Having a court grant a preliminary injunction is frequently an important strategic victory for a patent plaintiff in an infringement suit.  The injunction not only eliminates a revenue stream for the accused infringer but also imposes other requirements (such as burdensome efforts to remove the alleged infringing article from the stream of commerce) that can (and indeed, are intended to) pressure the defendant to consider settlement.  But in order for a plaintiff to obtain an injunction, she must show a likelihood of prevailing on the merits, and in Indivior Inc. v. Dr. Reddy's Laboratories, S.A., the Federal Circuit recently found the District Court erred in finding such a likelihood, based on the patentee having disclaimed embodiments that encompassed the accused infringing article.

The case arose in ANDA litigation over Indivior's suboxone film product Suboxone®, a rapidly dissolving film formulation of two active ingredients:  buprenorphine, which decreases a patient's need for opioids, and naloxone, which deters abuse; it is the leading treatment for opioid dependency according to the Federal Circuit opinion.  The challenge for such formulations is drug content uniformity, i.e., having the ingredients homogeneously distributed in the films, which are produced from larger sheets that are cut into individual dosage units based on a particular size and shape to provide the appropriate dose of each drug.  U.S. Patent Nos. 9,931,305 and 8,603,514 (which have identical specifications) cover Indivior's product (the '305 patent being the only patent at issue in the case), which disclose methods for mixing the drugs with a polymer, casting the mixture to produce a wet film, and then "controllably drying the film to produce a solid sheet having less than ten percent variance in active ingredient throughout any given area."  Relevant to the issues before the Court, prior art methods (involving drying the films by applying warm air to only the top surface) were inadequate to achieve content uniformity, with films produced in this manner having a "rippled" surface.  The invention overcame these limitations by "applying heat to the bottom of the film, introducing controlled microwaves, controlling the air flow above and beneath the film, and employing furnace filters."

The parties had engaged in ANDA litigation involving the '514 patent brought in the District of Delaware; claim 62 of this patent in informative:

62.  A drug delivery composition comprising:
    (i) a cast film comprising a flowable water-soluble or water swellable film-forming matrix comprising one or more so substantially water soluble or water swellable polymers; and a desired amount of at least one active;
    wherein said matrix has a viscosity sufficient to aid in substantially maintaining non-self-aggregating uniformity of the active in the matrix;
    (ii) a particulate active substantially uniformly stationed in the matrix; and
    (iii) a taste-masking agent selected from the group consisting of flavors, sweeteners, flavor enhancers, and combinations thereof to provide taste- masking of the active;
    wherein the particulate active has a particle size of 200 microns or less and said flowable water-soluble or water swellable film-forming matrix is capable of being dried without loss of substantial uniformity in the stationing of said particulate active therein; and
    wherein the uniformity subsequent to casting and drying of the matrix is measured by substantially equally sized individual unit doses which do not vary by more than 10% of said desired amount of said at least one active.

The District Court held that Indivior had disclaimed (indeed, disparaged) conventional air drying methods in these claims, and on this basis construed "dried" (and "drying") to exclude embodiments that only used "conventional convection air drying from the top."  The District Court found that Dr. Reddy's did not infringe the claims of the '514 patent (a decision on appeal to the Federal Circuit).

Reacting to this decision, Indivior amended claims in a pending application that matured into the '305 patent that replaced "dried" and "drying" with "continuously" and "continuously cast," as illustrated in claim 26 of the '305 patent:

26.  A drug delivery composition comprising:
    (i) a continuously cast film produced on a manufacturing line comprising a flowable water-soluble or water swellable film-forming matrix comprising one or more substantially water soluble or water swellable polymers; and at least one active;
    wherein said matrix has a viscosity sufficient to aid in substantially maintaining non-self- aggregating uniformity of the active in the matrix;
    (ii) a particulate active substantially uniformly stationed in the matrix; and
    (iii) a taste-masking agent selected from the group consisting of flavors, sweeteners, flavor enhancers, and combinations thereof to provide taste- masking of the active;
    wherein the particulate active has a particle size of 200 microns or less and said flowable water-soluble or water swellable film-forming matrix is capable of being continuously cast on the manufacturing line without loss of substantial uniformity in the stationing of said particulate active therein; and
    wherein said uniformity of the continuously cast film is measured by substantially equally sized individual unit doses cut from the continuously cast film which do not vary by more than 10% of a desired amount of said at least one active.

