England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION (PATENTS COURT)
THE HON MR JUSTICE PUMFREY
HC 05 CO2457

		Royal Courts of Justice Strand, London, WC2A 2LL
		18/10/2007

Lord Justice Jacob:

1. Novartis appeals the decision of Pumfrey J, [2006] EWHC 2506 (Pat) that Ivax's "Equoral" product does not infringe its UK patent No. 2,222,770 (the "Patent"). The Judge held the patent valid. There was a contingent cross-appeal about that, advanced on the basis that if the patent does cover Equoral it would be invalid. After hearing the argument about infringement we informed the parties that we would dismiss the appeal. It became unnecessary therefore to hear the cross appeal. These are my reasons for dismissing the appeal.
2. Mr Daniel Alexander QC argued the case for Novartis and Mr Simon Thorley QC that for Ivax. Mr Alexander's case broadly was that the judge had rightly held the patent good (indeed "plainly valid") but construed it too narrowly.

Technical background

3. Neither side criticises the Judge's exposition of this, which I borrow with gratitude:

3 … The patent is plainly directed to a pharmaceutical formulator wishing to provide a formulation of cyclosporin. By 1988, cyclosporin was a well-understood pharmaceutical, and in 1988 it was known to present difficulties in formulation. The patentees, the well-known Swiss pharmaceutical company Sandoz, were marketing a formulation of cyclosporin that attempted to overcome its almost complete insolubility in water. Pharmaceuticals that are insoluble in water may well be soluble to a greater extent in oils, and this fact was exploited by the existing formulation, "Sandimmun". Because cyclosporin therapy will last potentially for the whole of the recipient's life, it is desirable to formulate the drug so as to be as conveniently administered as possible. Oral administration is desirable, and Sandimmun was an oral formulation. It was based upon olive oil, a surfactant (Labrafil) and ethanol (alcohol). Sandimmun was what is called a pre-concentrate: when diluted with an aqueous phase (as for example the aqueous contents of the gut) it forms an oil-in-water (o/w) emulsion.

Emulsions

4. An emulsion is one example of a colloidal system. In very general terms, such systems consist of two "phases": a discontinuous or dispersed phase and a dispersing or continuous phase. An oil-in-water emulsion comprises very small particles of oil dispersed through a continuous aqueous medium. Such emulsions are generally cloudy or milky in appearance and are generally stabilised, at least to some extent, so that they do not separate out, or at least separate out sufficiently slowly to make them useful. The stabilisation is achieved by the use of surfactants, mixtures of surfactants, or a surfactant and a co-surfactant. Surfactants are molecules which have both a hydrophilic and a lipophilic part, and form a monolayer between the oily phase and the aqueous phase. Such molecules are called amphiphilic. Co-surfactants are also amphiphilic molecules, but, as I understand the evidence, typically rather smaller than a surfactant: for example, ethanol, propanol, butanol and pentanol may be co-surfactants. These molecules also are amphiphilic, being soluble in water and in some lipids.

5. The relative proportions of the different phases present in an emulsion are commonly shown on ternary plots (Figures I and II of '770 are examples) in which the relative concentrations yielding the desired emulsion are shown as areas within a triangle whose apices represent 100% of each component. In Figure I, for example, components 1.1, 2 and 3 are respectively the hydrophilic, lipophilic and surfactant components. Region A represents a region where the mixture works, and Region B a preferred region.

6. The cloudy appearance of an oil-in-water emulsion, and of other emulsions such as egg-yolk in olive oil, is caused by the size of the particles of the dispersed phase being sufficiently large to disperse light. As I understand the evidence, the droplet size of the dispersed phase in typical emulsions ranges from about 0.2 to 10 microns diameter. (This case is vexed by using three units for sizes in this general region: nanometres or nm = 10^-3 microns = 10 angstrom units = 10^-9 metres. The limit for optical visibility is about one wavelength of light, which at the blue end is about 400 nm, or 4,000 angstroms. The red end is about 700 nm. Any emulsion contains a distribution of particle sizes, and will tend to look bluish in reflected light (and reddish in transmitted light) as the centre of the distribution moves closer to sizes comparable with the wavelength of blue light.)

