**United States Court of Appeals for the Federal Circuit**

03-1575

GLAXO GROUP LIMITED

and SMITHKLINE BEECHAM CORP.,

> Plaintiffs-Appellees,

v\.

APOTEX, INC.,

> Defendant-Appellant.

[Dennis J. Mondolino]{.underline}, Morgan, Lewis & Bockius LLP, of New
York, New York, argued for plaintiffs-appellees. With him on the brief
were [Michael F. Hurley]{.underline}, [Brett M. Schuman]{.underline},
[Esther H. Steinhauer]{.underline}, [Brian W. Nolan]{.underline} and
[Christopher S. Pennisi]{.underline}. Of counsel was [Thomas M.
Peterson]{.underline}, of San Francisco, California.

[Scott B. Feder]{.underline}, Lord, Bissell & Brook LLP, of Chicago,
Illinois, argued for defendant-appellant. With him on the brief were
[Hugh L. Moore]{.underline}, [Hugh S. Balsam]{.underline} and [Kevin M.
Nelson]{.underline}.

Appealed from: United States District Court for the Northern District of
Illinois

Judge Robert W. Gettleman

**United States Court of Appeals for the Federal Circuit**

03-1575

GLAXO Group lIMITED

and Smithkline Beecham corp.,

Plaintiffs-Appellees,

v\.

apotex, inc.,

Defendant-Appellant.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

DECIDED: July 27, 2004

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Before SCHALL, GAJARSA, and DYK, [Circuit Judges]{.underline}.

Opinion for the court filed by [Circuit Judge]{.underline} GAJARSA.
Opinion concurring-in-part and dissenting-in-part filed by [Circuit
Judge]{.underline} DYK.

GAJARSA, [Circuit Judge]{.underline}.

Apotex, Inc. ("Apotex") appeals the judgment of the United States
District Court for the Northern District of Illinois, which found that
Apotex's filing of an Abbreviated New Drug Application ("ANDA") for a
generic version of the antibiotic Ceftin® willfully infringed U.S.
Patent No. 4,562,181 (the "'181 patent") and U.S. Patent No. 4,820,833
(the "'833 patent") owned by Glaxo Group Limited and SmithKline Beecham
Corp. (collectively "Glaxo"). [Glaxo Group Ltd. v. Apotex,
Inc.]{.underline}, 268 F. Supp. 2d 1013 (N.D. Ill. 2003). While we
affirm the district court's determination that Apotex's ANDA infringes
the '181 and '833 patents pursuant to 35 U.S.C. § 271(e)(2), and also
affirm that the patents at issue are not invalid, we reverse the
district court's finding that Apotex's ANDA filing constituted willful
infringement. We hold that the mere filing of an ANDA cannot constitute
an act of willful infringement compensable by attorney's fees under the
Drug Price Competition and Patent Term Restoration Act of 1984, also
known as the Hatch-Waxman Act.

I. Background

A. [The '181 and '833 patents]{.underline}

Glaxo is the owner by assignment of a series of patents directed to
antibiotics in the cephalosporin family. In the 1970s, Glaxo developed
the cephalosporin compound of cefuroxime, the subject of U.S. Patent No.
3,974,153. Cefuroxime required intravenous or intramuscular injection
because of bioabsorption difficulties and was therefore of limited
usefulness. Glaxo then synthesized a family of cefuroxime esters that
were capable of oral administration and obtained U.S. Patent No.
4,267,320 (the "'320 patent"), which issued May 12, 1981. The '320
patent claimed, among other compounds, a compound known as cefuroxime
axetil (hereinafter "CA"). The '320 patent disclosed CA in the forms of
(1) an impure amorphous compound and (2) a purer crystalline compound.
Crystalline compounds contain a structure whereby molecules are arranged
in a regularly repeating order. By contrast, amorphous is often defined
as the opposite of crystalline and refers to a structure where molecules
are randomly distributed with respect to one another. [See]{.underline}
[Glaxo Group Ltd. v. Ranbaxy Pharms., Inc.]{.underline}, 262 F.3d 1333,
1335 (Fed. Cir. 2001) (explaining that amorphous compounds lack an
"ordered arrangement").

After the issuance of the '320 patent, Glaxo scientists continued
development on CA because of persistent difficulties with bioabsorption.
On July 29, 1983, Glaxo filed the application that matured into the '181
patent, a continuation of U.S. Patent Application Ser. No. 781,505 (the
"'505 application"). The '181 patent is directed to a highly pure
[amorphous]{.underline} form of CA that offers superior bioavailability
and stability than crystalline forms of CA. According to the patent, the
discovery that an amorphous CA compound provided a better pharmaceutical
formulation ran counter to the expectations of those familiar with
cephalosporin compounds. '181 patent, col. 2, ll. 3-9. The '181 patent
issued on December 31, 1985, and expired on July 29, 2003.

