Patent Baristas

Conducting a thorough IP due diligence review is a critical aspect of successful tech deals – especially in the bioscience industry. The intellectual property at issue can make or break a deal. It is imperative that you know what you have (or are getting) is the real deal.

When undertaking a due diligence review during a company merger or acquisition, negotiating a license or joint venture agreement, purchasing patent other intellectual property rights, there are some basic steps to go through in order to cover the important issues of the transaction.

Some of the steps in due diligence procedures designed to flush out the needed information include:

What IP Rights?

The identification of all intellectual property rights is very useful in predicting future value of a business. The best approach, then, is to simply list (with a detailed description) all intellectual property rights. In addition to exploring the right-to-use, it is also important to determine what intellectual property assets are held by the business itself. For example, while it is not always guaranteed that a holder of a patent has the right to make, use or sell its own patented product or service, it is important to develop a position of strength for its products and services.

The procurement of a set of intellectual property rights may not guarantee immunity from a competitor’s pressure but a business which is active in procurement of rights is often much more aware of other’s rights. It also may be able to bargain (i.e., cross-license) with a competitor over certain rights to avoid a costly settlement or to be blocked in the marketplace all together.

Prioritize Your Rights

Not all intellectual property rights may be of significant value to a business. Therefore, it is necessary to review all aspects of the company and assign priorities to the rights according to their value. The more important the rights are to the future vitality of a business, the more due diligence that will be necessary. Mature products and services often are the most important source of the current financial state of a business. However, a changing market demands that much more due diligence be performed in order to understand any future product changes or improvements that are being implemented or planned.

While some businesses may choose to compete in the market without obtaining patents or aggressively protecting trademark rights, a competitor in a market may be working toward reducing the competitive advantage of a business by securing substantial patents, trademarks or other intellectual property rights. It is quite common for at least one player in a multi-firm market to follow such a strategy in an attempt to force competitors to either take licenses or stop making or using the proprietary technology. Such tactics are frequently successful in securing a superior competitive position.

Can You Use It?

It is one thing to own IP rights; it is another thing to be able to conduct a business without infringing third party IP rights. Thus, the fact that a company has a patent for a product does not give it the right to make the product. The unfettered right to use, make or sell certain technology, or to use trademarks or material subject to copyrights, is often crucial to the health of any business. If a competitor holds patents, trademarks, copyrights or other related rights that dominate a successful product or service of a business, the profitability of a business, and even the ability to survive, may be at stake.

In addition, if patent, trademark, and trade secret rights, for example, have been licensed in from another company, it will be important to look to the license agreement to determine whether the scope of the license is sufficient in relation to the company’s business activities. One should not stop at the license agreement, however, because it is also possible that the licensor company obtained additional IP, such as patents, not in the license agreement, that may affect freedom to operate.

Thus it is often important to conduct independent IP searches in areas of relevance to the company’s business to identify third party patents, trademarks, or copyrights that may be of importance. Additionally, it is important to scrutinize any demand letters, litigation history, and other relationships with competitors to identify potential third party IP risks. Preferably, a company will periodically monitor the intellectual property rights held by competitors.

Check Under the Hood

Title to recordable IP rights (e.g., patents, trademarks and copyrights) should be verified by doing the appropriate searches. Any licenses, assignments, government rights, and liens (secured or unsecured) also should be verified by searches. In addition, any new intellectual property interests arising from an investment, acquisition or sale should be recorded in appropriate state and federal offices. Ownership interests in foreign countries require separate title searches, as well as separate assignments or other legal instruments for perfecting rights in those foreign countries.

For intellectual property rights not identifiable as an issued patent, a registered trademark or a registered copyright, detailed listings and explanations also should be provided. Such rights may include trade secrets, know-how, common law trade names, trade dress (unique appearance), trademarks and unregistered copyrights. For each of these, the inventors, authors and uses of the rights should be identified and the dates of first use recorded. In some businesses, these rights can be at the heart of a business and never should be ignored. Often, the dates of creation of first use are critical in protecting and preserving the rights. For example, dates and evidence of use of common law trademarks are important to preserve superior rights over a later user.

The doctrine of equivalents was upheld for AstraZenaca’s patent on Propofol, used to induce and maintain general anaesthesia and sedation in patients. After the district court found Mayne had infringed AstraZeneca’s U.S. Pat. Nos. 5,714,520, 5,731,355 and 5,731,356, literally and under the doctrine of equivalents, the CAFC found that the district court erred in its construction of “edetate” and reversed the finding of literal infringement but affirmed since the district court did not err in determining that the accused product infringes under the doctrine of equivalents. Abraxis Bioscience (f/k/a Astrazeneca) v. Mayne Pharma (f/k/a Faulding Pharmaceutical) (06-1118).

