

The district court concluded that Teva had not raised a substantial question that a person of ordinary skill in the art would have had a reasonable expectation of success in making the claimed invention. The prior art, however, especially Abbott’s own ’190 patent, contradicts that conclusion. As argued by Teva, another claim from the ’190 patent merits close attention. Not only does the ’190 patent claim compositions with clarithromycin, but claim 14 of the ’190 patent claims “[t]he composition of claim 4, wherein the macrolide is selected from the group consisting of erythromycin, dirithromycin, azithromycin, roxithromycin, and ABT-229.” This claim is relevant because it describes Abbott’s own view of the ordinary skill in the art at the time it filed the application that led to the ’190 patent and it does so not by what the ’190 patent discloses but by what it does not disclose. Claim 4 and 14 of the ’190 patent cover compositions that include azithromycin or clarithromycin. Despite these claims to varied compositions, the specification only explicitly describes compositions made from clarithromycin. We presume that Abbott filed and prosecuted the ’190 patent 

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Roussel, Inc., 314 F.3d 1313 (Fed. Cir. 2003) (“[W]e hold a presumption arises that both the claimed and unclaimed disclosures in a prior art patent are enabled.”). Because the ’190 patent explicitly discloses only clarithromycin controlled release compositions, yet claims azithromycin compositions, we conclude that Abbott has represented to the U.S. Patent and Trademark Office (“PTO”) that the differences between clarithromycin and azithromycin were such that azithromycin could be substituted into a controlled release clarithromycin composition by a person of ordinary skill in the art without undue experimentation. See representing that claim 14 of the ’190 patent satisfies the written description and enablement requirements of 35 U.S.C. § 112. See Amgen Inc. v. Hoechst Marion Invitrogen Corp. v. Clontech Labs., Inc., 429 F.3d 1052, 1070-71 (Fed. Cir. 2005) (“Section 112 requires that the patent specification enable those skilled in the art to make and use the full scope of the claimed invention without undue experimentation . . . . The scope of enablement, in turn, is that which is disclosed in the specification plus the scope of what would be known to one of ordinary skill in the art without undue experimentation.”). As a result, based on Abbott’s own ’190 patent, there exists a substantial argument that a person of ordinary skill in the art would be motivated to combine the ’422 publication, namely the use of HPMC in extended release macrolide compositions, with the ’190 patent with a reasonable expectation of success.

Furthermore, the district court also erred by focusing on the drugs’ chemical dissimilarities, while not properly accounting for their similarities. It appears to have focused on the presence of differences per se, rather than on those differences that would be relevant vel non to one of ordinary skill in the art. For example, the court 

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appears to have been influenced by Abbott’s expert, Dr. Banker, who pointed out that the half-life of azithromycin is longer than that of clarithromycin. Dr. Banker also noted that clarithromycin exhibits an extensive “first-pass” metabolism to an active metabolite, whereas azithromycin does not. However, the court appears to have inexplicably discounted the testimony of Dr. Lee. As Dr. Lee noted, because the drug is transformed into an active metabolite, “a person skilled in the art would have expected that clarithromycin would work even better than azithromycin in an extended release formulation.” Addressing the drugs’ differences in half-life and metabolism, Dr. Lee concluded that “these characteristics further support the expectation that a person of ordinary skill in the art would have motivation and a reasonable expectation of success in making a successful ER formulation of clarithromycin . . . .” (emphasis added).

In light of the record, Teva has raised a substantial question that claim 4 is vulnerable to allegations of invalidity. The ’190 patent itself demonstrates that Abbott has represented to the PTO and the public in general that a person of ordinary skill in the art can expect to successfully substitute azithromycin into a clarithromycin controlled release composition without undue experimentation.

Claim 2 presents a slightly different analysis. The prior art and the obviousness discussion from claim 4 could be applied directly to claim 2 but for the differences in pharmacokinetic limitations. Upon inspection, the ’422 publication and the ’190 patent disclose compositions satisfying the pharmacokinetic limitations of claim 2 and therefore the obviousness arguments from above do apply and provide a substantial argument as to the invalidity of claim 2. As discussed above, where two compositions have similar AUCs, these compositions have similar bioavailability. The ’190 patent discloses 

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compositions with similar AUC’s and therefore there exists a substantial argument that it discloses compositions with substantially equivalent bioavailability. ’190 patent, col. 7, table 2. Thus, the ’190 patent discloses compositions that satisfy the second of the pharmacokinetic limitations of claim 2. Furthermore, although the ’190 patent does not explicitly disclose compositions with a lower fluctuation index, the ’190 patent, nonetheless, does so implicitly. By comparing the disclosed pharmacokinetic parameters from the ’190 patent, a substantial argument exists that the ’190 patent also discloses compositions satisfying DFLER < DFLIR. As discussed above, the ’190 patent discloses pharmacokinetic parameters that satisfy claim 4. In other words, the ’190 patent discloses a composition that satisfies: CMax_ER< CMax_IR , AUCER = AUCIR , and CMin_ER = CMin_IR. By examining the definitions given in the specification, we conclude that the disclosed composition from the ’190 patent also implicitly satisfies the condition from claim 2 that DFLER < DFLIR. By subtracting claim 4’s third condition from the first, one can infer that the composition from the ’190 patent also satisfies . This inequality, with the definition of the fluctuation index, and with the second limitation from claim 4, establishes that:

.