The '181 patent has fourteen claims, of which Claims 1 and 8 are most
relevant to the current appeal:

1.  Cefuroxime axetil in amorphous form essentially free from
    crystalline material, and having a [purity of at least
    95%]{.underline} aside from residual solvents.

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8.  An antibacterial pharmaceutical composition containing an
    antibacterially effective amount of cefuroxime axetil according to
    claim 1 in admixture with one or more pharmaceutical carriers or
    excipients.

[Id.]{.underline} at col. 13, ll. 4-8; col. 14, ll. 1-4 (emphasis
added).

In addition to the '181 patent, Glaxo holds the '833 patent claiming a
method for preparing highly pure amorphous CA. The '833 patent, which,
like the '181 patent, is a continuation of the '505 application, issued
on April 11, 1989. The '833 patent contains a terminal disclaimer and
expired on July 31, 2003, along with the '181 patent. The one
independent claim of the '833 patent reads:

1\. A process for preparing a highly pure, substantially amorphous form
of cefuroxime axetil which comprises preparing a [highly pure solution
of cefuroxime axetil]{.underline} and spray drying said solution to
recover highly pure, substantially amorphous cefuroxime axetil.

'833 patent, col. 14, ll. 4-8 (emphasis added). Spray drying is a
technique by which a solution is atomized into droplets and then
instantaneously dried, creating an amorphous rather than a crystalline
form of the compounds suspended in the solution. [See]{.underline}
[id.]{.underline} at col. 8, ll. 27-41.

The commercial embodiment of the '181 and '833 patents is Ceftin®, a
drug formulation approved by the Food and Drug Administration ("FDA")
that has been very successful in the marketplace. Glaxo has generated
almost \$4 billion in sales from Ceftin® in the drug's fifteen years on
the market.

B. [ANDA]{.underline}

On April 5, 2000, Apotex filed an ANDA seeking approval by the FDA to
market a generic version of Ceftin®. Apotex creates its generic drug by:
(1) dissolving excipients zinc chloride and sorbitol into a solution of
water and acetone along with approximately 98% pure crystalline CA; (2)
mixing the resulting solution; (3) spray drying the solution under
nitrogen; (4) collecting, compacting, and milling the resulting spray
dried amorphous particles into granules; (5) mixing the granules with
additional excipients; (6) compressing the resulting blend into a tablet
core; and (7) coating the tablet. Apotex's spray dried solution creates
an amorphous "co-precipitate" comprised of 90% CA, 9% sorbitol, and 1%
zinc chloride by mass. On November 26, 2002, the patent office issued to
Apotex U.S. Patent No. 6,485,744 (the "'744 patent") relating to
Apotex's unique use of zinc chloride as a stabilizing excipient for CA.

Apotex's ANDA filing is atypical in that it did not contain a
certification pursuant to 21 U.S.C. § 355(j)(2)(A). Under the
Hatch-Waxman Act, most patentees and NDA holders must list patents
related to their approved drugs in the FDA's "Approved Drug Products
with Therapeutic Equivalence Evaluations" publication (the "Orange
Book"). 21 U.S.C. § 355(b)(1). Reciprocally, a generic company has an
obligation to consult the Orange Book before filing an ANDA and certify
that either (I) no patent information is listed in the Orange Book for
the proposed generic drug; (II) that the listed patents have expired;
(III) that the listed patents will expire before the generic company
markets its product; or (IV) that the patents listed are invalid or will
not be infringed by the generic drug (a "paragraph IV certification").
[21 U.S.C.]{.underline} § 355(j)(2)(A)(I)-(IV).

In the current case, however, CA was approved under 21 U.S.C. § 357, a
now-repealed provision of the Federal Food, Drug, and Cosmetic Act
relating to antibiotics. Drug manufacturers who utilized Section 357 to
obtain FDA approval are exempt from listing the patents related to their
antibiotic in the Orange Book. Correspondingly, ANDA applicants
attempting to market generics of such antibiotics are not required to
file a certification under 21 U.S.C. § 355(j)(2)(A). [See]{.underline}
Pub. L. 105-115, Title I, §125 (d), 11 Stat. 2326 (1997). Accordingly,
Glaxo did not list the '181 or '833 patent in the Orange Book, and
Apotex therefore did not file a paragraph IV certification in its ANDA
application.

