## United States Court of Appeals for the Federal Circuit
2006-1564

DAIICHI SANKYO CO., LTD. (formerly known as Daiichi Pharmaceutical Co., Ltd.) and DAIICHI SANKYO, INC. (formerly known as Daiichi Pharmaceutical Corporation),

Plaintiffs-Appellees,

v.

APOTEX, INC. and APOTEX CORP., Defendants-Appellants.

Brian P. Murphy , Morgan, Lewis & Bockius LLP, of New York, New York, argued for plaintiffs-appellees. With him on the brief were David Leichtman , Daniel Murphy , and Oren D. Langer . Of counsel on the brief was James P. Flynn , Epstein, Becker & Green, PC, of Newark, New Jersey. Robert B. Breisblatt , Welsh & Katz, Ltd., of Chic ago, Illinois, argued for defendantsappellants. With him on the brief were A. Sidney Katz , Julie A. Katz , Philip D. Segrest, Jr. , and Michael A. Krol . Of counsel on the brief was Steven Gerber , Adorno & Yoss, LLP, of Wayne, New Jersey. Appealed from: United States District C ourt for the District of New Jersey Senior Judge William G. Bassler

## United States Court of Appeals for the Federal Circuit

2006-1564

DAIICHI SANKYO CO., LTD. (formerly known as Daiichi Pharmaceutical Co., Ltd.) and DAIICHI SANKYO, INC. (formerly known as Daiichi Pharmaceutical Corporation), Plaintiffs-Appellees,

v. APOTEX, INC. and APOTEX CORP., Defendants-Appellants.

_____________________ ______________________ NONPRECEDENTIAL OPINION ISSUED: July 11, 2007 PRECEDENTIAL OPINION ISSU ED: September 12, 2007

_____________________ ______________________ Before MICHEL, Chief Judge , ARCHER, Senior Circuit Judge , and DYK, Circuit Judge

. ARCHER, Senior Circuit Judge

. Apotex, Inc. and Apotex Corp. (collect ively “Apotex”) appeal the judgment of the United States District Court for the District of New Jersey that Apotex infringes U.S. Pat. No. 5,401,741 (“the ’741 patent”) and that the ’741 patent is not invalid or unenforceable. Daiichi Pharm. Co. v. Apotex, Inc. , 441 F. Supp. 2d 672 (D.N.J. 2006) (“ Validity Determination ”). Because the invention of the ’741 patent would have been obvious in view of the pr ior art, we reverse.I The ’741 patent is drawn to a method fo r treating bacterial ear infections by topically administering the antib iotic ofloxacin into the ear. 1 Claim 1 is representative and states “[a] method for treating otopat hy which comprises the topical otic administration of an amount of ofloxacin or a salt thereof effe ctive to treat otopathy in a pharmaceutically acceptable carrier to the ar ea affected with otopathy.” ’741 Patent, col.6 ll.36-39. Apotex filed an Abbreviated New Drug A pplication (“ANDA”) seeking approval to manufacture a generic ofloxaci n ear drop, including a ¶ IV ce rtification that the ’741 patent was invalid and/or not infringed. Follo wing receipt of the ANDA, Daiichi, owner of the ’741 patent, sued Apotex for infringement. Following a Markman hearing, the district court construed the claim term “effecti ve to treat” as “efficacious and safe.” Based on this construction and following a bench trial, the court concluded that the ’741 patent was not invalid. The co urt also found that Daiichi did not intend to deceive the Patent and Trademark Office dur ing prosecution of the ’ 741 patent. Finally, because Apotex stipulated that the subject matter of its ANDA fe ll within the scope of the claims of the ’741 patent, the c ourt found that Apotex in fringed the ’741 patent. Apotex appeals, and we have jurisdicti on pursuant to 28 U.S.C. § 1295(a)(1). II Obviousness is a question of law bas ed on underlying questions of fact. Winner Int’l Royalty Corp. v. Wang , 202 F.3d 1340, 1348 (Fed. Cir. 2000). Thus, we review the