In other words, because the ’190 patent disclosed a composition satisfying the pharmacokinetic limitations of claim 4, the ’190 patent also disclosed compositions that satisfy DFLER < DFLIR and are substantially bioequivalent.5 Thus, the obviousness

5 As mentioned above, though the inequality follows strictly from satisfying the conditions of claim 4, this does not necessarily lead to the conclusion that the fluctuation index of the extended release formulation is “statistically significantly lower” 

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arguments relating to the ’190 patent and the ’422 publication made above for claim 4 can be applied in similar fashion to claim 2. As a result, Teva has also raised substantial questions as to the validity of claim 2.

than the immediate release. But nonetheless, the result derived here is enough to show that Teva has produced substantial argument as to the invalidity of claim 2. This is true despite the example given in the ’718 patent analyzing Formula A from the ’190 patent for its pharmacokinetic parameters, ’718 patent, col. 10, ll. 62-67, most notably, because Formula C not Formula A from the ’190 patent appears to satisfy the pharmacokinetic limitations of claims 2 and 4 of the ’718 patent.

B.

We now turn to claim 6 of the ’718 patent and claim 2 of ’616 patent.6 In its analysis, the district began by looking to the claims. Claim 2 of the ’616 patent sets forth

a method of reducing gastrointestinal adverse side effects comprising administering an effective amount of an extended release pharmaceutical composition comprising an erythromycin derivative and a pharmaceutically acceptable polymer, wherein the erythromycin derivative is clarithromycin.

’616 patent, col. 12, ll. 39-46. For these claims, “erythromycin derivative” and “pharmaceutically acceptable polymer” are construed as they are construed in claims 2 and 4 of the ’718 patent discussed above. As to claim 2, the district court relied on the plain meaning of “reducing gastrointestinal adverse side effects.”

At the district court, Teva argued that

[w]ell before the invention of the patent, adverse gastrointestinal effects were widely known as side effects of both erythromycin and clarithromycin and, to a lesser degree, azithromycin. In addition, persons skilled in the art knew that one way to reduce these gastrointestinal effects was to

6 The district court concluded that Teva had made a substantial argument as to the invalidity of claim 2 of the ’616 patent. In this appeal, Abbott argues that claim 2 of the ’616 could form an alternative basis for upholding the preliminary injunction and therefore we also review the parties’ arguments as to the validity of claim 2. 

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formulate the drug in a polymer matrix, e.g., an extended release formulation. The GI side effects of clarithromycin were known to be dependent on the drug concentration in the blood. Moreover, the ’422 [publication] for extended release azithromycin disclosed that extended release compositions of that closely-related compound reduced gastrointestinal side effects.

Abbott Labs., slip op. at 21. In contrast, Abbott argued, inter alia, that “the gastrointestinal side effects of different active pharmaceutical agents are so distinct that the pharmacokinetic properties of a formulation with one drug are not predictive of a similar formulation with another drug.” Id.

After reviewing the prior art, the district court concluded that

Abbott has failed to meet its burden of demonstrating that Teva’s opposition lacks substantial merit. This court finds that the prior art, specifically the discussions in industry treatises and medical journals of formulations that reduced GI irritation, the teachings of the ’422 [publication], and the reference material in the Physicians’ Desk Reference regarding side effects, would lead a person of ordinary skill in the art to expect that an extended release formulation of clarithromycin would reduce adverse GI side effects.

Id. at 22.

Claim 6 of the ’718 patent claims

an extended release pharmaceutical composition comprising an erythromycin derivative and a pharmaceutically acceptable polymer, the composition having an improved taste profile as compared to the immediate release formulation.

’718 patent, col. 12, ll. 23-27. As to claim 6, the district court specifically construed the term “taste profile” noting that the specification of the ’718 patent describes “taste profile” in parentheses immediately following the words “taste perversion.” ’718 patent, col. 9, ll. 23-24. The specification defines “taste perversion” as “the perception of a bitter metallic taste normally associated with the erythromycin derivatives, particularly, with clarithromycin.” ’718 patent, col. 3, ll. 53-55. Based on this usage in the 

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specification, the district court concluded that “taste perversion” and “taste profile” are “used synonymously.” Abbott Labs., slip op. at 19.