AstraZeneca sold DIPRIVAN® for treatment in humans and RAPINOVET® for veterinary use. The composition consists of an injectible oil-in-water emulsion containing propofol, or 2,6-diisopropylphenol, as its active ingredient. DIPRIVAN® is administered to patients by infusion, which involves the use of a “giving set.” A giving set involves connecting a reservoir containing the propofol emulsion with the patient’s vein via the appropriate tubing.

AstraZeneca researchers began developing an improved formulation using preservatives and discovered that one preservative in particular, disodium edetate, was unexpectedly effective in retarding microbial growth in the propofol formulation without disrupting the oil-in-water emulsion for at least twenty-four hours. In March 1995, the inventors applied for a patent on their improved DIPRIVAN® formulation. In December 1995, AstraZeneca also filed a supplemental New Drug Application (“NDA”) on the new formulation.

In 1995, scientists at ESI Lederle (later part of Baxter) learned of the reports of infection relating to original DIPRIVAN®. ESI decided to develop a similar generic formulation and screened antimicrobial agents in an effort to replace the edetate in the improved DIPRIVAN® formulation with a different agent. They found that the calcium trisodium salt of diethylenetriaminepentaacetic acid (pentetate), which is also referred to as DTPA, was a promising candidate as an antimicrobial agent.

In selecting that compound, they noted that since calcium trisodium DTPA is “structurally similar to edetate, product stability is predicted to be unaffected.” ESI filed a patent application on its pharmaceutical composition and was later granted U.S. Patent 6,028,108. ESI filed an ANDA with a Paragraph IV Certification asserting that the patents in suit were invalid, unenforceable, or would not be infringed by its generic propofol formulation, which led to this suit.

The district court issued a Markman ruling construing the term, “edetate” as “EDTA as well as compounds structurally related to EDTA regardless of how they are synthesized.” Based on the district court’s construction of edetate as encompassing structural analogs of EDTA, the court found that Mayne’s generic propofol formulation literally infringed claims 1 and 3-14 of the asserted patents, and claim 38 of the ’520 patent and claims 38 and 39 of the ’520 patent under the doctrine of equivalents.

Claim construction is an issue of law reviewed de novo while the district court’s determination of infringement is a question of fact that we review for clear error. In construing edetate, the court noted that the patentees defined edetate in the specification as EDTA and derivatives thereof. The court proceeded to define the term derivatives by adopting a broad definition, specifically one that encompasses structural analogs of EDTA as well as synthetic derivatives.

The CAFC disagreed with the district court’s definition of derivatives as unsupported by the intrinsic evidence. The part of the specification describing “edetate” reads:

By the term “edetate” we mean ethylenediaminetetraacetic acid (EDTA) and derivatives thereof, for example the disodium derivative is known as disodium edetate. In general suitable edetates of this invention are those salts having lower affinity for EDTA than calcium. Particular derivatives of use in the present invention include trisodium edetate, tetrasodium edetate and disodium calcium edetate.

The CAFC concluded that

[T]he listing of EDTA salts as “[p]articular derivatives of use in the present invention,” coupled with the statements regarding the uniqueness of edetate as the only successful antimicrobial agent, and the patentees’ description of EDTA salts as advantageous, preferable, and “exceptional,” limit the term “derivatives” to EDTA salts or compounds that maintain the EDTA free acid structure. Those statements are inconsistent with a definition of “derivatives” that includes structural analogs that can encompass a large number of non-derivative compounds. That definition fails to recognize that the patentees’ discovery focused on the unexpected effectiveness of edetate and its salts as antimicrobial agents.

Under the DOE, Mayne argued (1) that the court clearly erred in its analysis with regard to the “way” prong of the function-way-result test by improperly defining the “way” in which edetate works (that it should have been one that incorporates the specific metal ions that are chelated, the strength of the bonds that are formed during chelation, and the stability constants); (2) that it was impermissible as a matter of law for the meaning of edetate to extend to calcium trisodium DTPA by equivalence because the patentees chose to narrowly claim their invention (i.e., using the narrower term “edetate rather than broader terms such as “polyaminocarboxylates” or “metal ion chelators”); and (3) that the lack of known interchangeability between calcium trisodium DTPA and edetate as an antimicrobial agent indicates that the substitution of calcium trisodium DTPA is a “substantial” change weighing against a finding of equivalence.

