Apotex, Inc. v. Cephalon, Inc.

Case Name:  Apotex, Inc. v. Cephalon, Inc., Civ. No. 2:06-cv-2768, 2011 U.S. Dist. LEXIS 125859 (E.D. Pa. October 31, 2011) (Goldberg, J.)

Drug Product and Patent(s)-in-Suit: Provigil^® (modafinil); U.S. Patent No. RE37,516

Nature of the Case and Issue(s) Presented:  Whether defendants' patent-in-suit was invalid. This case arose from Apotex's declaratory judgment action for invalidity and non-infringement of the '516 patent, which claimed a pharmaceutical composition having modafinil particles of a certain size.  The invalidity case was bifurcated, and Apotex posited the following invalidity arguments: (i) on-sale bar; (ii) invented by another; (iii) lack of written description; (iv) obviousness; and (v) unenforceability as a result of inequitable conduct before the USPTO. 

The most relevant facts to Apotex's declaratory judgment claims concerned Cephalon's association with a French company, Laboratoire L. Lafon.  Lafon manufactured and sold a modafinil composition in France for several years before the priority date of the '516 patent.  Lafon's composition included modafinil within the particle size claimed in the '516 patent.  Before the ‘516 priority date, Lafon and Cephalon entered into a supply and license agreement.  One of the terms of this agreement required Lafon to provide Cephalon with information regarding Lafon's clinical studies in France.  In particular, Lafon would report on some of the adverse effects associated with large dosages of modafinil and the efficacy associated with using a smaller particle size of modafinil.  Cephalon did not make any changes or modifications to its compositions of modafinil based on the information it received from Lafon.  None of the information from Lafon was provided to the USPTO during prosecution of the '516 patent. 

Cephalon's main argument in response to Apotex's invalidity claims was that Lafon did not appreciate the efficacy associated with the smaller particle size of modafinil.  In particular, Cephalon argued that Lafon did not appreciate that a smaller particle size of modafinil improved dissolution and bioavailability.  

Why Apotex Prevailed:  (Patentee's license agreement created on-sale bar; licensee's actions found to invalidate patent under 102(f); lack of written description; unenforceable due to inequitable conduct).  Cephalon's own actions provided the evidence to support Apotex's invalidity claims.  Cephalon's license agreement with Lafon was found to be an on-sale bar because it contained various terms the Federal Circuit had found to indicate that a license agreement was a commercial offer for sale and not an experimental agreement.  Those included terms such as purchase price, quantity, ordering, shipping information, and warranties.  The Court found that this agreement mirrored the agreement in Enzo Biochem., Inc. v. Gen-Probe Inc., and found the '516 patent invalid under 35 U.S.C. §102(b).  366 F.3d 1336 (Fed. Cir. 200).

Lafon's composition embodied the claims of the '516 patent, and Lafon provided sufficient information to Cephalon regarding the efficacy of modafinil in smaller particle sizes.  The Court found that Lafon was in possession of the claimed invention, and rejected Cephalon's argument that Lafon did not appreciate its efficacy.  Thus, the Court further held that the '516 patent was invalid under 35 U.S.C. §102(f).  The Court also found that the '516 patent was invalid for lack of written description because it failed to disclose the particle size of modafinil used in its final tablet composition.  Like in Eli Lily & Co. v. Teva Pharms. USA, Inc., a specification that only describes the particle size of the bulk chemical fails the written description requirement.  619 F. 3d 1329, 1345 (Fed. Cir. 2010).  The Court rejected Cephalon's argument that the '516 patent was not obvious because the prior art did not appreciate the efficacy of using smaller particle sizes of modafinil.  The Court found it was well known in the art that a smaller particle size improves dissolution and bioavailability.  Cephalon's claim of unexpected results was not supportable because Lafon was using a smaller particle size of modafinil and had communicated its results to Cephalon, which the Court considered to be prior art.   

Lastly, the Court found that  the '516 patent was unenforceable due to inequitable conduct on the part of Cephalon during prosecution.  Cephalon did not disclose any information to the USPTO from Lafon, including the license agreement or findings of Lafon.  In addition, Cephalon represented to the USPTO that it discovered the unexpected results of using a smaller particle size, even though Lafon had communicated those findings to Cephalon previously.  The Court found that the only reason why Cephalon would not disclose this information to the USPTO amounted to an intention on Cephalon's part to deceive the USPTO.