At the district court, Teva argued that “[i]t was known that clarithromycin caused taste perversion and this created a motivation for formulators to try to create an extended release formulation that would have a[n] improved taste profile. As support, Teva cited a 1993 article written by Abbott researchers, discussing the pharmacokinetics of single- and multiple-dose clarithromycin.” Id. at 19 (citations omitted). Furthermore, Teva also relied on Pfizer’s ’422 publication which, as discussed above, disclosed extended release formulations for amelioration of other macrolide related side effects. Abbott argued that only its own study by its researchers mentioned taste perversion. The other references, like the ’422 publication, either describe other non-taste related side effects or they describe “taste masking” rather than “taste perversion.” Id. Furthermore, as to its one study, Abbott argued that the mere fact that taste perversion is mentioned does not make claim 6 obvious and, additionally, that Teva had not even shown evidence that taste perversion is dose dependent.

After weighing the prior art, the district court

agree[d] with Abbott that Teva has not met its burden of raising a substantial question as to the validity of claim 6. Teva relies primarily on only one study, cited apparently in only one article, that mentions taste perversion as a known side effect of clarithromycin, and even then, in only one of thirty-eight research subjects. This court finds that Teva has failed to provide sufficient evidence to demonstrate that improved taste profile as a result of an extended release formulation of clarithromycin would have been obvious to an ordinary person skilled in the art.

Id. at 20. 

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The district court concluded that Teva failed to raise a substantial question as to claim 6 of the ’718 patent but the district court found Teva had raised a substantial question as to the validity of claim 2 of the ’616 patent.

1.

The district court properly construed the claims for the purposes of the preliminary injunction. “Erythromycin derivative” and “pharmaceutically acceptable polymer” are construed as above. Furthermore, for claim 2 of the ’616 patent, reducing gastrointestinal side effects is given its plain meaning while for claim 6 of the ’718 patent, “taste profile” is read as synonymous with “taste perversion.”

2.

We now turn to the obviousness contentions based on the above construction of claim 2 and 6. Even though claim 2 is a method claim and claim 6 is a composition, they both deal with ER compositions of erythromycin derivatives combined with pharmaceutically acceptable polymers that can improve adverse side effects compared to the IR compositions. As a result, the obviousness analysis is quite similar for both claims. Claim 2 addresses reducing adverse GI side effects while claim 6 addresses improving the taste profile.

These two claims have three major components. They require an erythromycin derivative, a polymer, and they each recite improvement of a side effect (taste perversion for claim 6 of the ’718 patent and GI side effects for claim 2 of the ’616 patent). Following the discussion above of claim 2 and 4 of the ’718 patent, there are substantial arguments that an extended release formulation with an erythromycin 

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derivative and an acceptable polymer would have been obvious in light of the prior art.7 The validity of claim 2 and claim 6 likely hinges on the extra limitations regarding the claimed improved side-effects. In its brief on appeal, Abbott contends that “[t]he inventions of the patents in suit decrease the incidence and severity of two primary side effects of clarithromycin: taste perversion and gastrointestinal distress. . . . [T]hese discoveries form the basis of claim 6 of the ’718 patent and claim 2 of the ’616 patent respectively.” As to such claims, this court has stated that “when unexpected results are used as evidence of nonobviousness, the results must be shown to be unexpected compared with the closest prior art.” In re Baxter Travenol Labs., 952 F.2d 388, 392 (Fed. Cir. 1991) (citing In re De Blauwe, 736 F.2d 699, 705 (Fed. Cir. 1984)).

The prior art and Abbott’s own statements in its briefs indicate that the reduction of systemic side effects would not be surprising and would not be unexpected. This, therefore, raises a substantial question as to the validity of the claims. First, as to the GI side-effects, the district court found that the “GI side effects of clarithromycin were known to be dependent on the drug concentration in the blood.” Abbott Labs., slip op. at 21. Furthermore, the district court found that Abbott contended that “an extended release formulation would reduce the maximum blood plasma concentration of the drug.” Id. Thus, the resulting reduction in GI side-effects cannot be said to be unexpected and the district court correctly found that Teva raised a substantial question as to the invalidity of claim 2 of the ’616 patent.

7 As opposed to claim 2 and 4 of the ’718 patent, claim 6 of the ’718 and claim 2 of the ’616 do not limit their claimed extended release formulations with any specific pharmacokinetic parameters. 

