No Change on S. Ct. Remand: Watson Lialda Generic Not Likely to Infringe Shire Patent

By Tony Dutra

June 3 — Ever since the Supreme Court's Teva decision changing the Federal Circuit's review of patent claim construction judgments, the appeals court has repeatedly said that the cases before it did not present circumstances to require the change. That was true as well on June 3 even though the court was issuing its opinion on one of the cases remanded by the high court in light of Teva.

Once again, the Federal Circuit determined that a district court had construed Shire Development LLC's patent underlying its Lialda colitis drug too broadly. And once again, it remanded with a new claim construction that would appear not to create infringement liability for generic drug maker Watson Pharmaceuticals.

As for the patent community, the court issued a Teva-related message, however. Since the Supreme Court's Jan. 20 decision, stakeholders have speculated that litigants would force district courts to deal with more “extrinsic evidence”—which, under Teva, would require deference rather than de novo review.

Shire argued that testimony from various expert witnesses during the claim construction hearing and at trial was just the kind of extrinsic evidence the high court had in mind. The appeals court disagreed.

“The [Supreme] Court did not hold that a deferential standard of review is triggered any time a district court hears or receives extrinsic evidence,” it said. 

Short Recap

The court's opinion, other than to account for changes in its standards imposed under Teva, was virtually identical to its March 28, 2014, decision.

In brief, Shire's patent titled “Mesalazine controlled release oral pharmaceutical compositions” underlies Lialda, used to treat inflammatory bowel diseases such as ulcerative colitis and Crohn's disease (U.S. Patent No. 6,773,720).

Shire sued Watson under Hatch-Waxman Act procedures, intending to keep a generic version of Lialda off the market. The U.S. District Court for the Southern District of Florida found that Watson's proposed generic would infringe the '720 patent in light of its construction of the terms “inner lipophilic matrix” and “outer hydrophilic matrix” in Shire's favor.

Judge Todd M. Hughes wrote the Federal Circuit's opinion then and now.

The primary question on appeal was whether the two matrices had to be “separate and distinct.” The lower court's construction allowed, for example, that the lipophilic matrix exhibit some hydrophilic—water soluble—properties.

The appeals court ruled that the claims themselves, the specification and, in particular, the prosecution history all pointed to a construction requiring separate and distinct matrices.

Remand by High Court

Shire filed a petition for writ of certiorari in August and the Supreme Court held the petition until after it issued Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831, 113 U.S.P.Q.2d 1269 (2015).

The high court held that the appeals court must review any “subsidiary factual findings” using a clear error review standard, but otherwise can continue its no-deference review “when the district court reviews only evidence intrinsic to the patent (the patent claims and specifications, along with the patent’s prosecution history).”

The court granted Shire's petition, vacated the decision and remanded for reconsideration.

Now on remand, the Federal Circuit said, “In this case, we review the district court’s constructions de novo, as the intrinsic evidence fully determines the proper constructions.” It then proceeded with the same analysis as it had 14 months earlier.

The court remanded to the district court with the “separate and distinct” modification to the claim construction at issue. It left to trial questions such as whether it would be noninfringement if only “a trace of hydrophilic molecules in the inner volume” was present, resulting from a characteristic of the manufacturing process.

Chief Judge Sharon Prost and Judge Raymond T. Chen joined the opinion.

Edgar H. Haug of Frommer Lawrence & Haug LLP, New York, represented Shire. Steven A. Maddox of Knobbe, Martens, Olson & Bear LLP, Washington, represented Watson.

Other Cases

Two other cases pending before the Supreme Court when Teva was decided were remanded for reconsideration as well.

There has been no progress in either of those cases since the parties filed briefs on remand. Lighting Ballast Control LLC v. Universal Lighting Techs., Inc., No. 2012-1014, and Butamax(TM) Advanced Biofuels v. Gevo, Inc., No. 2013-1342.

The Federal Circuit is considering another request for en banc rehearing in the first case. In the second, the alleged infringer also filed another appeal Feb. 6 on a different matter, likely to be consolidated with the claim construction issue.

In addition, the high court remanded CSR PLC v. Azure Networks LLC, No. 2013-1459, where the petition was filed after Teva was issued. That appeal was just reopened on May 29.

To contact the reporter on this story: Tony Dutra in Washington at

To contact the editor responsible for this story: Anandashankar Mazumdar in Washington at

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