Indivior brought this ANDA suit against Dr. Reddy's in New Jersey based on the '305 patent claims; nevertheless, Dr. Reddy's launched at risk after the FDA approved its ANDA.  Indivior petitioned the District Court for a temporary restraining order (TRO) and a preliminary injunction (PI), both of which were granted (the TRO after a telephone conference between the parties and the Court, and the PI after a hearing).  As part of the District Court's determinations in support of granting the PI, the Court held that Indivior was likely to succeed on the merits that Dr. Reddy's product infringed the '305 patent claims and that those claims were not invalid nor unenforceable.  In construing the scope of the asserted '305 patent claims, the New Jersey Court declined to apply the Delaware Court's reasoning that Indivior's specification disclaimed embodiments encompassing Dr. Reddy's product, based in part on the '305 patent claim not reciting a "drying" limitation.  This different construction also supported the New Jersey Court's decision that a PI (and Indivior's lawsuit) was not barred under the doctrine of claim preclusion.  This appeal followed.

The Federal Circuit reversed, in an opinion by Judge Stoll joined by Judge Lourie; Judge Newman filed a dissenting opinion.  The majority held that the District Court had abused its discretion in granting the PI, because in their view the '305 patent specification disclaimed conventional air-drying methods (such as those used by Dr. Reddy's) for producing such films.  This conclusion was supported by "remarks in the specification," specifically that such conventional methods did not solve the content uniformity problems in prior art drying methods.  Disclaimer (or, put another way, disavowal) requires that a specification be express ("make clear" that the inventor intends to disclaim part of the scope of a claim that would otherwise encompass certain embodiments based on the plain meaning of claim terms).  This must be more than merely expressing a patentee's preference with regard to certain features; characteristic of effective disclaimers are instances where "'the specification goes well beyond expressing the patentee's preference . . . [such that] its repeated derogatory statements about [a particular embodiment]," citing Openwave Sys., Inc. v. Apple Inc., 808 F.3d 509, 513 (Fed. Cir. 2015) (quoting Chicago Bd. Options Exch., Inc. v. Int'l Sec. Exch., LLC, 677 F.3d 1361, 1372 (Fed. Cir. 2012)).

In this case (and in direct analogy to the Openwave Systems caseand SciMed Life Sys., Inc. v. Advanced Cardiovascular Sys., Inc., 242 F.3d 1337, 1343–44 (Fed. Cir. 2001), "the '305 patent is 'rife with remarks that disparage, and therefore, disclaim' solely using conventional top air drying to form films," according to the majority opinion.  The opinion cited disclosure in the specification that "conventional drying methods themselves are unable to provide uniform films" and that such methods "produce a 'ripple effect' that results in 'an uneven, and therefore non-uniform film.'"  The opinion also cites two specific examples in the specification that illustrate the advantage of avoiding conventional top-only air drying in favor of the claimed methods that employed other drying geometries and methodologies; the opinion recites several portions of the specification to illustrate its points.

The majority rejected Indivior's argument that these statements in the specification were not relevant to construing the asserted '305 patent claims because these claims did not recite "drying" or "dried."  The majority held that the substitute language, "continuously cast film," implicated the disclaimer of conventional drying because drying was part of the disclosed methods for producing a continuously cast film.  And the opinion states that "[t]he specification makes clear that a film produced using only conventional top air drying cannot satisfy the claim limitations."

The majority also rejected Indivior's argument that "it is improper to import drying, a process limitation, into the '305 patent's composition claims because there is an absence of 'specific process language.'"  While acknowledging that "[a]s a general rule, product claims are not limited to the method of manufacture disclosed in the specification," citing Vanguard Prod. Corp. v. Parker Hannifin Corp., 234 F.3d 1370, 1372 (Fed. Cir. 2000), "process steps can be treated as part of a product claim if the patentee has made clear that the process steps are an essential part of the claimed invention," citing Andersen Corp. v. Fiber Composites, LLC, 474 F.3d 1361, 1375 (Fed. Cir. 2007).  That is the case here, in the majority's opinion, because a "continuously cast film" requires a process for achieving the end product.  The '305 patent discloses only an irrelevant extrusion method and a wet casting method, the product of which must be dried ("combining a polymer and a polar solvent, forming the combination into a film, and drying the film in a controlled manner").  Analogous to the Anderson case, the majority found that "Indivior's patent specification makes clear that the drying process is an essential part of the '305 claimed invention" in order to achieve content uniformity, which an expressly recited limitation in the '305 patent claims.