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Second, as to taste perversion, Teva points to a number of prior art references including a study conducted by Abbott described in S.-y. Chu et al., Single- and Multiple-dose Pharmacokinetics of Clarithromycin, a New Macrolide Antimicrobial, 33 J. Clin. Pharmacol. 719-26 (1993). The article describes a study of single and multiple dose trials of clarithromycin and it reported the side effects encountered by participants including taste perversion. At the district court, Abbott argued “that Teva’s reliance on [this] Abbott study disclosed in the Journal of Clinical Pharmacology overstates its case. Only one of thirty eight subjects reported taste perversion as a side effect, and only at one of four different dosage levels.” Abbott Labs., slip op. at 19. The district court seemingly agreeing with Abbott’s view of that reference concluded that “this court agrees with Abbott that Teva has not met its burden of raising a substantial question as to the validity of claim 6. Teva relies primarily on only one study, cited apparently in only one article, that mentions taste perversion as a known side effect of clarithromycin, and even then, in only one of thirty-eight research subjects.” Abbott Labs., slip op. at 20.

Upon examining that reference, we cannot agree with Abbott’s or the district court’s characterization. In the study, two groups of participants underwent differing treatment protocols. See Chu, supra, at 721. A group of twenty underwent both a single 250 mg clarithromycin protocol and a multiple 250 mg clarithromycin protocol. Id. From among these two 250 mg protocols, no participants reported taste perversion as a side-effect. Id. Another group of eighteen participants underwent both a single 500 mg protocol and a multiple 500 mg dose protocol. Id. From among these protocols, one participant in each of the 500 mg protocols reported taste perversion. Id. Thus, out of the four trials, neither of 250 mg protocols produced taste perversion as a side-effect 

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while each 500 mg trial produced one reported case of taste perversion. Therefore, Abbott is incorrect in stating that the study only reported taste perversion at one of four dosage levels. Admittedly, finding 0 out of 20 cases in neither 250 mg dosage protocols and 1 out of 18 cases in each 500 mg protocol does not establish that taste perversion is dose dependent but it does support such arguments. Furthermore, as a general matter, the prior art also suggests that a known advantage of a sustained-release formulation is “a decrease or elimination of both local and systemic side effects.” Charles S. L. Chiao & Joseph R. Robinson, Sustained-Released Drug Delivery Systems, in Remington: The Science and Practice of Pharmacy, 1660, 1662 (A.R. Gennaro, ed. 1995). Lastly, Abbott states that “taste perversion is different from simply an ‘unpleasant taste’ of the drug when first ingested. . . . Rather, it refers ‘to the continuing effect of the drug upon the sense of taste while the drug remains in the bloodstream . . . .’” In other words, taste perversion is not related to a direct, local taste sensation from the drug on the tongue but is rather a systemic side effect. In regard to systemic side effects generally, Abbott states that “side effects can be either systemic - in which case they correlate to overall drug levels in blood - or local - in which case they correlate with the levels of drug being released at the site of irritation.” From these statements, Abbot suggests that systemic side effects like taste perversion correlate with overall drug blood levels. Thus, Abbott’s own statements from its brief support the argument that reduction of taste perversion would not be unexpected when an extended release formulation lowers the concentration of the drug in the blood.8 Based, on these

8 This does not mean to suggest that lowering drug concentration will lead inexorably to improved side effects; rather, it only suggests that such an improvement would not be unexpected. 

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references and statements, a substantial question exists that the improvement of the taste perversion side-effect would not be unexpected in an extended release formulation of clarithromycin.

Teva has raised a substantial question as to the validity of claim 6 of the ’718 patent and claim 2 of the ’616 patent.9 The district court was correct in concluding that Teva had also raised a substantial question as to invalidity of claim 2 of the ’616 patent and, therefore, claim 2 cannot provide an alternative grounds for affirming the preliminary injunction. Furthermore, as discussed above, Teva has raised a substantial question as to the validity of claims 2 and 4 of the ’718 patent. As a result it has raised a substantial question of validity with each of the asserted claims but as in Amazon.com, our decision today in no way resolves the ultimate question of invalidity. Nonetheless, for the purposes of the preliminary injunction Abbott as the moving party has not established a likelihood of success on the merits.

IV.

Turning now to the other factors in a motion for preliminary injunction, the district court concluded that Abbott established irreparable harm. See eBay, Inc., 126 S. Ct. at 1839 (“According to well-established principles of equity, a plaintiff seeking a permanent injunction must satisfy a four-factor test before a court may grant such relief. . . . These familiar principles apply with equal force to disputes arising under the Patent Act.”). The district court presumed Abbott would suffer irreparable harm absent the injunction

9 Other arguments as to obviousness may also have merit such as arguments relating to inherency. See, e.g., In re Wiseman, 596 F.2d 1019 (CCPA 1979). But as the arguments relating to unexpected results demonstrate the vulnerability of the claims to invalidity, we do not reach these other, related obviousness arguments. 