C. [Procedural History]{.underline}

Glaxo brought a declaratory judgment action against Apotex after the
filing of Apotex's ANDA, alleging anticipatory infringement and
"artificial" infringement pursuant to 35 U.S.C. § 271(e)(2)(A). Section
271(e)(2)(A) provides a jurisdictional basis for a declaratory judgment
suit against a generic manufacturer and states:

\(2\) It shall be an act of infringement to submit---

> \(A\) an application under Section 505(j) of the Federal Food, Drug,
> and Cosmetic Act . . . for a drug claimed in a patent or the use of
> which is claimed in a patent, . . . \[i\]f the purpose of such
> submission is to obtain approval under such Act to engage in the
> commercial manufacture, use, or sale of a drug . . . claimed in a
> patent or the use of which is claimed in a patent before the
> expiration of such patent.

35 U.S.C. § 271(e)(2)(A); [see also]{.underline} [Glaxo, Inc. v.
Novopharm Ltd.]{.underline}, 110 F.3d 1562, 1569 (Fed. Cir. 1997)
(stating that "§ 271(e)(2) provided patentees with a defined act of
infringement sufficient to create case or controversy jurisdiction to
enable a court to promptly resolve any dispute concerning infringement
and validity"); [Eli Lilly & Co. v. Medtronic, Inc.]{.underline}, 496
U.S. 661, 678 (1990) (explaining that 35 U.S.C. § 271(e)(2) and (e)(4)
have a "very limited and technical purpose" and that such purpose is "to
enable the judicial adjudication upon which the ANDA and paper NDA
schemes depend").

On June 10, 2002, the district court issued a preliminary injunction
preventing Apotex from marketing its generic CA product pending
resolution of the case. As part of its order enjoining Apotex, the court
issued a claim construction for Claim 1 of the '181 patent, finding that
the phrase "cefuroxime axetil . . . having a purity of at least 95%"
meant that the CA claimed must have "no more than 5% degrading, unwanted
impurities." The district court further clarified that impurities do not
include excipients. This Court affirmed the preliminary injunction in
its unpublished decision of [Glaxo Group Ltd. v. Apotex,
Inc.]{.underline}, 64 Fed. Appx. 751 (Fed. Cir. 2003).

After issuance of the preliminary injunction, the district court
conducted a bench trial. At trial, the district court found that Apotex
infringed the '181 patent because Apotex's ANDA stated that its products
do not contain more than 1% impurities, excluding excipients.[^1] With
respect to the '833 patent, the court construed the term "pure" in Claim
1 to mean the absence of impurities, where excipients are not considered
to be impurities. The court then dismissed Apotex's argument that Claim
1's phrase "a highly pure solution of cefuroxime axetil" required that
the solution consist only of CA. Instead, the court found that Claim 1
encompassed the spray drying of solutions like that used by Apotex,
which consist of CA [and]{.underline} excipients, and found Apotex to
infringe the '833 patent.

The district court also dismissed Apotex's counterclaim of invalidity.
The district court rejected the evidence of anticipation proffered by
Apotex's witness Dr. Jay Siegel. Dr. Siegel testified that he was able
to use the '320 patent to create highly pure amorphous CA. He admitted,
however, to deviating from the example of the '320 patent in which
amorphous CA synthesis is disclosed. In addition, Dr. Siegel had
reviewed the '181 patent prior to performing his experiments. Both facts
led the district court to conclude that Dr. Siegel's experiments were
"highly suspect" and therefore insufficient to prove invalidity by clear
and convincing evidence.

As its final determination, the district court found Apotex's
infringement to be willful and awarded Glaxo attorney's fees under 35
U.S.C. § 285 as an exceptional case. Relying heavily on the fact that
Apotex did not receive an opinion from competent patent counsel, the
district court found that Apotex did not exercise due care in filing its
ANDA.

# II. Discussion

A. [Standard of Review]{.underline}

Apotex appeals to this Court and we have jurisdiction pursuant to 28
U.S.C. § 1295(a)(1). Claim construction is a matter of law that we
review de novo on appeal. [Cybor Corp. v. FAS Techs., Inc.]{.underline},
138 F.3d 1448, 1454 (Fed. Cir. 1998). A determination of whether a
patent satisfies the written description and definiteness requirements
of 35 U.S.C. § 112 is also a question of law that we review de novo.
[Union Pac. Res. Co. v. Chesapeake Energy Co.]{.underline}, 236 F.3d
684, 692 (Fed. Cir. 2001); [Amgen, Inc. v Chugai Pharm.
Co.]{.underline}, 927 F.2d 1200, 1212 (Fed. Cir. 1991).