In addition, the majority found that Indivior was barred by the claim preclusion doctrine because the '305 patent claims were patentably indistinct from the '514 patent claims held before the Delaware District Court not to be infringed by Dr. Reddy's products (a decision that follows inexorably from the majority's holding that replacing "dried" and "drying" with "continuously cast" did not distinguish the claims of the '305 patent from the earlier-asserted claims of the '514 patent).  Finally, the majority held that Indivior's filing a terminal disclaimer provided a "strong clue" that these claims were not patentably distinct.

Judge Newman dissented.  In her opinion, the factors surrounding the District Court's grant of the PI (that "Dr. Reddy's Laboratories[] could readily be made whole by monetary payment if the injunction was imposed in error," that "Indivior could not recover its reputation and market share if the injunction was erroneously denied," and that Indivior had posted a $72 million bond protecting Dr. Reddy's from any adverse monetary consequences) were sufficient for the Court not to disturb the District Court's determination.  Judge Newman's opinion is based on the equitable nature of grant of a preliminary injunction, which requires appellate review on the propriety of a District Court's equitable discretion.  Here, Judge Newman chided her brethren for focusing on the substantive merits of Indivior's patent infringement allegations, supported by a decision of a different district court, "on a different patent with different claims" (and that is on appeal to the Federal Circuit), rather than on the equitable considerations in the case.

Judge Newman was also not persuaded on the question of whether there was specification disclaimer.  In her view, the majority improperly imported a process limitation into a claim for a formulation:

My colleagues select the drying method claimed in a different patent (the '514 parent patent) and place that limitation in the claims of the '305 patent, although the patentee expressly amended the '305 claims to remove the drying method.  My colleagues give the amended '305 claims identical scope to the claims of the '514 patent, the patent previously litigated in Delaware.  My colleagues then conclude that the '305 claims would have the same infringement position as the '514 claims were found to have in Delaware.  This is improper.  It is improper for a court to rewrite a product claim to contain a process limitation from the specification—here contained in a preferred but not sole embodiment—for it confounds the roles of the specification and the claims.  See Raytheon, 724 F.2d at 957.  "[I]f we once begin to include elements not mentioned in the claim, in order to limit such claim . . . , we should never know where to stop."  Phillips, 415 F.3d at 1312 (omission in original) (quoting McCarty v. Lehigh Valley R.R. Co., 160 U.S. 110, 116 (1895)) [citation to the record omitted].

Judge Newman saw nothing improper in the amendments to the claims that ultimately granted as the '305 patent, replacing "dried" and "drying" with "continuously" and "continuously cast."  To her, these amendments broadened the scope of the claim so as not to be limited to any particular film-casting (or drying) method.

Finally, Judge Newman disagreed with the majority on the issue of claim preclusion.  Citing precedent, she contended that it is improper to infer an admission from an applicant filing a terminal disclaimer; see, Ventana Medical Systems, Inc. v. Biogenex Laboratories, Inc., 473 F.3d 1173, 1184 n.4 (Fed. Cir. 2006).  Moreover, the status of the Delaware District Court's decision (being on appeal), raises the specter of the Court deciding Indivior's suit should be dismissed on issue preclusion grounds over a decision that might itself be overturned, citing Butler v. Eaton, 141 U.S. 240, 242–44 (1891), Levi Strauss & Co. v. Abercrombie & Fitch Trading Co., 719 F.3d 1367, 1372 (Fed. Cir. 2013), and 18A Charles A. Wright, et al., Federal Practice and Procedure § 4433 (2d ed. 2002).

Finally, Judge Newman objected to the majority's refusal to consider the District Court's reasoning on the other equitable factors involved in a preliminary injunction determination:

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 [citing Deckert v. Independence Shares Corp., 311 U.S. 282, 290 (1940)].

Indivior Inc. v. Dr. Reddy's Laboratories, S.A. (Fed. Cir. 2018)
Nonprecedential disposition
Panel: Circuit Judges Newman, Lourie, and Stoll
Opinion by Circuit Judge Stoll; dissenting opinion by Circuit Judge Newman