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because of its conclusion regarding likelihood of success on the merits. Furthermore, and in addition to the presumption, the district court considered Abbott’s economic consequences of denying the injunction and it concluded that “entry of the generic extended release formulation competitor will likely crush the market.” Abbott Labs., slip op. at 27. On appeal the parties dispute whether the district court properly concluded that Abbott would suffer irreparable harm if the injunction were not issued. Teva argues that any harm that Abbott may suffer could be remedied by monetary compensation. Abbott responds by contending that the sharp economic consequences of open competition from generic drugs establish the inadequacy of monetary damages and irreparable harm.

First, as noted above, we conclude that Abbott has not established a likelihood of success on the merits. As a result, Abbott is no longer entitled to a presumption of irreparable harm. See Reebok Int’l Ltd. v. J. Baker, Inc., 32 F.3d 1552, 1556 (Fed. Cir. 1994). And as to Abbott’s economic arguments, we do not doubt that generic competition will impact Abbott’s sales of Biaxin XL, but that alone does not establish that Abbott’s harm will be irreparable. As we stated in Illinois Tool Works, Inc. v. Grip-Pak, Inc., if this court were to accept a patentee’s “argu[ments] that, ‘apart from the presumption,’ its ‘potential lost sales’ alone demonstrate ‘manifest irreparable harm’, acceptance of that position would require a finding of irreparable harm to every manufacturer/patentee, regardless of circumstances.” 906 F.2d 679 (Fed. Cir. 1990). On the other hand, we also note that the district court found that “the parties’ models of how the market will react to generic competition for extended release clarithromycin remain highly speculative” and Teva has not proven that monetary damages will suffice. 

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Abbott Labs., slip op. at 27. Therefore, where a patentee has not shown a likelihood of success on the merits, and where the patentee has not clearly established that monetary damages could not suffice but the defendant has not established that monetary damages do suffice, we cannot say that the irreparable harm prong of the analysis favors either party.

As to the third prong of the analysis, the district court stated that Teva was “reluctan[t] or inab[le] to quantify the hardship, if any, it will face if an injunction is incorrectly entered” and “there is little choice but to conclude that the balance of hardships favors [Abbott].” Abbott Labs., slip op. at 30-31. As Teva does not appeal this issue, we also conclude that the district court properly found that the balance of hardships favors Abbott.

Lastly, as to the public interest factor, the district court determined that “[t]o the extent that this court has found that the patents in suit are valid, the public interest is best served by enforcing them.” Id., slip op. at 32. Although the public interest inquiry is not necessarily or always bound to the likelihood of success of the merits, in this case absent any other relevant concerns, we agree with the district court that the public is best served by enforcing patents that are likely valid and infringed. As Abbott did not establish a likelihood of success on the merits, we conclude that the public interest is best served by denying the preliminary injunction.

V.

First, in determining Abbott’s likelihood of success on the merits, the district court clearly erred in assessing the content of the prior art. The prior art supports Teva arguments and Teva has raised a substantial question regarding the validity of claims 2, 

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4, and 6 of the ’718 and claim 2 of the ’616 patent. We conclude that Abbott has not established a likelihood of success on the merits and this supports denying the injunction. Second, absent the presumption of irreparable harm and in light of the arguable sufficiency of monetary damages, Abbott has not established that irreparable harm supports the grant of the injunction. Third, as the issue was uncontested, the balance of hardship still supports the grant of the injunction. Fourth and lastly, as a substantial question of patent validity has been raised by Teva, the public interest benefits from a denial of the injunction. As result of these considerations, we vacate the preliminary injunction.

VACATED 

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United States Court of Appeals for the Federal Circuit

05-1433

ABBOTT LABORATORIES,

Plaintiff-Appellee,

v.

ANDRX PHARMACEUTICALS, INC.,

and ROXANE LABORATORIES, INC.,

Defendants,

v.

TEVA PHARMACEUTICALS USA, INC.,

Defendant-Appellant.

NEWMAN, Circuit Judge, dissenting.

It has been confirmed that the remedy of injunction in patent cases is subject to the sound discretion of the district court, upon application of the traditional criteria by which injunctive relief is evaluated and applied. eBay, Inc. v. MercExchange, L.L.C., 126 S. Ct. 1837, 1841 (2006) ("We hold only that the decision whether to grant or deny injunctive relief rests within the equitable discretion of the district courts, and that such discretion must be exercised consistent with traditional principles of equity, in patent disputes no less than in other cases governed by such standards.") 