Whether an accused product infringes is a question of fact reviewed for
clear error. [Apex Inc. v. Raritan Computer, Inc.]{.underline}, 325 F.3d
1364, 1371 (Fed. Cir. 2003). Likewise, the question of whether a prior
art reference expressly or inherently discloses every claim limitation
is reviewed under the clearly erroneous standard. [Atlas Powder Co. v.
IRECO, Inc.]{.underline}, 190 F.3d 1342, 1346 (Fed. Cir. 1999). A
finding is clearly erroneous when, despite some supporting evidence,
"the reviewing court on the entire evidence is left with the definite
and firm conviction that a mistake has been committed." [United States
v. U.S. Gypsum Co.]{.underline}, 333 U.S. 364, 395 (1948).

We review a district court's award of legal fees under 35 U.S.C. § 285
by first reviewing de novo whether the court applied the proper legal
standard. We then review the court's factual findings, including whether
the case is exceptional, for clear error. [Brasseler, U.S.A. I, L.P. v.
Stryker Sales Corp.]{.underline}, 267 F.3d 1370, 1378 (Fed. Cir. 2001).
If the district court finds the case to be exceptional and awards legal
fees to the prevailing party, we review such an award for an abuse of
discretion. [Cybor Corp.]{.underline}, 138 F.3d at 1460.

An appellate court's preliminary injunction opinion has no conclusive
bearing at the trial on the merits and is not binding on a subsequent
panel. [Univ. of Tex. v. Camenisch]{.underline}, 451 U.S. 390, 395
(1981); Int'l [Cmty. Materials v. Ricoh Co.]{.underline}, 108 F.3d 316,
318-19 (Fed. Cir. 1997) ("We do not regard it as our function \[in a
preliminary injunction appeal\] to definitively construe" claim language
or to review claim construction "as if from final judgment"); [see
also]{.underline} [Purdue Pharma L.P. v. Boehringer Ingelheim
GmbH]{.underline}, 237 F.3d 1359, 1363 (Fed. Cir. 2001).

B. [Infringement of the '181 Patent]{.underline}[^2]

On appeal, Apotex argues that the district court erred in construing the
phrase "having a purity of at least 95%" of Claim 1 of the '181 patent
to cover formulations with more than 5% of other ingredients. Apotex
argues that Claim 1 covers only pure CA and that any other compounds
added to CA render the CA impure for purposes of meeting the 95% purity
limitation of Claim 1. Under this definition, Apotex's formulation,
which contains only 90% amorphous CA, would not infringe the '181
patent.

To properly construe a claim term, a court first considers the intrinsic
evidence, starting with the language of the claims. [Vitronics Corp. v.
Conceptronic, Inc.]{.underline}, 90 F.3d 1576, 1582 (Fed. Cir. 1996).
Claim terms should be construed consistently with their ordinary and
customary meanings, as determined by those of ordinary skill in the art.
[Brookhill-Wilk 1, LLC v. Intuitive Surgical, Inc.]{.underline}, 334
F.3d 1294, 1298 (Fed. Cir. 2003). In construing the terms of a patent,
the court must also examine the specification to determine whether the
patentee used the claim term consistent with its ordinary meaning or
acted as his own lexicographer in defining the term. [See,
e.g.]{.underline}, [Renishaw PLC v. Marposs Societa' per
Azioni]{.underline}, 158 F.3d 1243, 1250 (Fed. Cir. 1988);
[Brookhill-Wilk]{.underline}, 334 F.3d at 1299.

In the present case, Apotex's construction of the phrase "having a
purity of at least 95%" is both contrary to the ordinary meaning of such
a phrase in the pharmaceutical arts and belied by the specification of
the '181 patent. The specification describes in detail the types of
molecules that are considered impurities, including among the "typical
impurities" compounds related to CA such as the Δ^2^-isomer and E-isomer
of CA. '181 patent, col. 2, ll. 36-38. The patent therefore uses the
term impurities in a manner similar to its ordinary usage, where
impurity is considered as an unwanted reaction product formed during
synthesis. [Glaxo]{.underline}, 268 F. Supp. 2d at 1026. In contrast,
excipients are inactive ingredients that are routinely and purposefully
added to the active ingredient to enhance the performance of the active
ingredient. [Id.]{.underline} at 1023. To one of ordinary skill in the
art, excipients are almost universally used with the active ingredient,
and therefore do not act to affect the purity of the drug.
[Id.]{.underline} at 1026. This common understanding of purity is aptly
demonstrated by Apotex's patent application for its co-precipitate,
which stated that, "In the case of pure amorphous cefuroxime axetil, the
process of manufacture will preferably be to dissolve the zinc salt
along with the cefuroxime axetil in suitable solvent and then evaporate
the solvent . . . ." Apotex's statement strongly suggests that the
purity of CA remains unaffected by the addition of excipients such as
the zinc chloride used by Apotex in its generic product.