7. The scattering of light by colloids forms the basis for instruments that are capable of measuring the particle size distribution of the colloids. These instruments, in existence and standard pieces of laboratory equipment at the priority date, have various limitations to which I shall return in considering the experiments in this case. For present purposes, it is only necessary to note that the measurement of particle size distribution in colloidal materials was well-understood at the priority date.

8. At the priority date, cyclosporin was, as I have indicated, a generally accepted drug for immunosuppression. It was known to be nephrotoxic (liver-damaging) and the "therapeutic window" between the minimum effective dose and a toxic dose was not wide.

9. Chemically, the drug is unusual, being an 11-unit cyclic peptide. In 1988, it was known to be very hydrophobic. It could not be delivered in tablet form, and there was no commercial formulation for topical administration.

The Patent

4. The patent is a long document, containing much that is irrelevant to this case and possibly irrelevant altogether. Again I can borrow from the Judgment:

11. After describing cyclosporin itself and its actual and potential applicability, the specification identifies (page 5, final paragraph) the problems with formulations, such as Sandimmun, containing both ethanol and olive oil:

"First, the necessity to use oils or oil based carriers may lend the preparations an unpleasant taste or otherwise reduce palatability, in particular for the purposes of long-term therapy. These effects can be masked by presentation in gelatine capsule form. However, in order to maintain the cyclosporin in solution, the ethanol content has to be kept high. Evaporation of the ethanol, e.g. from capsules or from other forms, e.g. when opened, results in the development of a cyclosporin precipitate. Where such compositions are presented in e.g. soft gelatine encapsulated form, this particular difficulty necessitates packaging of the encapsulated product in an air-tight compartment, for example an air-tight blister or aluminium-foil blister-package. This in turn renders the product both bulky and more expensive to produce. The storage characteristics of formulations as aforesaid are far from ideal."

12. Thus the first problem with existing formulations that is identified is the problem caused by the presence of alcohol in the formulation. The second is variation between groups of patients and, even for a single patient, of bioavailability of the active ingredient:

"Bioavailability levels achieved using existing oral cyclosporin dosage systems are also low and exhibit wide variation between individuals, individual patient types and even for single individuals at different times during the course of therapy. Thus reports in the literature indicate that currently available therapy employing the commercially available Ciclosporin drink solution provides an average absolute bioavailability of ca. 30% only, with marked variation between individual groups, e.g. between liver (relatively low bioavailability) and bone-marrow (relatively high bioavailability) transplant recipients. Reported variation in bioavailability between subjects has varied from anything between one or a few percent for some patients to as much as 90% or more for others. And as already noted, marked change in bioavailability for individuals with time is frequently observed."

13. On page 7 of the specification, the proposals already made to meet these problems are discussed, and it is observed that the overriding difficulty is the consequence of the inherent insolubility of the cyclosporins in aqueous media. The specification refers to the additional need for a topical delivery system for the drug, and sets out its solution to the problem at the foot of page 7:

"By the present invention there are provided novel cyclosporin galenic formulations in the form of a micro-emulsion pre-concentrate and/or based on the use of particular solvent media as hereinafter defined, which meet or substantially reduce difficulties in cyclosporin, e.g. Ciclosplorin, therapy hitherto encountered in the art. In particular it has been found that the compositions of the invention permit the preparation of solid, semi-solid and liquid compositions containing a cyclosporin in sufficiently high concentration to permit, e.g. convenient oral administration, while at the same time achieving improved efficacy, e.g. in terms of bioavailability characteristics."

14. It is said (foot of page 8) that the invention of the patent in suit enables the preparation of compositions which are non-alkanol based, for example, free or substantially free of ethanol. The first aspect of the invention is stated on page 9:

"In a first aspect, the present invention specifically provides pharmaceutical compositions comprising a cyclosporin as active ingredient, which compositions are in the form of an "oil-in-water microemulsion pre-concentrate"."

15. The key concept is thus a mixture (pre-concentrate) which will form a microemulsion when added to an aqueous medium. The passage which follows, which defines the term "oil-in-water microemulsion pre-concentrate", is of particular importance:

"By the term "oil-in-water microemulsion pre-concentrate" as used herein is meant a system capable on contacting with, e.g. addition to, water of providing an oil-in-water microemulsion. The term microemulsion as used herein is used in its conventionally accepted sense as a non-opaque or substantially non-opaque colloidal dispersion comprising water and organic components including hydrophobic (lipophilic) organic components. Microemulsions are identifiable as possessing one or more of the following characteristics. They are formed spontaneously or substantially spontaneously when their components are brought into contact, that is without substantial energy supply, e.g. in the absence of heating or the use of high shear equipment or other substantial agitation. They exhibit thermodynamic stability. They are monophasic. They are substantially non-opaque, i.e. are transparent or opalescent when viewed by optical microscopic means. In their undisturbed state they are optically isotropic, though an anisotropic structure may be observable using e.g. x-ray technique.