The district court concluded that calcium trisodium DTPA and edetate were equivalent after finding that the differences existing between the two were insubstantial. In reaching this conclusion, the court performed a function-way-result analysis. The court identified the “function” of edetate as “retard[ing] microbial growth in propofol oil-in-water emulsions.” The court then defined the “way” that edetate worked as by metal ion chelation and found that the result achieved was “retard[ing] microbial growth to the extent required by the microbiological test set forth in the claims.”

In reaching a conclusion that the compounds are equivalent, the CAFC held that:

Contrary to Mayne’s assertion, the inventors did not clearly disavow other polyaminocarboxylates, including DTPA, by claiming edetate. There is no evidence that the patentees made a clear and unmistakable surrender of other polyaminocarboxylates, or calcium trisodium DTPA in particular, during prosecution. See Cordis Corp. v. Medtronic AVE, Inc., 339 F.3d 1352, 1363 (Fed. Cir. 2003) (noting that a “clear and unmistakable surrender of subject matter” is required to find estoppel by argument). Indeed, the district court found that “the antimicrobial activity of calcium trisodium DTPA was unforeseeable during prosecution.” Nov. 2, 2005 Opinion, slip op. at 37-38. Mayne itself acknowledged the unforeseeability of DTPA while prosecuting its own patent. Id. at 38. Thus, a person of ordinary skill in the art reading the patent would not conclude that by claiming “edetate,” the patentees surrendered or waived coverage of all polyaminocarboxylates, including DTPA, as an equivalent, particularly in light of the unforeseeability of calcium trisodium DTPA as an equivalent.

The CAFC also rejected the conclusion that the accused product does not infringe under the doctrine of equivalents based on the fact that Mayne was able to receive a patent on its generic propofol formulation stating:

As stated in Warner-Jenkinson, known interchangeability is only one factor to consider in a doctrine of equivalents analysis. It aids the fact-finder in assessing the similarities and differences between a claimed and an accused element. … As discussed above, the court made factual findings that insubstantial differences exist between calcium trisodium DTPA and edetate, and further found that the separate patentability of Mayne’s generic formula did “not outweigh the substantial evidence of equivalence between Mayne’s calcium trisodium DTPA and the claimed edetate.” Nov. 2, 2005 Opinion, slip op. at 39. We see no clear error in that finding.

Affirmed

Ranbaxy and Teva won a victory in the U.S. Court of Appeals for the D.C. Circuit that preserved their 180-day exclusivity when patents are delisted from the FDA Orange Book. Ranbaxy et al. v. Michael O. Leavitt, Secretary of Health and Human Services et al. (06-5154). Ranbaxy and Teva had challenged the decision on the basis that it was inconsistent with the Hatch-Waxman Act.

Before marketing a new branded drug, the manufacturer must file with the FDA a New Drug Application (NDA), including evidence the drug is safe and effective, and the identifying number and expiration date of any patent or patents covering the drug. When it approves the NDA, the FDA must publish the patent information, which it does in Approved Drug Products with Therapeutic Equivalence Evaluations (a/k/a the Orange Book).

Before marketing a generic drug, the manufacturer may submit an Abbreviated New Drug Application (ANDA). Unlike an NDA, an ANDA need not contain evidence of the drug’s safety or efficacy. However, each ANDA, however, must contain “a certification … with respect to each patent which claims [a drug or a method of using a drug listed in the Orange Book] for which the applicant is seeking approval under this subsection and for which information is required to be filed under subsection (b) or (c) of this section – (I) that such patent information has not been filed, (II) that such patent has expired, (III) [that] such patent will expire [on a specified date], or (IV) that such patent is invalid or will not be infringed by the manufacture, use, or sale of the new drug for which the application is submitted[.]”

The Act rewards the first manufacturer to file an approved ANDA containing the certification in paragraph IV by giving it a 180-day period of marketing exclusivity, which begins with the earlier of the applicant’s first commercial marketing of the generic drug or when the applicant prevails in a suit over infringement or the validity of the patents covering the branded drug.

When a patent is removed from the Orange Book (or delisted), the FDA by regulation requires the sponsor of the corresponding ANDA to delete its paragraph IV certification with respect to the delisted patent. If no patent covering the branded drug remains listed, then the generic applicant must file a paragraph I certification, and the FDA treats the ANDA as though it had never contained a paragraph IV certification. As a result, the generic applicant that was first to file an approved application does not get the 180-day period of exclusivity.