Apotex's construction also violates the principle that claims should
rarely, if ever, be construed to exclude a preferred embodiment.
[Vitronics]{.underline}, 90 F.3d at 1583. Were we to count excipients as
impurities for purposes of Claim 1, we would be forced to limit Claim 8
to pharmaceutical formulations in which CA composed at least 95% of the
formula. The specification of the '181 patent provides, however, that
"\[c\]ompositions may contain between 0.1 - 99 % of the active
ingredient . . . ." '181 patent, col. 5, ll. 17-37, 59-61; col. 6, ll.
1-5. The specification also provides a list of pharmaceutical examples
related to Claim 1, all of which contain less than 95% amorphous CA.

Because Apotex's construction (1) conflicts with the ordinary
understanding of the phrase "having a purity of at least 95%," (2) would
exclude all preferred embodiments of Claim 8, and (3) is in conflict
with the specification of the '181 patents, this Court affirms the
district court's construction of the '181 patent. Based on this
construction, Apotex's ANDA admission that its generic CA products
contain less than 2% by weight impurities of CA supports the district
court's finding of infringement of the '181 patent.

C. [Infringement of the '833 Patent]{.underline}

Apotex's arguments as to the proper claim construction for the '833
patent fail on the same logic as the '181 patent. Apotex argues that the
district court erred in construing the term "pure" to mean the absence
of impurities, where excipients are not considered to be impurities.
Under Apotex's definition of "pure," Claim 1 of the '833 patent would
cover methods of spray drying where the solution to be spray dried
contained only highly pure CA. Because the term "pure" should be
construed such that it is consistent with the ordinary meaning of that
term, we construe the '833 patent consistently with the '181 patent and
affirm the district court's construction. Based on this construction, a
"highly pure solution of cefuroxime axetil" may include a solution that
contains excipients along with pure CA. Apotex's method of producing its
amorphous CA product by spray drying excipients and pure CA therefore
infringes the claims of the '833 patent.

D. [Invalidity]{.underline}

On appeal, Apotex advances two theories for invalidating the '181 and
'883 patents: (1) that the district court's claim construction of
"purity" and "pure" renders the patents invalid for purposes of 35
U.S.C. § 112, and (2) that Glaxo's '320 patent enables one of ordinary
skill in the art to produce 97% pure CA in an amorphous form, thereby
anticipating or rendering obvious the '181 and '833 patents pursuant to
35 U.S.C. § 102(b). We hold that neither of Apotex's theories overcomes
the presumption of validity provided to an issued patent by 35 U.S.C. §
282.

1.  [35 U.S.C. § 112]{.underline}

Apotex argues that the district court's claim construction of "purity"
and "pure" renders the patents at issue in this litigation hopelessly
indefinite. According to Apotex, one of ordinary skill in the art would
not know that the '181 patent claimed CA that had more than 5% of other
ingredients. In addition, Apotex argues that a skilled artisan would not
realize that the '833 patent covered a process by which excipients are
mixed with CA prior to spray drying. These arguments are disingenuous.
As discussed previously, the '181 patent specifically states that the
pharmaceutical compositions covered by the invention may contain between
0.1 to 99% of the active ingredient, CA. '181 patent, col. 5, ll. 59-62.
CA formulations with more than 5% other ingredients were thus pointed
out to the public in the '181 patent. The written description of the
'833 patent is similarly explicit. In the written description, Glaxo
discloses that the pharmaceutical compositions of CA may be produced by
spray-drying "a suspension of pure amorphous cefuroxime axetil with the
excipients appropriate for said tablets, capsules or granules." '883
patent, col. 5, ll. 40-45. Glaxo therefore informed the public that
combining CA with excipients prior to spray drying was contemplated
under the '833 patents. These detailed disclosures clearly convey to one
of ordinary skill in the art that the patentee "invented what is
claimed," and also give notice to the public of the limits of the
invention. [Vas-Cath, Inc. v. Mahurkar]{.underline}, 935 F.3d 1555, 1563
(Fed. Cir. 1991); [see also]{.underline} [Miles Lab., Inc. v. Shandon,
Inc.]{.underline}, 997 F.2d 870, 875 (Fed. Cir. 1993); [United Carbon
Co. v. Binney & Smith Co.]{.underline}, 317 U.S. 228, 232 (1942).