Microemulsions comprise a dispersed or particulate (droplet) phase, the particles of which are of a size less than 2,000 A, hence their optical transparency. The particles of a microemulsion may be spherical, though other structures are feasible, e.g. liquid crystals with lamellar, hexagonal or isotropic symmetries. Generally, microemulsions comprise droplets or particles having a maximum dimension (e.g. diameter) of less than 1,500 A, e.g. typically from 100 to 1,000 A.

[For further discussion of the characteristics of microemulsions see, e.g. Rosof . . . ; Friberg . . . ; and Müller . . . . ]

From the foregoing it will be understood that the "oil-in-water microemulsion pre-concentrates" of the invention are galenic systems comprising a cyclosporin as active ingredient capable of forming an oil-in-water microemulsion, spontaneously or substantially spontaneously on contact with water alone."

A clause repeating claim 1 of the patent, which is the only claim with which I am concerned, then follows. I set claim 1 out here for convenience:

'1. A pharmaceutical composition comprising

a cyclosporin as active ingredient,

1) a hydrophilic phase,

2) a lipophilic phase, and

3) a surfactant,

which composition is an "oil-in-water microemulsion pre-concentrate."'

17. A very substantial amount of text follows. Its function is mainly to give examples of suitable materials, but there is also explanatory material dispersed throughout. The general term used for a composition falling within the claim is 'a composition defined under (A)' or 'in accordance with (A)'. Important for present purposes is the explanation of the terms of the claim:

i) The lipophilic phase may include any pharmaceutically acceptable solvent which is non-miscible with the selected hydrophilic phase (page 15);

ii) The surfactant may comprise hydrophilic or lipophilic surfactants or mixtures thereof (page 16);

iii) There may be a single surfactant or a mixture comprising a surfactant and a co-surfactant (page 21);

iv) Where the surfactant 'comprises an effective solvent for the cyclosporin active ingredient, as in the case e.g. of surfactants or mixtures of surfactants…it may be incorporated into [compositions according to the invention] not only as surfactant, but in excess as an additional carrier or co-solvent phase, i.e. as part of the hydrophilic or lipophilic phase'(page 22);

v) The composition may also include a thickening agent (page 22).

Equoral

5. The Judge describes Ivax's product uncontroversially as follows:

19. Ivax wants Equoral to be available in the UK as a 100mg/ml oral solution and 25mg, 50mg and 100mg soft gelatine capsules. The oral solution is intended for dispersion in a drink, and the capsules to be swallowed and to dissolve in the stomach where the active ingredient will be released. The (very) approximate proportions (w/w) of the various components in the solution are as follows:

Cyclosporin (9%);

Polyglycerol (3) oleate (30%);

Polyglycerol (10) oleate (19%);

Macrogolglycerate hydroxystearate (27%);

Ethanol (15%);

Fatty acids (~1%);

[capsules only] D,L-... tocopherol (vitamin E, an antioxidant)(<1%).

6. There was much controversy before the Judge about whether and, if so, how much of the product consisted of a microemulsion. He concluded that:

20. ….. Taking a cut-off point for particle size of 2000Å (200nm, 0.2µ), the vast majority of particles by number falls below this limit. However (and this is important) less than 14% of the active ingredient is to be found in all the particles of size less than 2000Å: more than 86% of the burden of active ingredient is carried by particles having size >2000Å.

And:

22. ……..the fair conclusion is that in the particles of size < 200nm the experiments show that the quantity of active ingredient is certainly not more than 14% and is likely to be rather less than this.

