Presenting Extrinsic Evidence At District Court Does Not Guarantee Review For Clear Error On Appeal

| June 11, 2015

Shire Development et al. v. Watson Pharmaceutical et al.  

June 3, 2015

Before: Prost, Chen and Hughes.  Opinion by Hughes.


In 2014, the CAFC reversed and remanded a district court finding of infringement, due to incorrect claim construction.  Shire appealed to the Supreme Court, which vacated and remanded in view of Teva v. Sandoz.  The CAFC again reached the same conclusion, and found that de novo review is appropriate in this case, since extrinsic factual findings did not “underlie” the district court’s claim construction.  Because the district court claim construction was based only on intrinsic evidence, de novo review was appropriate.


Shire is the owner of U.S. Patent No. 6,773,720, which claims a drug for inflammatory bowel diseases marketed as “Lialda.”  Watson filed an ANDA, and Shire subsequently sued.   The district court construed various claim terms, including two disputed terms, and found that Watson infringed the ‘720 patent.  Watson appealed, and the CAFC reversed the claim construction and remanded.  Shire appealed to the Supreme Court, who vacated and remanded the CAFC decision for further consideration in view of Teva v. Sandoz.

A representative claim is as follows:

  1. Controlled-release oral pharmaceutical compositions containing as an active ingredient [mesalamine], comprising:

    a) an inner lipophilic matrix consisting of substances selected from the group consisting of unsaturated and/or hydrogenated fatty acid, salts, esters or amides thereof, fatty acid mono-, di- or triglycerid[e]s, waxes, ceramides, and cholesterol derivatives with melting points below 90° C., and wherein the active ingredient is dispersed both in said the [sic] lipophilic matrix and in the hydrophilic matrix;

    b) an outer hydrophilic matrix wherein the lipophilic matrix is dispersed, and said outer hydrophilic matrix consists of compounds selected from the group consisting of polymers or copolymers of acrylic or methacrylic acid, alkylvinyl polymers, hydroxyalkyl celluloses, carboxyalkyl celluloses, polysaccharides, dextrins, pectins, starches and derivatives, alginic acid, and natural or synthetic gums;

    C) optionally other excipients; wherein the active ingredient is present in an amount of 80 to 95% by weight of the total composition, and wherein the active ingredient is dispersed both in the lipophilic matrix and in the hydrophilic matrix.

In the specification, it is described that the inner lipophilic matrix is made by mixing lipophilic excipients with the active ingredient, heating to homogenized, and then cooling.  The resulting product is then formed into matrix granules, which are mixed with hydrophilic excipients and compressed into tablets.  In Watson’s product, the active ingredient is dispersed in the granules and in the spaces outside of the granules.

Claim construction

The district court construed “inner lipophilic matrix” to mean “a matrix including at least one lipophilic excipient, where the matrix is located within one or more other substances,” and construed “outer hydrophilic matrix” to mean “a matrix of at least one hydrophilic excipient, where the matrix is located outside the inner lipophilic matrix.”  However, the CAFC held that both constructions were incorrect in that they were overly broad.

In particular, with respect to “inner lipophilic matrix,” the district court’s construction was incorrect, because it focused on the properties of an excipient in the matrix, rather than the matrix itself.  The CAFC stated that “lipophilic” is an adjective describing the noun “matrix,” and thus the matrix must have the lipophilic properties.  This was also consistent with the specification.

Additionally, the parties disputed whether the inner matrix and outer matrix must be “separate and distinct,” as urged by Watson.  During prosecution, Shire argued that the cited art did not have separate matrices, but did not explicitly state that their invention does in fact have separate matrices.  The district court held that although Shire had distinguished over the art by describing their matrices as “separate,” the prosecution history was insufficient to rise to a clear and unambiguous disavowal.  The CAFC agreed with the district court that this does not amount to an “unambiguous disavowal,” but stated that these statements in prosecution inform the claim construction.

The CAFC further held that the “separate and distinct” claim construction is consistent with the claim language, ordinary meaning of the claims, Markush groups and the specification.  For example, the CAFC pointed out that since the claims recite the inner matrix and outer matrix as elements (a) and (b), the structure of the claims indicates separate matrices.   Additionally, in oral argument, Shire conceded that the matrices are separate.  Furthermore, the claims used mutually exclusive language in describing the spatial and compositional characteristics of the matrices (inner vs. outer; lipophilic vs. hydrophilic).  Also, each of the matrices is described using a Markush group with no overlapping members, further supporting the position that the matrices are separate and distinct.

The CAFC further noted that the district court’s claim construction improperly permits a single mixed matrix with hydrophilic and lipophilic components to include both an “inner lipophilic matrix” and an “outer hydrophilic matrix.”  However, the CAFC held that the claims require two separate matrices with a defined spatial relationship.  Although Shire complained that claim construction creates ambiguity with respect to the required degree of separation, the CAFC indicated that this is a question of infringement for the fact finder.

Standard of Review

According to Teva, when the district court “reviews only evidence intrinsic to the patent, the judge’s determination will amount solely to a determination of law” and de novo review by the CAFC is appropriate.  On the other hand, if the district court “resolves factual disputes over evidence extrinsic to the patent,” the CAFC must review for clear error of the factual findings that underlie the district court’s claim construction.

On this remand from the Supreme Court, Shire argued that the claim construction should be reviewed under the clear error standard, because the district court heard expert testimony.  It should be noted, however, that the district court’s claim construction order only relied upon extrinsic evidence with respect to “melting points,” which is not at issue in the appeal.  The CAFC held that the district court’s claim construction with respect to the above-discussed terms was made based on intrinsic evidence only, not factual findings.  Even though the district court heard expert testimony, this is insufficient to trigger the clear error standard of review, because the extrinsic evidence did not “underlie” construction of the disputed terms.  Thus, the CAFC held that de novo review of claim construction is appropriate in this case.

Take Away

Merely presenting extrinsic evidence at the district court level does not guarantee the “clear error” standard on appeal.  Rather, review for clear error is only required where the factual findings underlie the claim construction by the district court.

Full Opinion

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