Merck & CIE v. Watson Labs., Inc.

Case Name: Merck & CIE v. Watson Labs., Inc., Civ. Nos. 13-978-RGA, 13-1272-RGA, 2015 U.S. Dist. LEXIS 115245 (D. Del. Aug. 31, 2015) (Andrews, J.) 

Drug Product and Patent(s)-in-Suit: Safyral® and Beyaz® (drospirenone/ethinyl estradiol/levomefolate calcium tablets and levomefolate calcium tablets); U.S. Patent No 6,441,168 ("the '168 patent") 

Nature of the Case and Issue(s) Presented: Claim 4 of the '168 patent recites a crystalline calcium salt of 5-methyl-(6S)-tetrahydrofolic acid ("MTHF"). Watson filed two ANDAs seeking approval from the FDA to engage in the commercial manufacture, importation, use, or sale of generic Safyral and Beyaz, both of which contain the patented MTHF active ingredient. Merck filed suit, and the parties stipulated that if claim 4 of the ’168 patent was valid, then Watson’s ANDA products would infringe. Watson alleged that the asserted claim was invalid due to the on-sale bar. Watson also alleged additional grounds of invalidity including anticipation, obviousness, and lack of written description. The court rejected all of Watson’s arguments and entered judgment in favor of Merck, finding the ‘168 patent not invalid, and infringed.

Why Merck Prevailed: The court first considered Watson’s invalidity argument concerning the on-sale bar under 35 U.S.C. § 102(b). Watson’s premised its argument on the existence of a business relationship between Merck and Weider Nutrition International ("Weider"). In 1997 Merck and Weider were exploring a strategic partnership to introduce dietary supplements incorporating Merck ingredients into the United States. The two companies entered into a Confidentiality and Noncompetition Agreement in 1998 that provided, in part, that a definitive agreement regarding a transaction would not exist unless it was signed by both parties. In August of 1998, Weider notified Merck that it was no longer interested in an exclusive strategic partnership, but the parties continued to exchange communications relating to the purchase of a batch of MTHF. In September of 1998, representatives from Merck sent a fax to Wieder identifying purchase information related to a shipment of MTHF, which included price, quantity, delivery and payment details. Weider initially expressed interest in carrying out the transaction, but eventually cancelled the purchase in January of 1999. Watson argued that Merck’s conduct in those negotiations constituted an offer for sale of the MTHF compound more than a year prior to the filing of the ’168 patent application. Watson argued that Merck’s communications contained all of the necessary elements for an offer for sale: identification of the compound, price terms, quantity, delivery instructions, and payment details. Moreover, Watson argued, there was nothing more that Weider needed to do to consummate the sale, and that the sale only failed to materialize because Weider eventually cancelled it. Merck responded by noting that the Confidentiality and Noncompetition Agreement specifically required a definitive agreement signed by both parties. Such an agreement did not exist in relation to Merck’s alleged offer for sale. Merck pointed to testimony from Merck and Weider representatives that the parties were in discussions, but had not formalized anything. Merck also pointed to the fact that a sale could not have been consummated during the relevant time frame because there were outstanding issues, e.g., incomplete toxicology tests, intellectual property and regulatory matters, and apportionment of liability, which needed resolution before a sale could go forward. The court agreed with Merck, noting that a commercial offer must be sufficiently definite that another party could make a binding contract by simple acceptance. In the transaction at issue, the court found that further assent was required before the sale could have been consummated. There was no signed agreement by both parties, as was required by the Confidentiality and Noncompetition Agreement. The court also agreed with Merck that contemporaneous evidence showed that Merck and Weider had merely expressed a mutual indication of interest, but had not advanced far enough in their negotiations that a sale was imminent. Last, the court was also persuaded by Merck’s argument that industry standards required the parties to reach an agreement on the issues of safety, intellectual property and regulatory issues, and apportionment of liability.

The court next addressed Watson’s anticipation argument. Watson alleged that the '168 patent was anticipated by U.S. Patent No. 5,350,850 ("the '850 patent"), which disclosed a process for obtaining a crystalline pentahydrate of MTHF. Chemists use powder x-ray diffraction to determine whether a substance has a crystalline content. Watson argued that the '850 product had a moisture content of 15.27%, which corresponded to a pentahydrate, and that Type I crystals were the only known crystalline pentahydrate of MTHF. Watson’s expert also testified that the powder x-ray diffraction results of the ’850 compound demonstrated that the 2θ values recited in claim 4 were inherently present. Merck disagreed, noting that the ’850 compound was categorized as "practically insoluble" while the ’168 compound was "sparingly soluble." "Practically" and "sparingly" are terms of art known to skilled artisans, and describe varying degrees of solubility. Based on this analysis, Merck argued that the '850 product could not anticipate the ’168 product because the ’168 product was about 100 times more soluble than the ’850 product. Merck also argued the possibility that undiscovered polymorphs of MTHF existed, and that it was therefore impossible for Watson to prove that the ’850 product was the claimed invention based solely on the fact that it was a pentahydrate of MTHF. Merck also criticized Watson’s expert for creating a version of the ’850 compound because the expert failed to produce the compound in the manner described in the patent. The court agreed with Merck’s arguments and found that Watson failed to prove inherent anticipation.

The court briefly addressed Watson’s obviousness argument, noting that Watson had spent very little time addressing the issue in its post-trial briefing. Watson argued that it would have been obvious for a person of skill in the art to combine the recrystallization process taught in the ’850 patent with a pentahydrate calcium MTHF disclosed in U.S. Patent No. 5,006,655. Merck countered that there would not have been a reasonable expectation of success where a process is complicated, unpredictable and largely conducted through trial and error. The court agreed with Merck and also noted that Watson had not raised any evidence, or the lack thereof, of secondary considerations of non-obviousness.

Last, Watson argued that the ‘168 patent was invalid for failing to meet the written description requirement because claim 4 did not disclose any information that would have allowed a person of ordinary skill in the art to conclude that the inventors possessed a MTHF polymorph with one water of crystallization. Merck countered by noting that patent language stated that the claimed compound "typically" contained three equivalents of water, and that the compound could therefore have fewer than three waters of crystallization. The court agreed with Merck’s interpretation.

The articles on our Website include some of the publications and papers authored by our attorneys, both before and after they joined our firm. The content of these articles should not be taken as legal advice.