7. The cut off size, 2000Å is the size below which the particles are considered to be of microemulsion size – they are too small to scatter light which is a key factor in determining this.
8. Mr Alexander showed us some experimental results showing what he called "twin peaks" - to suggest that the particles were divided into two broad sorts, those of microemulsion size and those well above it. There is not, he suggested, just a bell-curve or similar distribution of particle sizes. The point of this was to suggest that there were two distinct populations of particle and that somehow made a difference. Mr Thorley showed us other experimental results which he suggested showed otherwise.
9. I do not think it either necessary or appropriate to go into this. It was not a point raised as one of significance at trial. Nor can I see it matters. Whether there are two distinct groups of particle size or not, the key fact is that at least 86% of the active ingredient is carried by particles which are larger than microemulsion size.
10. It is against that factual background that the first question of construction arises. Mr Alexander submits that Equoral is a composition which comprises (in the sense of includes) a cyclosporin, the two specified phases, a surfactant and a microemulsion pre-concentrate. The amount of this, 14% or a bit less, cannot be considered trivial or de minimis. The fact that other, larger, particle sizes are present makes no difference. If one were to remove the larger particles, one would be left with what would be unarguably a microemulsion. So a microemulsion must have been there all along, mixed up with emulsion.
11. He reinforces his argument by pointing out that the patent expressly contemplates a mixed system: the presence of thickening agents is specifically mentioned. These would render the microemulsion cloudy, but it would still be a microemulsion of the sort contemplated by the patentee.
12. So he submitted this was a case where the patented invention had been taken along with something else. As Lord Reid put it in Henriksen v Tallon [1965] RPC 434 at 445 "it would be a very artificial construction of the claim to hold that because [the alleged infringement] is not very efficient though sufficient for commercial purposes, therefore there was no infringement."
13. I reject that argument. The fundamental question to be answered is: what would the skilled person have understood the patentee to have used the language to mean? - see Amgen at §§34 and 47 - 48.
14. The claim has to be construed in the context of the patent. I go to that first. If one asks what the fundamental teaching of this patent is, the answer is clear: avoid the problems of the prior art emulsion formulation by carrying the cyclosporin in microemulsion size particles. The Judge has quoted most of the passages which lead to this answer.
15. Mr Thorley drew our attention to one other. At p.11 the patent says:

"Microemulsions obtained on contacting the 'microemulsion pre-concentrate' compositions of the invention with water or other aqueous medium exhibit thermodynamic stability, that is they will remain stable at ambient temperatures, e.g. without clouding or regular emulsion size droplet formation or precipitation, over prolonged periods of time."

So the patentee saying it is a special virtue of the invention that the microemulsions do not, over time, turn into emulsions. It is inconceivable that he would have intended to include within his claim a product in which most of the active ingredient was carried in emulsion sized particles.

16. If one reads the claim as a whole and with purpose in mind the right way to read it is that the active ingredient of the composition is to be carried by the "oil-in-water microemulsion." It is not enough for there simply to be present cyclosporin and a microemulsion. The latter is for carrying the former. This is not a case of an inefficient product sufficient for commercial purposes as contemplated by Lord Reid. This is a case of a product which is nearly all that which the patentee was trying to avoid.
17. That is enough to dispose of this point. I should, however, mention three other matters. An Austrian distributor of the respondent in some product information about Equoral (under a different trade mark in Austria) said:

[Equoral] is a new galenic form based on the so-called microemulsion principle (emulsion of micro-droplets)

Mr Alexander submitted we should somehow take this into account: that it is some evidence that a skilled man would regard Equoral as in effect a microemulsion hence within the claim. But it is not suggested that Ivax were responsible for the statement (indeed its own literature suggests Equoral works by a different mechanism). Nor was the statement made in the context of the patent. Nor, as it seems to me, can it actually be right given that nearly 90% of the active ingredient is not delivered from a microemulsion.

18. Secondly there is the cross-examination of Professor Lawrence. The Judge relied upon some of this to hold that Equoral was not a microemulsion even though there are microemulsion size particles in it. Although both sides took us to more of it, the key passage is quoted by the Judge:

'Q…If it was written like that and you had something with particles less than 2000 angstrom and particles more than 2000 angstroms, whether you would call the resultant product a microemulsion or not?

A. I think there is probably a misunderstanding here. I would call a microemulsion coexisting with something else anyway. I would never call it, if it had two populations, a microemulsion per se. That would just be totally wrong. I would say that the particles that are microemulsion particles and particles that are something else. Does that answer your question?

Q. It is the answer you have given to my question. Let me add one further rider to that description. Assume that it is said that the particles are of a size less than 2000 angstroms hence their optical transparency. You have added into it optical transparency. Would you then be prepared to call a mixture of 2000 angstrom and smaller particles and 2000 angstrom larger particles a microemulsion or not?