2\. [Anticipation and Obviousness]{.underline}

On appeal, Apotex also argues that the district court erred by finding
that the '320 patent does not anticipate or make obvious the '181 and
'833 patents. Apotex has the burden of showing invalidity by clear and
convincing evidence. [Robotic Vision Sys., Inc. v. View Eng'g,
Inc.]{.underline}, 189 F.3d 1370, 1377 (Fed. Cir. 1999). This burden is
"especially difficult" when, as is the present case, the infringer
attempts to rely on prior art that was before the patent examiner during
prosecution. [Al-Site Corp v. VSI Int'l Inc.]{.underline}, 174 F.3d
1308, 1323 (Fed. Cir. 1999).

Apotex argues that the district court erred in discrediting Dr. Siegel's
experiments for their failure to follow Example 1 of the '320 patent.
Apotex is of course correct that anticipation requires that all
limitations of the claimed invention are described in a single
reference, rather than a single example in the reference.
[See]{.underline} [In re Spada]{.underline}, 911 F.2d 705, 708 (Fed.
Cir. 1990). At the same time, however, Apotex did not sufficiently
convince the district court that the deviations from the example
provided by the '320 patent for the synthesis of an amorphous form of CA
were not the result of impermissible hindsight. Inherent anticipation
requires that the "missing characteristic is necessarily present, or
inherent, in the single anticipating reference." [Schering Corp. v.
Geneva Pharms., Inc.]{.underline}, 339 F.3d 1373, 1377 (Fed. Cir. 2003);
[see also Trintec Indus., Inc. v. Top-U.S.A. Corp.]{.underline}, 295
F.3d 1292, 1295 (Fed. Cir. 2002). In the present case, the missing claim
limitations, which increased the purity of the amorphous CA
considerably, were not found to be inherent by the district court. Dr.
Siegel, by benefit of reading the '181 patents prior to conducting his
experiments, knew that he needed to prepare a highly pure amorphous form
of CA and used a mixture of methods, some even from the synthesis of
crystalline compounds, to meet this goal. Glaxo demonstrated that every
deviation from the teaching of the '320 patent increased purity. It was
therefore not incorrect for the district court to discredit Dr. Siegel's
testimony and experiments as to whether the '320 patent inherently
yields highly pure amorphous CA.

We also affirm the district court's determination that the '181 patented
invention would not have been obvious in light of the '320 patent. The
'320 patent does not suggest that highly pure amorphous CA product would
have better bioavailability and stability than a crystalline form. This
surprising discovery by Glaxo scientists formed the basis for the
issuance of the '181 patent. Even Dr. Siegel admitted that the '320
patent did not provide a teaching or suggestion that amorphous CA would
have a superior combination of stability and bioabsorption properties as
compared to crystalline CA forms. Secondary factors of
non-obviousness---commercial success, long felt but unresolved need, and
unexpected results---also favor the non-obviousness determination
reached by the district court. [Graham v. John Deere Co.]{.underline},
383 U.S. 1, 17-18 (1966).

E. [Willful Infringement]{.underline}

The final issue we address on appeal is whether the district court
clearly erred in finding that the infringement of the '181 and '883
patents was willful.[^3] Apotex argues that: (1) it has never committed
an act of infringement with respect to the '181 and '883 patents except
for the filing of its ANDA; (2) it did not provide a paragraph IV
certification and therefore never certified that the patent was invalid
or non-infringed; and (3) the district court ignored evidence that
Apotex took due care. Because we agree with Apotex that the mere filing
of an ANDA cannot constitute grounds for a willful infringement
determination, we reverse the district court's award of attorney's fees
to Glaxo.

The act of filing an ANDA constitutes a "highly artificial" act of
infringement under 35 U.S.C. § 271(e)(2). [Eli Lilly]{.underline}, 496
U.S. at 678. This highly artificial act of infringement gives rise to
only a limited set of statutorily-defined consequences set forth in 35
U.S.C. § 271(e)(4). The remedies available to the innovator company
under Section 271(e)(4) are:

\(4\) For an act of infringement described in paragraph (2)---

> \(A\) the court shall order the effective date of any approval of the
> drug or veterinary biological product involved in the infringement to
> be a date which is not earlier than the date of the expiration of the
> patent which has been infringed,
>
> \(B\) injunctive relief may be granted against an infringer to prevent
> the commercial manufacture, use, offer to sell, or sale within the
> United States or importation into the United States of an approved
> drug or veterinary biological product, and

\(C\) damages or other monetary relief may be awarded against an
infringer only if there has been commercial manufacture, use, offer to
sell, or sale within the United States or importation into the United
States of an approved drug or veterinary biological product.