Merck submitted to the FDA information with respect to three patents covering the drug Zocor®: U.S. Patent Nos. 4,444,784, RE 36,481, and RE 36,520. Teva and Ranbaxy each filed an ANDA to market generic simvastatin. The two ANDAs – both of which were eligible for a 180-day period of marketing exclusivity because they involved different dosages – each contained a paragraph IV certification with respect to the ‘481 and ‘520 Patents. With respect to the ‘784 Patent, Ranbaxy and Teva each filed a paragraph III certification that it would expire in December 2005.

Merck, however, did not sue Ranbaxy or Teva for patent infringement based upon their paragraph IV certifications. Instead, before their ANDAs were approved, Merck asked the FDA to delist the ‘481 and ‘520 Patents from the Orange Book, which the agency did in 2004. Consequently, Ranbaxy and Teva were required to delete the paragraph IV certifications from their ANDAs and thereby lost their eligibility for a period of marketing exclusivity.

Ranbaxy and Teva each filed a citizen petition asking the FDA to relist the two patents. The FDA denied the petitions because Merck had not sued Ranbaxy or Teva for patent infringement. Ranbaxy and Teva then repaired to the district court, which entered a summary judgment for the plaintiffs, and the FDA appealed.

The D.C. Circuit held that the FDA’s requirement that a generic manufacturer’s patent challenge give rise to litigation as a condition of retaining exclusivity when a patent is delisted is inconsistent with the Act, which provides that the first generic manufacturer to file an approved application is entitled to exclusivity when it either begins commercially to market its generic drug or is successful in patent litigation.

A jury rejected the claims of Kourosh Dastgheib, an ophthalmologist who accused Genentech of reneging on a promise to pay him royalties from the drug in exchange for his research slides of human eye specimens. Dastgheib v. Genentech Inc., U.S. District Court, Eastern District of Pennsylvania (04CV01283).

While Dastgheib’s lawyers said he was entitled to at least $1.2 billion, the jury left him empty-handed. Dastgheib claimed the company couldn’t have developed the successful drug without his underlying research and claimed it denied him royalties and recognition for his contribution. Genentech denied making the agreement and said Dastgheib’s research had little impact on its development of the drug. Lucentis, introduced June 30, had $153 million in third-quarter sales for Genentech.

Lucentis (ranibizumab) is an ophthalmic drug used to treat the wet form of age-related macular degeneration. Lucentis is an antibody fragment to Vascular Endothelial Growth Factor (VEGF) and is designed to bind to and inhibit VEGF, a protein that plays a role in angiogenesis (the formation of new blood vessels). It works by keeping new blood vessels from forming under the retina (a sensory membrane that lines the inside of the eye). In people with a certain type of eye disease, new blood vessels grow under the retina where they leak blood and fluid. This is known as the “wet form” of macular degeneration.

Lawyers argued that Dastgheib was owed at least $1.2 billion, a third of the drug’s estimated $3.5 billion value. An attorney for Genentech, argued the amount was closer to $48,000 using the company’s pay scale for independent scientists. Genentech initially paid Dastgheib $2,000 for five days’ worth of work on the project.

Dastgheib claimed that he had provided “vitally important” research to Genentech that led to its development of Lucentis and Genentech reneged on its promise to give him 1 percent of its gross revenues and professional recognition for his role in discovering the drug.

Dastgheib had argued he reviewed more than 90,000 human eye specimens before coming up with a theory linking a form of eye disease known as macular degeneration to VEGF. Dastgheib claims that Genentech used the slides as the basis for its research and omitted Dastgheib’s involvement both from articles about the drug and its NDA application to the U.S. Food and Drug Administration.

Genentech claims that it had already identified the VEGF factor through its own research and collaborations with outside scientists. It didn’t help that Dastgheib didn’t have anyone corroborate his story.

In the end, Dastgheib was unable to prove his claim and, after a 12-day trial before U.S. District Judge Eduardo C. Robreno, the jury rejected all three of Dastgheib’s claims — fraud, unjust enrichment and unfair trade practices. The next time, you can bet he’ll ask for all the details in ink.

If you think things are getting more expensive, it may not be your imagination. The Tufts Center for the Study of Drug Development has announced that the average cost of developing a new biotechnology product is $1.2 billion (yes, that’s with a “B”).

