Shire Development, LLC v. Watson Pharmaceuticals, Inc.

Addressing the impact of statements made during prosecution on claim construction, the U.S. Court of Appeals for the Federal Circuit vacated and remanded a lower court’s ruling of infringement, finding that the lower court construed relevant terms too broadly in view of the statements made during prosecution.  Shire Development, LLC v. Watson Pharmaceuticals, Inc., Case No. 13-1409 (Fed. Cir., Mar. 28, 2014) (Hughes, J.).

Shire owns a patent directed to a controlled-release oral pharmaceutical composition for treating inflammatory bowel disease.  The patent requires the claimed composition to have an inner lipophilic matrix consisting of substances and an outer hydrophilic matrix consisting of compounds.  After Watson filed an Abbreviated New Drug Application (ANDA) to obtain approval to sell a generic form of the drug, Shire sued for infringement.

The district court found infringement based on its construction of disputed terms “inner lipophilic matrix” and “outer hydrophilic matrix.”  The court construed the former to mean a matrix including at least one lipophilic excipient and the latter to mean a matrix of at least one hydrophilic excipient located outside the inner lipophilic matrix.  The district court construed the claim to not require the inner lipophilic matrix to be separate from the outer hydrophilic matrix, reasoning that even though applicants had described their matrices as “separate” to distinguish over the prior art references, those statements did not raise to the level of clear and unambiguous disavowals.  Watson appealed.

The Federal Circuit disagreed with the district court’s construction of inner lipophilic matrix and outer hydrophilic matrix and determined that the matrix—not just an excipient within the matrix—must exhibit the lipophilic or hydrophilic characteristic and that the inner lipophilic matrix and outer hydrophilic matrix should be construed as separate from one another, based on the prosecution history.

Although the Federal Circuit agreed with the district court that the applicants’ statements did not rise to the level of unmistakable disavowal, it nevertheless found that Shire’s statements did inform the claim construction and that the statements made to the Patent and Trademark Office (PTO) “stays true to the claim language and most naturally aligns with the patent’s description of the invention.”  The Court reasoned that the applicants’ statements together with the structure of the claim compel a claim construction which logically requires that the inner lipophilic matrix be separate from the outer hydrophilic matrix.