1 The ’741 patent has an effectiv e filing date of April 8, 1988.

2006-1564 2ultimate determination of obvio usness by a district court de novo and the underlying factual inquiries for clear error. Id. The underlying factual inquiries in an obviousness analysis include: “(1) the scope and content of the prior art; (2) the level of ordinary ski ll in the prior art; (3) the differences between the claimed invention and the prior art; and (4) objective evidence of nonobviousness.” In re Dembiczak , 175 F.3d 994, 998 (Fed. Cir. 1999). In this case, we begin our analysis with the question of the le vel of ordinary skill in the prior art. The district court concluded that the or dinary person skilled in the art pertaining to the ’741 patent “would hav e a medical degree, experience treating patients with ear infections, and knowledge of the pharmacology and use of antibiotics. This person would be . . . a pediatrici an or general practitioner—those doctors who are often the ‘first line of defense’ in treating ear infections and who, by virtue of their medical training, possess basic pharmacological knowledge.” Daiichi Pharm. Co. v. Apotex, Inc. , 380 F. Supp. 2d 478, 485 (D.N.J. 2005) (“ Claim Construction Order ”). Apotex argues that the district court clearly erred in this determination and that one having ordinary skill in the relevant art is properly defined as “a person engaged in developing new pharmaceuticals, formulations and treat ment methods, or a specialist in ear treatments such as an otologis t, otolaryngologist, or otorhi nolaryngologist who also has training in pharmaceutical formulations.” “Factors that may be considered in dete rmining level of ordi nary skill in the art include: (1) the educational leve l of the inventor; (2) type of problems encountered in the art; (3) prior art solutions to those proble ms; (4) rapidity with which innovations are made; (5) sophistication of t he technology; and (6) educational level of active workers in

2006-1564 3the field.” Envtl. Designs, Ltd. v. Union Oil Co. , 713 F.2d 693, 696 (Fed. Cir. 1983) (citing Orthopedic Equip. Co. v. A ll Orthopedic Appliances, Inc. , 707 F.3d 1376, 1381-82 (Fed. Cir. 1983)). These factors are not exhaustive but are merely a guide to determining the level of ordinary skill in the art. In making its determination regarding the leve l of skill in the art, the district court noted that the parties had provided “little more than conc lusory arguments concerning this issue in their briefs.” As a result, the court looked to other decisions involving patents for a method of treating a physical condition for guidance. Only one case cited by the district cour t is binding on us, Merck & Co. v. Teva Pharm. USA, Inc. , 347 F.3d 1367 (Fed. Cir. 2003). The district court was co rrect that in that case we affirmed the trial court’s conclusion that a person havi ng ordinary skill in the relevant art was a person having a medical degree, experience treating patient s with osteoporosis, and knowledge of the pharmacology and usage of biphosponate s—the compounds at issue in Merck . However, in Merck the level of skill in the art wa s not disputed by the parties. Thus, we simply accepted the district court’s finding. That clearly is not the case before us. Therefore, the district court’s reliance on the level of skill in the art stated in Merck was improper. The art involved in the ’741 patent is the creation of a compound to treat ear infections without damaging a pa tient's hearing. The invent ors of the ’741 patent were specialists in drug and ear tr eatments—not general practitioner s or pediatricians. At the time of the invention, Inventor Sato wa s a university professor specializing in otorhinolaryngology; Inventor Handa was a c linical development department manager at Daiichi, where he was invo lved with new drug development and clinical trials; and

2006-1564 4Inventor Kitahara was a res earch scientist at Daiichi enga ged in the research and development of antibiotics. Additionally, others working in the same field as the inventors of the ’741 patent were of the same skill level. See Daiichi Material for [C]onference on Development , at 1 (Nov. 11, 1987) (stating that “there are many voices among medical persons co ncerned with otorhinolary ngology for demanding development of an otic solution making use of [ofloxacin]”). Further, the problem the inv ention of the ’741 patent was trying to solve was to create a topical antibiotic compound to treat ear infections (otopathy) that did not have damage to the ear as a side effe ct. ’741 Patent, col.1 ll.23-34. Indeed, most of the written description details the inventors’ testing ofloxacin on gui nea pigs and their findings that ototoxicity did not result from the use of their compound. Such animal testing is traditionally outside the realm of a general practitioner or pediatrician. Finally, while a general practitioner or pediatrician could (and would) prescribe the invention of the ’741 patent to treat ear infections, he would not have the trai ning or knowledge to develop the claimed compound abs ent some specialty traini ng such as that possessed by the ’741 patent’s inventors. Accordingly, the level of or dinary skill in the art of the ’741 patent is that of a person engaged in developing pharma ceutical formulations and treatment methods for the ear or a specialist in ear treat ments such as an otologist, otolaryngologist, or otorhinolaryngologist w ho also has training in pharmaceutical formulations. Thus, the district cour t clearly erred in finding otherwise. We now turn to the question of whether the invention of the ’741 patent would have been obvious to one of ordinary skill in the art at t he time of the invention. The district court’s error in determining the level of ordinary skill in the art of the ’741 patent

