November 1, 2019
On October 10, in HZNP Medicines LLC v. Actavis Laboratories UT, Inc., the Federal Circuit affirmed a district court holding that patent claims that include the transitional phrase “consisting essentially of” are indefinite where the “basic and novel characteristics of the claimed invention” were found to be indefinite. Secondarily, the court further addressed what qualifies as induced infringement for pharmaceutical products with instructions for use, holding that instructions that do not require each step in a patented method are not sufficient evidence of intent to induce infringement.
Horizon (for whom HZNP Medicines was substituted as plaintiff-appellant during the pendency of the appeal) was the assignee of patents that claimed pharmaceutical formulations and methods of use for treating osteoarthritis.
Horizon’s pharmaceutical formulation patent claims used the transitional phrase “consisting essentially of” in specifying various components of the formulation. Claim 49 was illustrative:
49. A topical formulation consisting essentially of:
1–2% w/w diclofenac sodium;
40–50% w/w DMSO;
23–29% w/w ethanol;
10–12% w/w propylene glycol;
hydroxypropyl cellulose; and
water to make 100% w/w, wherein the topical formulation has a viscosity of 500–5000 centipoise.
The transitional phrase “consisting essentially of” limits a claim to the listed components and those that do not materially affect the basic and novel characteristics of the claimed invention. But what are the “basic and novel characteristics of the claimed invention”?
In this case, district court held that the specification of the formulation patents identified five basic and novel properties: (1) better drying time; (2) higher viscosity; (3) increased transdermal flux; (4) greater pharmacokinetic absorption; and (5) favorable stability. The district court then evaluated the identified basic and novel properties under the Nautilus definiteness standard, which invalidates a claim if, in light of the specification and prosecution history, it fails to inform, with reasonable certainty, those skilled in the art of the scope of the invention. Under this standard, the district court found the basic and novel property of “better drying time” to be indefinite. The court held that the two tests disclosed in the specification for evaluating “better drying time” did not provide consistent results at consistent times, and that the skilled artisan would not know under what standard to evaluate the drying rate. The district court then concluded that because one of the basic and novel properties was indefinite, the phrase “consisting essentially of” was indefinite, and held Horizon’s formulation claims to be invalid for indefiniteness.
This holding raises certain questions. The court based its conclusion regarding “drying time” on two sets of data in the specification that were found to be inconsistent. Had the patentee not included one of these data sets, or perhaps omitted the drying data altogether, the court’s holding necessarily would have been different, and perhaps the claim would not have been held indefinite. There was no suggestion that there was any indefiniteness with reference to the identity of any of the components of the composition, for example, or to the other properties of the composition.
Horizon appealed, arguing that the district court erred when it evaluated the basic and novel properties of the invention under the Nautilus definiteness standard. Horizon contended that the Nautilus definiteness standard focuses on the claims and, therefore, should not be applied to the basic and novel properties of the invention.
The Federal Circuit disagreed and held that the phrase “consisting essentially of” incorporates the basic and novel characteristics of the claimed invention into the claim scope, and thus, those characteristics are properly part of the claim construction analysis and subjected to the definiteness requirement. The Federal Circuit affirmed the district court’s finding that one of the basic and novel properties of the claimed formulation, “better drying time,” was indefinite and affirmed the district court’s conclusion that, therefore, Horizon’s use of “consisting essentially of” was indefinite.
The Federal Circuit clarified that every use of “consisting essentially of” would not be indefinite per se. The court stated that an inventor or patent owner may use the transitional phrase “consisting essentially of” to leave a claim open to components that do not materially affect the basic and novel characteristics of the claimed invention, so long as those basic and novel characteristics meet the definiteness standard.
Further, the Federal Circuit addressed whether a warning in Actavis’s proposed label showed intent to induce a use of its product that would directly infringe Horizon’s method-of-use claims.
Horizon’s patent claims were directed to methods of use for treating osteoarthritis. The claims included applying a first medication, waiting for the treated area to dry, and subsequently applying sunscreen or insect repellant. Claim 10 was illustrative:
10. A method for applying topical agents to a knee of a patient with pain, said method comprising:
applying a first medication consisting of a topical diclofenac preparation to an area of the knee of said patient to treat osteoarthritis of the knee of said patient, wherein the topical diclofenac preparation comprises a therapeutically effective amount of a diclofenac salt and 40–50% w/w dimethyl sulfoxide;
waiting for the treated area to dry;
subsequently applying a sunscreen, or an insect repellant to said treated area after said treated area is dry, wherein said step of applying a first medication does not enhance the systemic absorption of the subsequently applied sunscreen, or insect repellant; and
wherein said subsequent application occurs during a course of treatment of said patient with said topical diclofenac preparation.
A finding of induced infringement requires evidence of active steps taken to encourage direct infringement. The only evidence of inducement presented was Actavis’s label, which was substantially similar to Horizon’s and included a warning to wait until the treated area is dry before applying sunscreen, insect repellant, lotion, moisturizer, cosmetics, or other topical medication.
The district court held that Horizon’s method-of-use claims required the application of a second topical agent. The district court further held that the warning to wait until the treated area is dry before applying other topical agents merely permitted, without encouraging, post-product application of such agents. The district court concluded that, therefore, Actavis did not induce infringement of Horizon’s method-of-use claims.
On appeal, Horizon argued that Actavis’s label reflected Actavis’s specific intent to induce infringement. Horizon contended that Actavis’s label tracked closely with the asserted claims and that when a user would need to apply sunscreen or insect repellant, Actavis’s instruction would lead to an infringing use. Horizon argued that, therefore, the district court erred in its finding that Actavis’s label did not induce infringement of Horizon’s method-of-use claims.
The Federal Circuit disagreed, finding that a label that does not require all of the steps required by the claimed method does not encourage infringement. The Federal Circuit affirmed the district court’s finding that Actavis’s label merely permitted, rather than required or directed, the post-product application of sunscreen, insect repellant, or a second topical medication. The Federal Circuit further affirmed the district court’s conclusion that Actavis did not induce infringement of Horizon’s method-of-use claims.
In her dissent, Judge Newman criticized the majority for departing from precedent regarding the construction of “consisting essentially of” and the interpretation of induced infringement. Judge Newman argued that the usage of “consisting essentially of” does not incorporate an evaluation of the basic and novel properties into the scope of the claims and emphasized that Actavis’s formulation did not incorporate any component that was not included in Horizon’s formulation claims. Regarding induced infringement, Judge Newman further argued that the fact that a user might not follow instructions does not insulate a provider from liability.
This case may be particularly relevant to chemical patent applications. A patent applicant wishing to use the phrase “consisting essentially of” may want to take special care to define the basic and novel properties of the invention and how those basic and novel properties are evaluated. The applicant may want to consider identifying fewer basic and novel properties, and might also consider including only one method for evaluating each property so that a court cannot find inconsistencies among multiple methods.
Further, a patent applicant seeking to claim a method of using a pharmaceutical product may want to consider claims that will match the instructions for use, and may also want to make sure that every step claimed will be required in the instructions for use.
For those seeking to invalidate or argue noninfringement of existing patents, this case highlights potentially useful lines of argument. If the “consisting essentially of” transitional phrase is used, one may consider arguing that the basic and novel properties of the claimed invention are indefinite. Specifically, one might consider looking for inconsistencies or undefined terms in any data evaluating the basic and novel properties provided in the patent.
Additionally, one seeking to avoid a finding of induced infringement for pharmaceutical products with instructions for use should take into account the impact of this decision.
For more information on this case, please contact Fitch Even attorney Caroline A. Schneider, author of this alert.
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