NOTE: Pursuant to Fed. Cir. R. 47.6, this disposition is not citable as precedent. It is a public record. 

## United States Court of Appeals for the Federal Circuit

04-1310

MEDPOINTE HEALTHCARE INC., Plaintiff-Appellee,

v. HI-TECH PHARMACAL CO., INC., Defendant-Appellant.

__________________________ DECIDED: November 17, 2004

__________________________ Before MAYER, Chief Judge , SCHALL, and PROST, Circuit Judges

. Opinion for the court filed by Circuit Judge PROST. Dissenting opinion filed by Chief Judge MAYER. PROST, Circuit Judge

. Hi-Tech Pharmacal Co. (“Hi-Tech”) appeals a preliminary injunction granted by the United States District Court for the Distr ict of New Jersey to plaintiff Medpointe Healthcare Inc. (“Medpointe”) in regard to the sale and manufa cture of a pharmaceutical composition protected by United States Patent No. 6,417,206 (“the ’206 patent”). Because Medpointe has not shown Hi-Tech’s invalidity defense based on obviousness is without substantial merit, we vacate the preliminary injunction.BACKGROUND MedPointe brought suit against Hi-Tech fo r allegedly infringing the ’206 patent. The ’206 patent claims therapeutic compositi ons of a pharmaceutical drug containing three active ingredients: (1) carbetapent ane tannate, (2) pyrila mine tannate, and (3) phenylephrine tannate. 1 Hi-Tech is a generic drug co mpany that manufactures the same claimed composition. It does not dis pute that its generic version of the drug infringes the ’206 patent, but asserts in it s defense that the pat ent is invalid for obviousness under 35 U.S.C. § 103. In this appeal, Hi-Tech argues that the district court erred in concluding that it had not raised a substantial question of validity of the ’206 patent. Hi-Tech contends that a pharmaceutical com position, named “Candettes,” 2
either alone or in combination with other prior art, such as Medpointe’s Tussi-12 product, 3 renders the claims of the ’206 patent obvious. The Candettes product, which has been available to the public since 1938, c ontains the same three types of active molecules claimed by the ’206 patent, but has associated with each type of active molecule a different salt counterion than that claimed by the ’206 patent. According to

1 The sole independent claim in the patent reads as follows:
1. A therapeutic composition for the symptomatic relief of cough associated with adverse respirator y tract conditions in warm-blooded animals in need of such treatment said composition comprising pharmaceutically effective amounts of active ingredients, wherein said active ingredients consist of carbetapentane tannate, pyrilamine tannate and phenylephrine tannate.

2 Candettes contains carbetapentane citr ate, phenylephrine hydrochloride, and pyrilamine maleate.

3 Tussi-12 contains carbetapentane tannate, phenylephrine tannate, and chlorpheneramine tannate.

04-1310 2Hi-Tech, it would have been obvious to subs titute tannate for the counterions in Candettes. Alternatively, Hi- Tech contends that it would have been obvious to modify the prior art, by substituting, for exampl e, pyrilamine tannate for chlorpheniramine tannate in Medpointe’s Tussi-12 product. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1). DISCUSSION I. Standard of review “[T]his court reviews a district court’s decision granting, denyi ng, or modifying an injunction, in a patent case . . . applying Federal Circuit law.” Int’l Rectifier Corp. v. Samsung Elecs. Co. , 361 F.3d 1355, 1359 (Fed. Cir. 2004); see also Lab. Corp. of Am. Holdings v. Chiron Corp. , ___ F.3d. ___, 2004 WL 2186670, at *5 (Fed. Cir. Sept. 30, 2004) (recognizing the Federal Circu it’s precedent of reviewing t he grant or denial of an injunction directed to substantive issues in patent cases under Federal Circuit law). We review the grant or denial of a preliminary injunction by a district court for abuse of discretion. Novo Nordisk of N. Am., Inc. v. Genentech, Inc. , 77 F.3d 1364, 1367 (Fed. Cir. 1996). “An abuse of discret ion may be established by showing that the court made a clear error of judgment in weighing relevant factors or exercis ed its discretion based upon an error of law or clearly erroneous factual findings.” Amazon.com, Inc. v. BarnesandNoble.com, Inc. , 239 F.3d 1343, 1359 (Fed. Cir. 2001) (quoting Novo Nordisk , 77 F.3d at 1367). Medpointe is entitled to a preliminary inj unction only if it can carry its burden of showing: (1) a reasonable likelihood of succe ss on the merits; (2) irreparable harm if an injunction is not granted; (3 ) a balance of hardships tipping in its favor; and (4) the

