Shire Development, LLC v. Watson Pharms., Inc.

Case Name: Shire Development, LLC v. Watson Pharms., Inc., 787 F.3d 1359 (Fed. Cir. June 3, 2015) (Circuit Judges Prost, Chen, and Hughes presiding; Opinion by Hughes, J.) (Appeal from S.D. Fla., Middlebrooks, J.) 

Drug Product and Patent(s)-in-Suit: Lialda^® (mesalamine); U.S. Patent No. 6,773,720 ("the '720 patent")

Nature of the Case and Issue(s) Presented: Following the Supreme Court’s recent decision in Teva v. Sandoz, the Federal Circuit addressed whether the district court’s claim construction was proper in light of the new standard of review provided by the Supreme Court. The patent in this case involved a control-release oral pharmaceutical drug for treating inflammatory bowel diseases. The claim terms at issue in the asserted claims were an inner lipophilic matrix and an outer hydrophilic matrix. The district court construed these terms as a matrix with certain excipients having certain characteristics, like lipophilic or hydrophilic.

Watson argued that the construction was incorrect because the construction focused on characteristics of excipients in the matrix and not the matrix itself. In addition, Watson argued that the inner and outer matrices must be separate and distinct because Shire had disclaimed during prosecution claim scope that included both matrices’ being one and the same.

Shire argued that the district court’s construction was correct because it properly described what in the respective matrix provided the relevant characteristic. Shire further argued that it did not disclaim claim scope during prosecution when it distinguished its claimed invention from the prior art by pointing out that the prior art did not have separate matrices. Lastly, Shire asserted that the proper standard of review was clear error because the district court heard expert testimony related to each side’s proposed claim construction. The Federal Circuit reversed and remanded.

Why Watson Prevailed: The Federal Circuit held that the district court’s claim construction for the claims at issue was incorrect based on the intrinsic record. As the Federal Circuit relied solely on the intrinsic record, the standard of review was de novo.  The Federal Circuit rejected Shire’s argument regarding the standard of review because there was nothing in the record that suggested that the district court relied on the expert testimony in formulating its claim constructions.

Firstly, the Federal Circuit found error in the claim construction because it focused on the properties of excipients in the matrix and not characteristics of the matrix itself. The claim language demonstrated that it was the matrix itself that was either hydrophilic or lipophilic, and not an excipient in the matrix. Secondly, the Federal Circuit rejected Watson’s argument that Shire had disavowed claim scope during prosecution when it distinguished its claimed invention over the prior art by describing the features of the prior art. Nevertheless, the Federal Circuit found that the claims, specification and file history supported the construction that the inner and outer matrices were separate. In particular, the claim language describes the two matrices separately, which supported Watson’s argument.