Tufts study said the $1.2 billion estimate reflects the costs of drugs that fail in testing and the time costs associated with bringing a new biopharmaceutical to market. Of this amount, capitalized out-of-pocket preclinical cost totaled $615 million, while similar clinical period cost totaled $626 million. A new biotech product took 97.7 months on average to wend its way through clinical development and regulatory review, about eight percent longer than for pharmaceuticals, according to the Tufts CSDD analysis.

Among the cost challenges faced for biotech drugs are safety concerns, which have made regulators more cautious about the drugs they approve. According to study, only 58 new drugs in 2002-04 received marketing approval from the U.S. Food and Drug Administration (FDA), a 47% drop from the peak of 110 new drugs in the 1996-98 period.

Interestingly, the study found that drug sponsors who make more extensive use of Contract Research Organizations (CROs) tend to complete projects faster, while maintaining quality comparable to submissions involving minimal use of CROs. In addition, projects involving high CRO usage typically are submitted more than 30 days closer to the projected FDA submission date than low CRO usage projects. Tufts CSDD estimates that $5.5 billion, or 15%, of global drug development spending, excluding pass-through fees (e.g., central lab costs and investigator grants), went to contract clinical services in 2004. This compares to 12% in 2001.

Closely tied to the cost estimates is a study showing that the cost per patient of running Phase 3 clinical studies of new pharmaceuticals now exceeds $26,000, on average according to a report “Clinical Operations: Accelerating Trials, Allocating Resources and Measuring Performance”, published by Cutting Edge Information. The survey data reveal that Phase 3 studies are the most costly as measured on a per-patient basis. Phase 2 trials are comparatively cheaper, with the average per-patient cost at just over $19,300 per patient. Phase 1 trials, which test drugs’ safety on a smaller number of patients, are even less expensive at about $15,700 per patient.

I will be attending the American Conference Institute’s 7th Advanced Forum on Biotech Patents: Analysis, Insights and Strategies for New Challenges in Biotech Patent Practices in Boston, MA on November 29 and 30. I will be on a panel discussion moderated by Dennis Crouch, entitled “Roundtable Wrap Up – Reviewing the Year in Patents with an Eye Toward the Future,” on Thursday, Nov. 30.

This looks to be a great conference on all the new issues in biotech. Let me know if you are interested in attending, anyone who attends the conference as a referral from us is entitled to $200 off the registration price. Just drop me a line for the keycode. Otherwise, I look forward to meeting in Boston.

A new blog I came across recently is the Daily Dose of IP, a blog by Mark Reichel that is a source of daily tidbits on IP law. Daily Dose of IP (or DDIP for short), focuses on a variety of issues including patents, trademarks, copyrights and trade secrets and provides information on IP issues with links to cases and other materials. I recommend that you check it out, particulary the wrap-up of Starbuck’s trademark fight.

Highlighting the importance of intellectual property in society, Time magazine has named YouTube the ‘Invention of the Year’, beating out Gardasil, a vaccine that prevents a cancer-causing sexually transmitted disease, and CrustaStun, a device that electrocutes a lobster in five seconds, and is touted as a humane alternative to boiling.

I guess it makes sense. YouTube was recently acquired by Google for $1.65 billion. Not bad for a business based on copyright infringement that is without a real plan for revenue.

Finally, Blawg Review #83 is up at (fittingly) Election Law. A follow-up to last week’s Blawg Review by Ed Still at Votelaw, Rick Hasen’s web log brings a round-up of posts regarding the election outcome and process. Scariest is the write by Equal Vote Blog describing where 18,000 undervotes appear to be the result of machine malfunction, poor machine design, human error, or something else in Sarasota – a vote separated by fewer than 400 votes.

But then, maybe it doesn’t matter what anyone does.

The U.S. Court of Appeals for the Federal Circuit again hammers home the message that you can’t make a silk purse from a sow’s ear – or, at the very least, you can’t turn a known compound into an unknown (novel and, therefore, patentable) compound.

In Abbott Laboratories v. Baxter Pharmaceutical Products (Fed. Cir. 06-1021, -1022, -1034; Nov. 9, 2006), the CAFC held that Abbott’s asserted claims on the formulation of an inhaled anesthetic called sevoflurane, U.S. Patent No. 5,990,176, were anticipated by the disclosure in U.S. Patent No. 5,684,211.