04-1310 3injunction’s favorable impact on the public interest. Id. at 1350. Although in some circumstances these factors taken indivi dually may not be dispositive because the district court’s decision to grant or deny a preliminary injuncti on rests on an overall process of balancing, a preliminary injuncti on cannot be granted if th e movant is unable to show a reasonable likelihood of success on the merits. Nat’l Steel Car, Ltd. v. Canadian Pac. Ry., Ltd. , 357 F.3d 1319, 1325 (Fed. Cir. 2004). To succeed at demonstrating the likelihood of success, M edpointe must present a “clear case” supporting the validity of the patent in sui t, thus showing that Hi-Tech’s invalidity defense lacks substantial merit. Amazon.com , 239 F.3d at 1359. Hi-Tech may defeat the motion for a preliminary in junction by showing that t he patent is “vulnerable” to attack based on validity. Id. II. Analysis A. Hi-Tech relies on Candettes, which wa s not before the Pa tent and Trademark Office (“PTO”), as the primary reference that allegedly renders the cl aims of the ’206 patent obvious. Hi-Tech contends that Candette s provides the requis ite teaching that it would be desirable to combine salts of ca rbetapentane, pyrilamine, and phenylephrine, and that reference, either al one or in combination with Tu ssi-12, renders obvious the tannate composition defined by claim 1 of t he ’206 patent. Hi-Tech complains that the district court erroneously determined that amm onium chloride, which Candettes lists as one of its ingredients, is an ac tive ingredient that must be removed, among other things, to transform Candettes into the composition def ined by the claims of the ’206 patent. Further, Hi-Tech argues that the court effe ctively ignored Candettes in addressing the

04-1310 4incentive to combine prior art. In addition, the district court allegedly made a legal error by erroneously requiring an exp licit teaching to combine the three active ingredients claimed by the ’206 patent, thereby effectivel y requiring anticipation by the prior art to raise a substantial question of invalidit y based on obviousness, and mischaracterizing Hi-Tech’s arguments as “obvious to try.” Further, Hi-Tech ar gues that the district court erred in regard to a number of factual findings that allegedly should not have weighed in favor of finding the ’206 patent nonobvious, including (1) the difficulty of working with tannates as a disincentive to combine prio r art products, (2) the patented invention’s commercial success, (3) the copying by Hi-Te ch after MedPointe released its product, and (4) the failure of others to formulate or market an anticipatory pharmaceutical composition before the ’206 paten t. As to the other prelim inary injunction factors, HiTech asserts that the district court erred in finding that MedPointe would be irreparably harmed without an injunction. B. The parties’ principal dispute revolves around the district c ourt’s scrutiny of Candettes. For the reasons that follow, we find that the dist rict court clearly erred in concluding that ammonium chloride must be removed to place Candettes within the scope of the claims of the ’206 patent. In addition, we find that the district court clearly erred in its assessment of evidence concer ning a teaching or motivation to modify Candettes by replacing the counterion asso ciated with each active ingredient with a tannate. Lastly, the district court erred in its weighing of the evidence of secondary considerations against the ev idence of incentive to modify Candette. These errors

04-1310 5mandate that we vacate the dist rict court’s preliminary injunction. We discuss the errors in greater detail below.

1. Although claim 1 uses open-ended, i.e., “comprising,” language to permit pharmaceutically acceptable inactive ingredient s to be a part of the claimed therapeutic composition, it limits the range of active ingredients to only carbetapentane tannate, pyrilamine tannate and phenylephrine tannate. Because the dist rict court held that the ammonium chloride must be removed as par t of the transformation to place Candettes within the scope of the composit ion defined by claim 1, the court evidently assumed that ammonium chloride is an active ingredient. Neither the district court nor Medpointe, however, cite any record evidence to support the assumption or to rebut Hi-Tech’s expert, who testified that ammonium chloride is an inactive ingredient. Medpointe contends that Hi-Tech’s te stimony should be disregarded because its expert did not testify “how one of ordinary sk ill would interpret the Candettes reference.” Alternatively, Medpointe argues that we shoul d infer that ammonium chloride is active merely because it is listed in a s pecific quantity on the specific ation sheet for the Candettes product. After careful review of t he record evidence proffered by Medpointe in its briefs and at oral argument, we discern no reasonable basis for the court’s implicit factual finding that ammonium chloride is an active ingredient that must therefore be removed to transform Candettes into the composition clai med by the ’206 paten t. In view of the

