AstraZeneca Canada Inc v Apotex Inc, 2015 FC 322

In a patent infringement suit that ran parallel to proceedings in the United States, the Federal Court determined that Apotex infringed AstraZeneca’s Canadian Patent No. 1,292,693 (“the ‘693 patent”) and held each of the challenged claims to be valid. The Court declined AstraZeneca’s request to apply foreign issue estoppel to findings of fact made in the U.S., largely because of the catch-22 that AstraZeneca could not prudently assume that the doctrine would be applied, so therefore had to lead its own evidence. [380]

The object of the ‘693 patent is an omeprazole formulation that provides gastric acid resistance, dissolves rapidly in alkaline media, and has good stability in long term storage. [7] The formulation accomplishes this combination of qualities, which had not yet been achieved before the ‘693 patent, through the use of a subcoating layer between the omeprazole cores and the outer enteric coating. [7]

Claim 1, which is the focus of infringement and validity arguments, claims the pharmaceutical preparation including this subcoating layer:

1. An oral pharmaceutical preparation comprising:

(a)  a core region comprising an effective amount of a material selected from the group consisting of omeprazole plus an alkaline reacting compound, an alkaline omeprazole salt plus an alkaline reacting compound and an alkaline omeprazole salt alone;

(b)  an inert subcoating which is soluble or rapidly disintegrating in water disposed on said core region, said subcoating comprising one or more layers of material selected from among tablet excipients and polymeric film forming compounds; and

(c) an outer layer disposed on said subcoating comprising an enteric coating. [10, emphasis added]

The infringement and validity arguments turned on the interpretation of the three key terms underlined above: “subcoating”,“disposed on” and “inert”.

Claim Construction

The Layer Formed by an In Situ Reaction is a “Subcoating” that is “Disposed” on the Omeprazole Core

Apotex’s product, Apo-Omeprazole, contains what might be called such a subcoating layer. Apotex argued, however, that its own “subcoating” is not covered by claim 1 because it is formed from an in situ chemical reaction. Furthermore, a “subcoating” formed in situ is not “disposed on” the core. [163] AstraZeneca argued that it does not matter how the basic elements that constitute claim 1 are formed because claim 1 is a product claim. Therefore, a subcoating layer that is formed in situ does not avoid claim 1. [165]

The Court sided with AstraZeneca. Although AstraZeneca did not contemplate the in situ method of creating the sublayer at the time of filing, the wording in the ‘693 patent is general enough that it does not import a process limitation. [179] And even though Apotex’s sublayer forms from a chemical reaction in situ, it does so in the course of applying the enteric coat to the core. [180, emphasis in original] Accepting the evidence of AstraZeneca’s expert, the Court noted that the advantage of the invention lies in the finished dosage form structure, not by how one gets there. [187, emphasis in original] The Court did not like the suggestion that a product claim ought to be interpreted to exclude a process that the patent never mentioned while at the same time limiting the claim to the process that was disclosed. [183]

Inert does not mean Absolutely Inert

The parties also disagreed about the meaning of the term “inert”. Apotex argued that “inert” meant absolutely inert, meaning the layer should not react with any of the other components even in a limited nature. [191] AstraZeneca argued for the more contextual definition: that “inert” meant the layer would not cause a deleterious reaction with either the enteric coating or the omeprazole core. [167] The Court followed AstraZeneca’s reasoning that the skilled person would find some minor level of reaction to be tolerable as long as the reaction does not adversely affect the functionality of the formulation. [194]

Essential Structural Features of the Subcoat: Quality, Quantity, Water Content, and Separating Layer

Quality: There was disagreement about whether the subcoat needed to be structurally perfect, free defects such as gaps or holes, or whether substantial continuity is sufficient as long as the formulation works. [197] Siding with the understanding that all pharmaceutical formulation has inherent in it some variability, the Court thought the skilled person would view the presence of small gaps not to be a concern if they did not compromise the formulation. [199]

Quantity: The Court found that the disclosure would inform the skilled person that the subcoating layer is to have thickness of at least 2 microns, [201] allowing for some inevitable variability. [202] Given this disclosure, however, the Court found that claim 1 does not include a thickness limitation beyond he expectation that the sublayer needs to be sufficiently robust that it constitutes an effective barrier. [205]

Water Content: Apotex argued that since the dependent claim 13 imposes a limit on the formulation’s water content, and claim 1 does not, then claim 1 has no water content limitation at all. [206] The Court sided with AstraZeneca’s expert’s testimony that the skilled person would understand that having a low water content is important, and that it depends on the formulation. Then, “In my view, Claim 1 and its dependant claims do not incorporate a water content limitation.” [208]