 

These traditional principles are no less applicable when a preliminary injunction is at issue, particularly when the purpose is to preserve -- not to change -- the relationship of the 

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litigants during the litigation. "The purpose of a preliminary injunction is to preserve the relative positions of the parties until a trial on the merits can be held." Univ. of Texas v. Camenisch, 451 U.S. 390, 395 (1981); Smith Int'l, Inc. v. Hughes Tool Co., 718 F.2d 1573, 1578 (Fed. Cir. 1983) ("A preliminary injunction will normally issue only for the purpose of preserving the status quo and protecting the respective rights of the parties pending final disposition of the litigation.") Precedent counsels against making an important change in the relationship of the parties while their dispute is being litigated, while recognizing that there may be circumstances warranting such change, when all of the legal and equitable aspects relevant to a particular case are considered. See, e.g., Mikohn Gaming Corp. v. Acres Gaming, Inc., 165 F.3d 891, 895 (Fed. Cir. 1998) (the preliminary injunction serves to preserve the status quo "lest one side prevent resolution of the questions or execution of any judgment by altering the status quo"); Globetrotter Software, Inc. v. Elan Computer Group, Inc., 236 F.3d 1363, 1367 (Fed. Cir. 2001). 

 

The trial court's decision with respect to the discretionary grant of a preliminary injunction warrants significant deference, for equitable considerations weigh heavily in matters of change or stability pendente lite. See Deckert v. Independence Shares Corp., 311 U.S. 282, 290 (1940) ("'It is well settled that the granting of a temporary injunction, pending final hearing, is within the sound discretion of the trial court; and that, upon appeal, an order granting such an injunction will not be disturbed unless contrary to some rule of equity, or the result of improvident exercise of judicial discretion.'"); Meccano, Ltd. v. John Wanamaker, New York, 235 U.S. 136, 141 (1920) ("The correct general doctrine is that whether a preliminary injunction shall be awarded rests in sound discretion of the trial court."). It is particularly irregular for an appellate court to reverse this discretionary 

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decision and thereby to make a significant change in the relationship of the parties, while presenting no explanation of how the district court abused its discretion.

Reversal of a preliminary injunction that preserves the status quo requires a clear showing that the district court exceeded its discretionary authority. See We Care, Inc. v. Ultra-Mark Int'l Corp., 930 F.2d 1567, 1570 (Fed. Cir. 1991) ("The court's determination can be overturned only on a showing that it abused its discretion, committed an error of law, or seriously misjudged the evidence.") My colleagues do not discuss the trial judge's careful explanations, but, upon finding that Teva has raised a "substantial question" about patent validity, they hold that Teva should be permitted to practice the Abbott invention before patent validity is decided. With all respect to my colleagues' concerns, they misapply not only the criteria of the preliminary injunction but also the standard of appellate review: 

 

First, as to patent validity, the panel majority rejects the requirement that in determining the likelihood that the patent will be proved invalid it is necessary to consider the burdens of proof that would inhere at trial. See Canon Computer Sys., Inc. v. Nu-Kote Int'l., Inc., 134 F.3d 1085, 1088 (Fed. Cir. 1998) ("However, a patent is presumed valid, and this presumption exists at every stage of the litigation. "); Genentech, Inc. v. Novo Nordisk, A/S, 108 F.3d 1361, 1364 (Fed. Cir. 1997) (criterion "substantial questions of validity" means that "in light of the presumptions and burdens that will inhere at trial on the merits" the attacker has "a likelihood of success" in invalidating the patent); PPG Indus., Inc. v. Guardian Indus., Inc., 75 F.3d 1558 (Fed. Cir. 1996) ("The ultimate question, however, is whether the challenger's evidence of invalidity is sufficiently persuasive that it is likely to overcome the presumption of patent validity.") In the case now before us the district court analyzed the evidence, in which technologically complex questions are presented, and 

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concluded that Teva was not likely to prove the patent invalid by clear and convincing evidence. In contrast, the panel majority holds that if the attacker raises no more than a "substantial question" of invalidity, that suffices to establish the likelihood that the attacker will succeed on the merits. That is incorrect in law and in procedure.

Next, even as the panel majority states its agreement with the district court's finding that "the balance of hardships favors Abbott," maj. op. at 30, the majority declines to weigh this factor in its decision. See Chrysler Motor Corp. v. Auto Body Panels of Ohio, Inc., 908 F.2d 951 (Fed. Cir. 1990) ("Our rule regarding whether a preliminary injunction should be granted or denied is that the trial court should weigh and measure each of the four factors against the other factors and against the magnitude of the relief requested."). Abbott points out that the status quo ante will not easily be recoverable if interim infringement is authorized; Abbott also points out that there is no patent barrier to Teva's entry into commerce with its own extended release formulation instead of that of Abbott, for the basic patent on clarithromycin has expired. Thus the panel majority again applies a flawed methodology, for "Where it is clear that the moving party will suffer substantially greater harm by the denial of the preliminary injunction than the non-moving party would by its grant, it will ordinarily be sufficient that the movant has raised 'serious, substantial, difficult and doubtful' questions that are the proper subject of litigation." Ugine-Savoie Imphy v. United States, 121 F. Supp.2d 684, 689 (Ct. Int'l Trade 2000). The district court's consideration of this aspect was proper, and warrants appellate deference. 