> [The remedies prescribed by subparagraphs (A), (B), and (C) are the
> only remedies which may be granted by a court for an act of
> infringement described in paragraph (2), except that a court may award
> attorney fees under section 285.]{.underline}

(emphasis added). Under this provision, courts are permitted to award
monetary damages only when commercial activity has actually occurred in
the United States or when the commercial product has been imported. 35
U.S.C. § 271(e)(4)(C). The exception to this provision is in the case of
attorney's fees awarded pursuant to 35 U.S.C. § 285. Section 285 permits
attorney's fees to be awarded to the prevailing party in "exceptional
cases." This court has recognized many types of misconduct that may
create an exceptional case for purposes of awarding fees, including
inequitable conduct before the PTO, litigation misconduct such as
vexatious or unjustified litigation or frivolous filings, and willful
infringement. [See]{.underline} [Hoffmann-La Roche Inc. v. Invamed
Inc.]{.underline}, 213 F.3d 1359, 1365 (Fed. Cir. 2000); [Rosemount,
Inc. v. Beckman Instruments, Inc.]{.underline}, 727 F.2d 1540, 1548
(Fed. Cir. 1984).

While a myriad of factual circumstances may give rise to a finding that
a case is exceptional for purposes of 35 U.S.C. § 285, this court has
limited what types of conduct may give rise to an award of attorney's
fees for purposes of Section 271(e)(4). In [Yamanouchi Pharmaceutical
Co. v. Danbury Pharmacal, Inc.]{.underline}, this Court determined that
a baseless and "wholly unjustified" paragraph IV certification in an
ANDA filing, when combined with litigation misconduct, warranted an
exceptional case finding. 231 F.3d 1339, 1346 (Fed. Cir. 2000). In
[Yamanouchi]{.underline}, the district court had found that the generic
company's ANDA filing constituted willful infringement, but we did not
adopt that rationale on appeal. [Yamanouchi Pharm. Co. v. Danbury
Pharmacal, Inc.]{.underline}, 21 F. Supp. 2d 366, 376 (S.D.N.Y. 1998).
Instead we cautioned that the trial court "need not have elevated the
ANDA certification into a finding of willful infringement" and held that
Danbury's entire conduct justified the award of attorney's fees, noting
that the generic company failed to present even a prima facie case of
invalidity in filing its paragraph IV certification, hence making a
baseless filing, and proceeded to present its case in litigation despite
"glaring weaknesses." [Yamanouchi]{.underline}, 231 F.3d at 1347.
Therefore, in [Yamanouchi]{.underline}, we did not agree that the
generic company had engaged in willful infringement, but rather
determined that an award of attorney's fees was permitted because the
generic had filed numerous baseless filings supporting its fruitless and
meritless arguments, both in its case at trial and in its ANDA
certification. Such unjustified litigation and misconduct has always
justified a finding of an exceptional case.

Consequently, as suggested by [Yamanouchi]{.underline}, we now hold that
the mere fact that a company has filed an ANDA application or
certification cannot support a finding of willful infringement for
purposes of awarding attorney's fees pursuant to 35 U.S.C. § 271(e)(4).
The Supreme Court has emphasized that 35 U.S.C. § 271(e)(2) and
35 U.S.C. § 271(e)(4) create an "artificial" act of infringement only
for a "very limited and technical purpose that relates only to certain
drug applications." [Eli Lilly]{.underline}, 496 U.S. at 623. This
purpose, as the Supreme Court explains, is to permit patent holders to
bring suit against generic companies despite the fact that the generic
companies have not yet infringed the patents at issue. [Id.]{.underline}
at 624; [see also]{.underline} 35 U.S.C. § 271(e)(1) (exempting generic
manufacturers from an infringement action when their use is for the
purposes of developing and researching generic alternatives to obtain
premarket approval by the FDA). In evaluating 35 U.S.C. § 271(e)(2), we
have in our past decisions considered this provision to be primarily a
jurisdictional-conferring statute that establishes a case or controversy
in a declaratory judgment action. [See]{.underline} [Allergan, Inc. v.
Alcon Labs.]{.underline}, 324 F.3d 1322, 1330 (Fed. Cir. 2003) (stating
that while § 271(e)(2) is not strictly a jurisdictional statute, it acts
to permit a district court to exercise jurisdiction under 28 U.S.C. §
1338(a) in situations where an ANDA has been filed). The district court
therefore erred in hanging a finding of willfulness on such a
special-purpose peg.