04-1310 6uncontroverted testimony from Hi-Tech’s expert that ammonium chloride is inactive, the court’s factual determination to the contrary is unsupported and thus clearly erroneous.
2. Operating under the false pr emise that a suggestion or motivation must be found to remove the ammonium chloride for Cande ttes to read on the claims of the ’206 patent, the district court determi ned that it was “far more likely for a practitioner to have discerned a suggestion or motive in the prior art to add an anti-tussive to Ryna-12 or the ’597 composition” than to modify Candettes. 4 Notwithstanding the erroneous factual finding in regard to ammonium chloride that underlies the court’s pre liminary injunction, Medpointe maintains that the injunction ma y still stand. Medpoint e asserts that any incentive to undertake the ex change of salts to make the tannate version of Candettes would have been counteracted by the knowledge t hat tannate salts are difficult to work with and present significant formulation problems at high levels. The district court, in agreement with Medpointe, found “it is difficult for practitioners of ordinary skill to work with tannates,” and “a practitioner would thus not have been inclined to experiment with them ba rring external reason for doing so.” The district court appeared, however , to unduly discount other evidence in the record, which weighs in favor of finding t hat there was indeed incentive to modify Candettes to attain the composition claimed by the ’206 patent. In particular, the c ourt found that tannates were “well-known to ordinarily skilled prac titioners” and that such practitioners would know tannate salts are usef ul as a way to provide longer-lasting dosages of

4 Ryna-12 and the ’597 composition (Uni ted States Patent No. 6,287,597) contain both phenylephrine t annate and pyrilamine tannate.

04-1310 7pharmaceuticals to a person. Further, t he record shows that the three active ingredients found in Candettes were each pr eviously converted with success from a non-tannate to a tannate salt, demonstrating that the barri ers imposed by working with tannates were in fact not insu rmountable or so great as to deter those skilled in the art from undertaking the conversion. Moreover, t he evidence shows that each of the active ingredients found in Candettes was successfu lly used in the tannate form, often in combination with the tannate versions of one of the other active i ngredients present in Candettes. Medpointe submits no evidence to suggest that any perso n skilled in the art expected the tannate version of the three ac tive ingredients in Candettes would not work together. Perhaps most importantly, t he inventors of the ’ 206 patent admitted in the Background of Invention secti on of their patent that at the time of invention it was at least somewhat accepted that “[a]ntitussi ves, antihistamines, and decongestants in the form of their tannate salts are very desirable because such salts are generally stable and may be combined in such form without any unt oward side effects.” ’206 patent, col. 1, l. 63 – col. 2, l. 2 (emphasis added). T he statement from the ’206 patent appears to acknowledge the presence of an existing moti vation to undertake the salt conversion that the district court evidently deemed missi ng from the record evidence. Thus, the court clearly abused its discretion when it failed to give weight to the significance of this professed motivation in its scrutiny of Candettes. 3. As for evidence of secondary considerati ons, we find them insufficient to show that the defendant’s invalidit y defense based on Candettes is without substantial merit. Evidence of secondary considerations, such as failure of others, unexpected results,

04-1310 8long felt but unresolved need, commercial su ccess, and copying, is often probative in the obviousness analysis. Ruiz v. A.B. Chance Co. , 357 F.3d 1270, 1274 (Fed. Cir. 2004). Here, the district court did not find evidence of failure of others or unexpected results. Moreover, the court opined that “[i]t was unclear w hether the ’206 patent fulfills any ‘long felt need.’” Although the district court found that Medpointe had demonstrated the commercial success of its claimed co mposition (marketed as Tussi-12D), the purported commercial success is somewhat tenuous given that Medpointe’s product has so far only broken even in the amount of money made, with the product’s long-term profitability yet to be established. T he weak evidence of commercial success and copying by competitors is inadequate to demonstrate nonobviousness of the claimed invention in view of the substantial question of validity raised by Candettes and the strong desirability professed by the ’206 patent to use antit ussives, antihistamines, and decongestants in their tannate form. CONCLUSION We conclude that the district court err ed in failing to recognize that Candettes raises a substantial question of invalidity. 5 Because Medpointe has not shown HiTech’s obviousness defense lacks substantial me rit, Medpointe has failed to carry its

5 Our decision today on the validity iss ue in no way resolves the ultimate question of invalidity. It remains to be dete rmined in what way any shortcomings in HiTech’s initial preliminary validity chall enge will be developed with furt her fact finding. We hold at this juncture onl y that Hi-Tech has cast enough doubt on the validity of the ’206 patent to avoid a preliminary injunction.

04-1310 9burden of showing it will likely prev ail on the merits at the final hearing. Accordingly, we must conclude that a necessary prerequisite for entry of a prelim inary injunction is absent. We therefore vacate the preliminary injunction. 6

6 Because we find that Medpointe has fa iled to show it will likely prevail on the merits, as required, to warrant issuance of the preliminary injunction, we find it unnecessary to address the alleged errors by the district court in regard to the irreparable harm finding.