 

Next, the panel majority states that the question of the sufficiency of money damages is "arguable" -- ignoring the district court's finding that this aspect may also favor Abbott. Instead, the majority opinion announces that this aspect will not be considered at 

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all. On this accumulation of flaws, and with no reference to the district court's well reasoned opinion, my colleagues reverse the preliminary injunction, change the status quo, and authorize infringement before validity is decided. I must, respectfully, dissent.

The Considerations Pendente Lite

At issue are claims 2, 4, and 6 of U.S. Patent No. 6,010,718 (the '718 patent) and claim 2 of U.S. Patent No. 6,551,616 (the '616 patent). The claims are directed to an extended-release formulation of erythromycin in a polymer matrix, and require that the minimum plasma concentration for the extended release formulation is substantially equivalent to that of the immediate release formulation; that is, the drug is released so as to be present in the plasma at the same minimum level for both the immediate release and extended release formulations, and with less fluctuation for the extended release product.

In the challenge to validity, Teva and Abbott both presented extensive argument and briefing, citing various references. The district court, explaining its decision on the question of Teva's likelihood of success in proving the patents invalid, analyzed the evidence and concluded:

This court finds that Teva has failed to raise a substantial question as to the validity of Abbott's claims 2 and 4. The prior art cited by Teva discloses discrete portions of the asserted claims, but Teva fails to demonstrate that this would be sufficient to give a person of ordinary skill in the art a reasonable expectation of success. Teva's prior art references reveal that using HPMC was a logical line of inquiry but the dissimilarities between the drugs with which HPMC had been successfully combined and clarithromycin defeat Teva's claim of obviousness. 

 

The district court included discussion of the issues and arguments presented by the parties, remarked on the uses of various known release agents, and the unpredictability of achieving successful extended release as to any particular product. The record shows 

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discussion at the district court that the metabolic pathway of the active ingredient must be determined, as well as the physical and chemical properties and physiologic behavior and effectiveness of the metabolites and their interaction with the materials in the extended release formulation. The record shows discussion at the district court of the need for extended release performance that will produce an effective drug exposure in the bloodstream over the entire release period, and the unpredictability of this performance. The record shows discussion of the non-linear pharmacokinetics1 exhibited by clarithromycin. The district court explained its decision that Teva had not shown that it was likely to prove invalidity of the claimed formulations:

This court is mindful of the Federal Circuit's warning about the risk of the "hindsight trap," or the post facto belief that an invention, which seems obvious once created, would have been obvious to people skilled in the art at the time. Abbott has provided ample evidence that its invention was not obvious and that there were many other extended release formulation methods known in the prior art. In fact, the existence of alternate methods and the attempted exploitation of some of those methods provide secondary considerations of nonobviousness. These factors suggest that there was a long-felt need for the invention, that others, including Abbott, initially failed to develop the invention, and go a long way to account for the commercial success that Abbott has unquestionably enjoyed with its BIAXIN XL product.

1 Abbott explains that "non-linear" here means that the amount of drug in the blood is not directly proportional to the dosage amount, but increases disproportionately with higher doses. This is not a characteristic of azithromycin, the product whose formulation is relied on by the panel majority, as discussed infra. 

 

The panel majority does not discuss, and assigns no flaw, to the district court's refusal to apply judicial hindsight; nonetheless, the majority applies such hindsight for itself, starting with the template of the Abbott invention and then selecting portions of references to 

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, 229 F.3d 1120, 1124-25 (Fed. Cir. 2000) ("a showing of a suggestion, teaching, or motivation to combine the prior art references is an 'essential component of an obviousness holding'"). reconstruct the invention within that template. To guard against such incorrect analysis, precedent teaches that references cannot be selected, and selected elements from selected references cannot be combined, without some suggestion, motivation, or teaching that would make obvious that selection and that combination. See, e.g., Karsten Mfg. Corp. v. Cleveland Golf Co., 242 F.3d 1376, 1385, 58 USPQ2d 1286, 1293 (Fed. Cir. 2001) ("In holding an invention obvious in view of a combination of references, there must be some suggestion, motivation, or teaching in the prior art that would have led a person of ordinary skill in the art to select the references and combine them in the way that would produce the claimed invention."); Brown & Williamson Tobacco Corp. v. Philip Morris Inc.