Separating Layer: In order to support an anticipation argument, Apotex argued that “subcoating” meant the same thing as a “separating layer” so that it could point to a prior art reference in which gelatin capsules were used as a separating layer. [209] The Court rejected the argument.  A subcoating layer was considered by the patent to be included within the term “separating layer”, but not the other way around. [211] Thus the term “subcoating” in claim 1 does not include gelatin capsules. [212]

Validity

Anticipation

Having lost on the interpretation of “separating layer”, Apotex was unable to show that the ‘693 patent was anticipated by prior art that showed gelatin capsules being used as a separating layer. [219]

Obviousness

The Court reviewed the evidence of the story of the invention and concluded that the development of the patented formulation was both complex and time-consuming. [272] It was known that in previous iterations of the omeprazole formulation there was a problem with long term storage stability, as evidenced by discolouration. [62] The discolouration problem would have signaled to the skilled person that there was a problem, [238] but the skilled person would not have been led directly and without difficulty to the multifaceted solution described in the ‘693 patent. [244] The use of a subcoating layer to separate the omeprazole core from the enteric coating came late in the development process after a number of other options were explored and rejected. [271] The ‘693 patent was therefore not obvious or obvious to try. [273]

Overbreadth, Inutility, and Ambiguity

Apotex pointed to a suggestion made by AstraZeneca’s that the patent covers any formulation with the generalized structure so long as they are gastric resistant and storage stable to argue overbroad and ambiguous claiming and inutility. [274] The Court rejected this argument. It is not that the patent claims include “highly reactive products” and any kind of subcoating. Rather, the skilled person with their common general knowledge, and possibly routine testing, would know that highly reactive constituents are to be avoided and that gaps and defects in the coating should also be avoided. [276]

Infringement

Given the Court’s conclusions on claim construction, it was not difficult to find that Apo-Omeprazole read onto the claims of the ‘693 patent. On the evidence, the Court found that Apo-Omeprazole did in fact have a subcoating disposed on the omeprazole core, [310] protecting it from the enteric layer, [365] that the layer was substantially continuous, [342] and that the layer was of at least 2 microns in thickness. [354] Apo-Omeprazole therefore infringed the ‘693 patent. [366]

After a lengthy review of the evidence, the Court commented that much of the reason for why it preferred AstraZeneca’s evidence over that of Apotex was that the AstraZeneca experts conducted their own tests and interpreted their own results, and thus were able to form a more complete overall opinion on the matter, whereas Apotex experts did not conduct their own tests, and thus were only able to form narrow opinions on isolated matters. [356]

Foreign Issue Estoppel

AstraZeneca asked the Court to apply foreign issue estoppel to findings of fact made in parallel litigation in the United States. [377] The Court expressed interest in the potential for foreign issue estoppel to conserve judicial resources. [379] However, the futility of this request soon became clear: foreign issue estoppel is discretionary, so AstraZeneca still had to lead its own independent evidence. Since AstraZeneca lead its own evidence, it was not necessary for the Court to grant foreign issue estoppel to fill the evidentiary record. [381] The Court also accepted argument from Apotex that American patent law is distinct enough from Canadian law that deferring to factual findings made in the U.S. would prejudice Apotex. [380] Overall, the Court commented that the pleading actually lengthened the trial. [380]

Remedies

This case did not deal with quanta of damages, only with liability. [2] The Court made a declaration that claims 1, 5, 6, 13, and 19 of the ‘693 patent are valid, [405] and that claims 1, 5, 6 and 19 were infringed. [391]

The Court also allowed AstraZeneca to make the election for an accounting of profits since Apotex acted inequitably by continuing to infringe even after its construction arguments were rejected by the Federal Court of Appeal in 2003 and it was found to be infringing the equivalent U.S. patent in 2007, whereas there was no evidence of AstraZeneca acting inequitably. [403-404]

Commentary

There are three key takeaways from this case.

The first is that although the Court expressed interest in foreign issue estoppel and its ability to conserve judicial resources, AstraZeneca was faced with the catch-22 that it needed to lead evidence on every factual issue in the event that foreign issue estoppel was not granted. This made the request moot.

A second takeaway for litigators is the Court’s warning that Apotex’s evidence was generally weaker than AstraZeneca’s because the Apotex experts did not conduct their own tests, and thus were only able to form narrow opinions on isolated matters. [356] This suggests that stronger evidence may be obtained from experts who are able to synthesize evidence from different fields, or who at least perform their own testing.

A third takeaway is for patent drafters: claim 1 was found to be a product claim with wording that was general enough to capture Apotex’s subcoating layer even though Apotex’s subcoating layer was generated by an in situ chemical reaction, a process that the patentee had not contemplated.