04-1310 10NOTE: Pursuant to Fed. Cir. R. 47.6, this disposition is not citable as precedent. It is a public record. 

## United States Court of Appeals for the Federal Circuit

04-1310 MEDPOINTE HEALTHCARE INC., Plaintiff-Appellee,

v. HI-TECH PHARMACAL CO., INC., Defendant-Appellant.

MAYER, Chief Judge , dissenting. Based on the evidence and keep ing in mind the proper ro le of an appellate court, I would affirm the district court’s decision to maintain the status quo pending a resolution of Medpointe’s allegation of in fringement. There are three ma jor flaws in this court’s opinion. First, the court overturns the distri ct court’s finding that ammonium chloride is an active ingredient in the Ca ndettes formulation. The c ourt bases this determination on a single statement by Hi-Tech’s expe rt witness James O’Donnell: “Ammonium Chloride, however, is an inactive ingredient.” The court apparently believes that this evidence is particularly weighty because M edpointe failed to rebut it with expert testimony. O’Donnell’s testimony, however, is conclusory and unsupported. Further, the district court also considered the C andettes reference, which itself provides compelling evidence that ammonium chlori de is an active ingredient. The referencelists only four ingredients: carbetapentane citrate, pyrila mine m a leate, phenylephrine hydrochloride and am monium ch loride. The precise amount of ammonium chloride is specified in a manner similar to t hat of the other three ingr edient s. And, the Candettes reference conspicuous ly fails to list any of the inactive ingredients that are required for a preparation of this type. If ammonium chloride is an inactive ingredient, why does the Candettes reference list it but fail to list any others? The district court, which ha s special expertise in making credibility determinations, was entitled to disreg ar d O’Donnell’s testimony, espec ially in light of the Candet t es reference. See Rohm and Haas Co. v

. Brotech Corp. , 127 F.3d 1089, 1092 (Fed. Cir. 1997) (“Nothing in the rules or in our jurisprudence requires the fact finde r to credit the unsupported assertions of an

ex pert witness.”); see also Libas, Ltd. v. United States , 193 F.3d 1361, 1366 (Fed. Cir. 1999) (“It would make little sense to say that a trial court in its fact-finding role should accord much if any weight to expert te stimony, the reliability of which is not established.”). Consequently, this court’ s decision that ammonium chlor i de is an inactive in gredient required the reversal of a credibilit y determination in ad dition to a reweighing of the evidence. Such a foray in to the virtually exclusive province of the district court has been regularly and consistent ly criticized by b o th the Supreme Court and this court. See, e.g. , Zenith Radio Corp. v. Hazeltine Resear ch, Inc. , 395 U.S. 100, 122 n.18 (1969) (“Rule 52(a) adm onishes due regard for the tr ial court’s opportunity to assess the credibility of witnesses.”); Applied Med. Res. Corp. v. United Stat es Surgica l Corp. , 147 F.3d 1374,1379 (Fed Cir. 1998). The court then disputes the district court’s determination that tannates are difficult to work with. In so doing, it takes is sue with the di strict court’s failure to properly

04-1310 2weigh the evidenc e. This c ourt apparently feels that bec ause tannates are both “wellknown to ordinarily s k illed pr actitioners” and long-lasting, ante , at 7, the district court could not have found that tannates are difficult to work with. The district court, however, was also presented with evidenc e in the testim ony of Dr. D’Addio that the volume of tannates in the ’206 formulation exceeded any ot her previous preparat ion and that such a high concentration presented increased difficulty. Pres ented with this testimony, which the district court obvious ly credited, it is hard to see how this court was “left with the definite and firm conviction t hat a mistake has been committed.” United States v. United States Gypsum Co. , 333 U.S. 364, 395 (1948). Finally, this court found that the “co mmercial success [of Tussi-12D] is somewhat tenuous given that Medpointe’s product has so far only broken even,” and that the evidenc e of copying is weak. Ante , at 9. I have been unabl e to find any case that suggests that a product was commercially uns uccessful because it had only broke n even at the time of inquiry. T u ssi-12D has been on the market since 2002, bare ly enough time to have recouped the investment in R&D that was neces s ary for its development. At the ti me the district cour t’s opinion was written, Medpointe had already sold in e x c e ss of $14 million worth of Tussi- 12D. Further, no fewer than four companie s are poised to flood the market w i th generic formulations of the ’206 patent. Based on this evidence, it is hard to imagine that Tussi-12D has not been greeted favorably by consumers. Because I c annot join in the court’s de novo review of the district court’ s findings of fact, I respe c tfully dissent.

04-1310 3