Claim 1 of the ’176 patent reads:

An anesthetic composition comprising: a quantity of sevoflurane; and a Lewis acid inhibitor in an amount effective to prevent degradation by a Lewis acid of said quantity of sevoflurane, said Lewis acid inhibitor selected from the group consisting of water, butylated hydroxytoluene, methylparaben, propylparaben, propofol, and thymol.

Sevoflurane is an inhalation anesthetic. However, pure sevoflurane degrades in the presence of Lewis acids (a substance that can accept an electron pair from a base). Among the products of the degradation reaction is hydrofluoric acid, which is highly dangerous if inhaled.

Abbott found that water mixed in with sevoflurane will bind to and deactivate Lewis acids, protecting the sevoflurane from the degradation reaction. A deliberate addition of water to sevoflurane ran counter to the conventional wisdom at the time. Abbott filed a patent application on the degradation-preventing combination of water or other “Lewis acid inhibitors” with sevoflurane, which issued as the ’176 patent.

Baxter filed with the FDA a certification of noninfringement and invalidity of the ’176 patent pursuant to 21 U.S.C. § 355(j)(2)(A)(vii)(IV) (commonly known as a “paragraph IV certification”), which caused Abbott to sue under 35 U.S.C. § 271(e)(2).

Earlier, the district court construed of the phrase “amount effective to prevent degradation” to require at least 131 parts per million (“ppm”) of water in its consequent summary judgment of noninfringement. The CAFC disagreed with that construction, noting that “an effective amount of any given Lewis acid inhibitor will vary according to the conditions to which sevoflurane is subjected,” making construction referencing particular ranges of water content inappropriate. The CAFC then vacated the district court’s summary judgment and remanded.

On remand, the district court determined that the term “to prevent degradation” had been left unconstrued and concluded that “sevoflurane is degraded if it contains degradants in amounts greater than 300 ppm.” Baxter then appealed arguing that the ’211 patent disclosed a composition of water-saturated sevoflurane that met all the limitations of the asserted claims.

The CAFC agreed holding:

Our cases have consistently held that a reference may anticipate even when the relevant properties of the thing disclosed were not appreciated at the time. The classic case on this point is Titanium Metals Corp. v. Banner, 778 F.2d 775 (Fed. Cir. 1985). In Titanium Metals, the applicants sought patent protection on an alloy with previously unknown corrosion resistance and workability properties. Id. at 776. The prior art reference was an article by two Russian scientists that disclosed in a few data points on its graphs an alloy falling within the scope of the claims of the patent in suit. Id. at 776-77. There was no sign that the Russian authors or anyone else had understood the later-discovered features of the alloy thus described. Id. at 780-81. Despite the fact that “the applicants for patent had discovered or invented and disclosed knowledge which is not to be found in the reference,” we held that the Russian article anticipated the asserted patent claims. Id. at 782.

…

The general principle that a newly-discovered property of the prior art cannot support a patent on that same art is not avoided if the patentee explicitly claims that property. “[A] prior art reference may anticipate without disclosing a feature of the claimed invention if that missing characteristic is necessarily present, or inherent, in the single anticipating reference.” Schering, 339 F.3d at 1377 (citing Continental Can Co. v. Monsanto Co., 948 F.2d 1264, 1268 (Fed. Cir. 1991)). “[I]nherent anticipation does not require that a person of ordinary skill in the art at the time would have recognized the inherent disclosure.” Id. (citing Cruciferous Sprout, 301 F.3d at 1351).

The district court noted CAFC holdings finding anticipation even where, as here, there was no knowledge at the time of the relevant properties of the prior art. However, it concluded that the ’211 patent did not anticipate since the ’211 patent disclosed an “intermediate step” in the manufacture of sevoflurane, “the patent’s purpose was not to produce sevoflurane in its final useable form,” in distinction to the purpose of the ’176 patent, which “involves a final step in production.” At the time, however, knowledge of the beneficial nature of a water-sevoflurane mix was wholly lacking in the art.

The CAFC didn’t buy it stating that:

We also do not find it material that the district court found the anticipating method in the ’211 patent to be “an intermediate step” in the manufacture of sevoflurane. Abbott, No. 01-CV-1867, slip op. at 42. The product of that method was an anesthetic sevoflurane composition with sufficient water to prevent Lewis acid degradation—exactly what is claimed by the ’176 patent. Commercial finality is not claimed.

This really won’t have a market impact since Baxter already started selling its generic version of the anesthetic.

Update: IPBiz points out the CAFC’s curious definition of a Lewis acid.