2006-1564 5tainted its obviousness analysis. In view of t he correct level of skill in the art and the evidence of record, we conclude that as a matter of law the ’741 patent is invalid as obvious. The district court construed “effective to treat” to include not only efficacy but safety. We need not decide whether safety is a positive limitation, because the evidence demonstrates that in view of the corre ct level of skill in the art using a topical formulation of ofloxacin to treat ear in fections was not only obvious but safe. An article published in 1986, taught the successful use of ear drops containing ciprofloxacin to treat middle ear infections. Horst Ganz, Gyrase inhibitor in local treatment of middle ear r adical cavities chronically infected with problem microorganisms , 34 HNO 511 (1986) (teach ing a lack of ototoxicity for ciprofloxacin administered topically) (“ Ganz ”). This article explained that ciprofloxacin “would definitely have to be suitable for use as eardops” because ciprofloxacin, a gyrase inhibitor, was not subject to the drawbacks normally associated wit h local treatment of the ear with antibiotics, su ch as ototoxicity. Id. The subjects’ ear infections were treated locally with a ci profloxacin solution, and “[i]n not one case were side effects of any kind observed.” Id. at 512. The district court dismissed this finding of no side effects, and thus no ototoxicity, because the article reported that use of gyrase inhibitors “should be used only in difficult cases and exclusively by the otologist.” Be cause an otologist was outside the level of ordinary skill in the art as determined by the di strict court, the dist rict court found that the reference did not support Ap otex’s argument t hat ofloxacin, a gyrase inhibitor like

2006-1564 6ciprofloxacin, was effective and safe to treat bacterial ear infections topically. 2 As explained above, the district cour t’s determination of the level of ordinary skill in the art was incorrect; thus, so, too, was it s dismissal of the teaching of the Ganz reference. When testifying as to the relevance of the Ganz reference in 1988, Apotex’s expert explained that cipr ofloxacin is an antibiotic that is in the same family as ofloxacin, and thus “[o]ne would understand t hat a very close relative to Ciprofloxacin [sic] was safe and effective in treatment of middle ear dis ease, otitis media.” Trial Tr. Vol. 3, 73- 74 Nov. 3, 2005. When ask ed specifically what the Ganz reference would teach to one of ordinary skill in the art with regard to of loxacin, he further opined that “someone of ordinary skill in the art would be taught that Ofloxacin [sic] would be very likely equally as effective as Ciprofloxacin [sic] when used topically to tr eat middle ear infections” and “one would also think it would be highly likely that Ofloxacin [sic] could be used in the middle ear with safety.” Id. at 77. This testimony was based on the Ganz reference’s statement that no side effect s were observed combined with the fact that ofloxacin and ciprofloxacin were both fr om the same drug family (gyrase inhibitors). Id. at 77, 61. This testimony was not disputed by Daiic hi’s expert except on the basis that the Ganz reference did not convey the same teaching to one of lower skill in the art such as a practicing physician. Daiichi’s expert opined that the Ganz reference disclosed “nothing at all” relevant. This opinion was based on the fact that the article was directed at “a highly, highly subspecialized physician . . . which would be the otologist or the ear doctor” not a primary care physician or gener al practitioner. Trial Tr. Vol. 7, 72-73 Nov. 11, 2005. He

2 Presumably, this explains why the district court di d not refer to ofloxacin’s similarity to ciprofloxacin in its opinion.

2006-1564 72006-1564 8 further explained that the arti cle did not render the invent ion of the ’741 patent obvious “most importantly because those of ordinar y skill are defined as a population . . . of physicians that are complete ly different than the audience Dr. Ganz [the author] was writing to.” Id. at 73-74. Thus, Daiichi’s evidence as to why this reference did not render the invention of the ’741 patent obvio us was based on an improper determination of the level of skill in the art. 3 Accordingly, the evidence demonstrates that a reasonable jury would have no other choice than to conclu de that, in view of the Ganz reference, it would have been obvious to a person engaged in developing pharma ceutical formulations and treatment methods for the ear or to a specialist in ear treatments who also has training in pharmaceutical formulations to use ofloxaci n in ear drops to topically treat ear infections. 4
III Because the invention of the ’741 patent would have bee n obvious to one having ordinary skill in the art at the time of the invention, t he judgment of the district court 5 is REVERSED

.

3 Daiichi’s only evidence with respect to this reference that does not rely on the level of skill in the art is its expert’s conclusory statement that “[o]ne cannot extrapolate a safety profile for one antibioti c to another.” This unsupported statement cannot refute the detailed test imony of Apotex’s expert. 4 Claim 4 of the ’741 patent recites a concentration range for the ofloxacin in the compound—“about 0.05 to about 2% w/v.” One of the prior art references, U.S. Patent No. 4,551,456, teaches the use of ofloxacin in antibiotic compounds where ofloxacin makes up “0.03 to 3% and especiall y 0.15% to 0.5%” of the compound. Col.1 ll. 37-39. Thus, the range clai med in the ’741 patent falls wit hin the scope of the prior art. 5 Because we hold the ’741 patent invalid as obvious, we need not reach Apotex’s arguments that t he ’741 patent was anticipat ed or procured through inequitable conduct.