Because 35 U.S.C. § 271(e)(2) is designed to create an
[artificial]{.underline} act of infringement for purposes of
establishing jurisdiction in the federal courts, we hold that the
district court committed clear legal error in finding that Apotex's mere
filing of an ANDA could form the basis of a willful infringement
finding. The district court did not find that Apotex engaged in any
litigation misconduct, and Apotex did not file a paragraph IV
certification of any kind, let alone one that made baseless accusations
of invalidity such as that filed in [Yamanouchi]{.underline}. A district
court abuses its discretion in awarding attorney's fees when its
decision is based on clearly erroneous findings of fact, an erroneous
interpretation of the law, or is clearly unreasonable, arbitrary, or
fanciful. [Fraige v. American-National Watermattress Corp.]{.underline},
996 F.2d 295, 297 (Fed. Cir. 1993). As a legal error, the district
court's award of legal fees based on its finding that Apotex committed
willful infringement under 35 U.S.C. § 271(e)(2) constitutes an abuse of
discretion which we hereby reverse.

Because the district court did not award attorney's fees on any basis
other than willful infringement, we therefore reverse the award of
attorney's fees to Glaxo.

III\. Conclusion

[W]{.smallcaps}e affirm the district court's claim construction of the
'181 and '833 patents and find that Apotex infringed the patents
pursuant to 35 U.S.C. § 271(e)(2) by the filing of its ANDA application
directed to a generic version of amorphous CA. We further affirm the
district court's dismissal of Apotex's claim that the '181 and '833
patents are invalid. We reverse, however, the finding of willful
infringement of the '181 and '833 patents based on Apotex's ANDA filing.
Such a filing cannot constitute willful infringement for purposes of
establishing an exceptional case and the award of attorney's fees under
35 U.S.C. § 271(e)(4). We therefore

[AFFIRM-IN-PART AND REVERSE-IN-PART]{.underline}

IV\. COSTS

No costs.

**United States Court of Appeals for the Federal Circuit**

03-1575

# GLAXO GROUP LTD. and

# SMITHKLINE BEECHAM CORP,

Plaintiffs-Appellees,

v\.

APOTEX, INC.,

Defendant-Appellant.

DYK, [Circuit Judge]{.underline}, concurring-in-part and
dissenting-in-part.

I agree with the majority's disposition of the dispute as to the
preliminary injunction bond and the claim for willful infringement.
Given that disposition, the questions of infringement and invalidity are
moot since, as the parties conceded at oral argument, there are no past
damages being sought for infringement, and the patents have expired. I
dissent from the majority's decision to address the issues of
infringement and invalidity in the absence of a live case or
controversy.

[^1]: The district court also construed the phrase "amorphous form
    essentially free from crystalline material" in Claim 1 of the '181
    patent in a manner that conforms to this Court's decision in [Glaxo
    Group Ltd v. Ranbaxy Pharmaceuticals, Inc.]{.underline}, 262 F.3d
    1333 (Fed. Cir. 2001). In [Ranbaxy]{.underline}, we construed the
    disputed phrase to mean that the compound contains "a maximum
    crystalline content of less than 10%." [Id.]{.underline} at 1337.
    Apotex does not appeal the district court's determination that
    Apotex's product meets this limitation of the '181 patent.

[^2]: The dissent argues that we should not address Apotex's
    infringement and invalidity arguments before turning to the issue of
    willful infringement because there are no past damages awarded for
    the infringement and because the patents have expired. We disagree.
    Willful infringement requires that the defendant infringe a valid
    patent without a reasonable belief that its actions would avoid
    infringement. [Vulcan Eng]{.underline}'[g Co. v. FATA Aluminium,
    Inc.]{.underline}, 278 F.3d 1366, 1378-79 (Fed. Cir. 2002). We thus
    find it appropriate to speak to the threshold issues of infringement
    and validity before turning our attention to willful infringement.

[^3]: Apotex additionally asserted that the district court improperly
    ordered the release of Glaxo's preliminary injunction bond. Because
    the entry of a permanent injunction obviates the need for a
    preliminary injunction bond, we find this issue to be moot.
    [See]{.underline} [Chiuminatta Concrete Concepts, Inc. v. Cardinal
    Indus., Inc.]{.underline}, 145 F.3d 1303, 1313 (Fed. Cir. 1998)
    (affirming release of preliminary injunction bond upon entry of
    permanent injunction).