The panel majority acknowledges the law, but finds a motivation to make the claimed formulation by combining the information in Abbott's prior art Patent No. 5,705,190, which shows extended release formulations of clarithromycin and azithromycin in "alginate," a known release agent derived from seaweed, with a Pfizer publication designated WO 95/30422, which shows the HPMC (hydroxypropyl methyl cellulose) of the '718 patent used with azithromycin. Abbott stated at the preliminary injunction hearing that what works for a product in an alginate matrix is not predictably applicable to other products; this statement was not contradicted. The district court analyzed the interchangeability of clarithromycin and azithromycin, stating: 

 

The questions are: how similar and dissimilar are the two molecules; and what are the implications of these similarities and dissimilarities to a person of ordinary skill in the art in light of prior art at the time of the invention. 

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Specifically, would a person of ordinary skill in the art have had a reasonable expectation of success in creating an extended release formulation of clarithromycin using a hydrophilic water-soluble polymer based on the prior art, including the '422 patent for an extended release formulation of azithromycin with such a polymer?

The court concluded that they were not so similar as to be interchangeable in the context of polymers like HPMC, correctly rejecting the argument that "obvious to try" can establish obviousness. The court stated:

Teva's prior art references reveal that using HPMC was a logical line of inquiry but the dissimilarities between the drugs with which HPMC had been successfully combined and clarithromycin defeat Teva's claim of obviousness.

My colleagues ignore the district court's analysis, offering neither deference nor acknowledgment. Instead, the panel majority explains that its finding of likelihood of success in proving obviousness is supported "not by what the '190 patent discloses but what it does not disclose" (emphasis in maj. op.), proposing that: "Abbott has represented to the U.S. Patent and Trademark Office that the differences between clarithromycin and azithromycin were such that azithromycin could be substituted into a controlled release clarithromycin composition by a person of ordinary skill in the art without undue experimentation." Maj. op. at 17-18. Thus my colleagues conclude that claim 4 of the '718 patent is "vulnerable to allegations of invalidity," and find "a substantial argument" as to other claims. These are not the criteria of likelihood of success. 

 

Reversible error has not been shown in the district court's analysis, and no basis whatsoever has been shown for overturning the court's discretionary decision to preserve the status quo while the matter is litigated. Even if Teva had raised a substantial argument, as my colleagues find, the criteria of abuse of discretion have not been met. To support a 

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change in the status quo before the merits are decided, it must be shown to be likely that the patent will be held invalid under the presumptions and burdens in effect at trial. The panel majority is incorrect in holding that it "require[s] less proof" to authorize infringement before the merits are decided; such a rule, whereby a patent is deprived of exclusivity during litigation, is not readily invoked, for it is excessively disruptive of the processes of law. As the Court said in eBay v. MercExchange: "As this Court has long recognized, 'a major departure from the long tradition of equity practice should not be lightly implied.'" 126 S. Ct. at 1839 (quoting Weinberger v. Romero-Barcelo, 456 U.S. 305, 320 (1982)).

Conclusion

The district court's conclusion as to the challenger's likelihood of success in invalidating all of the claims in suit, and the district court's view of the balance of harms, are well reasoned and fully supported by precedent. The district court's ruling, preserving the status quo during litigation, warrants, and requires, our deference. From my colleagues de novo and incorrect contrary ruling, I must, respectfully, dissent. 

 

 

 

Additional Cases

 

 



[1]           As of March 1, 2003, the U.S. Customs Service became the Bureau of Customs and Border Protection in the Department of Homeland Security.  The Department of the Treasury still retains authority over Customs’ revenue functions including enforcement of 19 U.S.C. § 1337.  Homeland Security Act of 2002, P.L. 107-296, §§ 412, 415, 116 Stat. 2135, 2179-81.

[2]           Our interpretation of the statutory language should not be read to preclude application of traditional principles of res judicata or collateral estoppel.  See, e.g., San Huan New Materials High Tech, Inc. v. Int’l Trade Comm’n, 161 F.3d 1347, 1357-58 (Fed. Cir. 1998) (“There is no denial of due process in applying to San Huan the claim construction that it declined to challenge by offering consent and seeking termination of the investigation.”); Aktiebolaget Karlstads Mekaniska Werkstad v. U.S. Int’l Trade Comm’n, 705 F.2d 1565, 1578 (Fed. Cir. 1983) (“Section 337(c) was not violated; KMW had adequate opportunity to present its legal and equitable defenses, albeit during the first investigation.”).  However, this is not a case where any form of preclusion is appropriate.  Vastfame was not a party to the Initial Investigation before the Commission and, thus, did not have a prior opportunity to raise the invalidity issue it now seeks to present.

[3]           The ’267 patent is a divisional of the ’621 patent.  The ‘907 patent is a continuation of the ‘267 patent, and the ‘410 patent is a continuation of the ‘907 patent.

[4] As will become apparent, the emphasized claim terms relate to an essential feature of the invention: play.

[5]           Because the asserted patents all share the same specification, all references to the ’907 patent should be understood as being applicable to the ’410 and ’267 patents as well.