A. Absolutely not. I would not call it a microemulsion. I thought a microemulsion was something else so the same thing still stands. If I could prove that there are particles of less than 2000 angstroms that are thermodynamically stable, isotropic, have the correct components making them a form of microemulsion droplets.

Q. Would you call the system a microemulsion?

A. No, I have just said that it would be whatever it was. For example, a suspoemulsion. You get suspensions and emulsions. You could have suspomicroemulsions. It is appropriate for whatever components are in there.'

19. I am bound to say that some of this seemed to involve cross-examination about the word as such rather than in context. I would place less weight on it than did the Judge, particularly because it did not concentrate on the purpose of the microemulsion, namely to carry the active ingredient. But in the end it does not matter.
20. I also am inclined to think that the passage in the patent about what a microemulsion is (quoted by the Judge at [15]) is not important for either side. It is not satisfactory on any view. The suggestion that it means the composition of the invention must not be cloudy makes no sense in view of the later reference to thickeners. Mr Thorley conceded that whether the product was or was not cloudy was not determinative, just a "first rough and ready test." If the product is cloudy you have to ask why? On that basis the passage just does not assist in deciding what the skilled man would understand the inventor to mean by his claim. It is not really related to the purpose of the invention at all.
21. That would be enough to dispose of this appeal. However the Judge held non–infringement for another reason too. The point was fully argued and so I should deal with it briefly. The question is whether Equoral has a lipophilic phase as called for by the claim. The suggested candidate is the polyglycerol (3) oleate (Pg3o). The hydrophilic phase is ethanol. Pg3o is soluble in ethanol. It is amphiphilic and has a surfactant function. In practice the three components, Pg3o, cremophor and polyglycerol (10) oleate will form an aggregate with the molecules of all three interspersed with one another (as established by Prof. Attwood's evidence, accepted by the Judge at [36].
22. The answer to the problem is found, as it so often is, when construing a patent claim, by asking: what is the claim element for? What in this case is the lipophilic phase for? The answer is that it is there for two reasons: to carry the insoluble cyclosporin and to form the microemulsion, the oil phase. It cannot do the latter if it is amphiphilic. The patent makes the purpose clear at p.15 saying:

Suitable components for use as the lipophilic phase include any pharmaceutically acceptable solvent which is non-miscible with the selected hydrophilic phase … Such solvents will appropriately be devoid or substantially devoid of surfactant function.

23. Mr Alexander invites us to say that the skilled man would read that as saying the lipophilic phase need not be non-miscible with the hydrophilic phase. He tries to get that out of the word "include" But that is to read the passage acontextually and without regard to the evident purpose of the lipophilic phase.
24. Moreover at p.22 of the patent there is a passage saying this:

When the surfactant comprises an effective solvent for cyclosporin active ingredient … it maybe incorporated into compositions as defined under (A) not only as surfactant, but in excess as an additional carrier or co-solvent phase, i.e. as part of the hydrophilic or lipophilic phases.

This is far from saying you can have the surfactant instead of the lipophilic phase.

25. Mr Alexander sought to bolster his argument by reference to examples 1.1 and 1.3. The suggestion was that they showed the use of amphiphilic compounds as the lipophilic phase.
26. He first relied on example 1.3. This specifies as component (3.1.1), i.e. the surfactant component "Nikkol HCO-40 120 mg/capsule, ethanol 19.0 and ascorbylpalmitate 1.0. The ethanol is described as "co-solvent (hydrophilic phase)". So the patentee himself does not regard the ethanol as part of the lipophilic phase. That is specified as Miglyol and in any event the ethanol is only a minor proportion of the surfactant phase. I am quite unable to see how this example shows that the patentee regarded ethanol as part of the lipophilic phase. It falls within the claim irrespective of the minor amount of ethanol. Moreover the point was not put to any witness or argued below. In those circumstances it is inappropriate for it to be taken now.
27. His reliance on example 1.1 came so late in the day that it did not make it to his skeleton argument. Again it was not put to the witnesses or argued below and is too late.
28. It is also extremely artificial. Example 1.1. specifies glycofural as the hydrophilic phase, miglyol as the lipophilic phase and cremophor rh 40 as the surfactant. Suppose, submitted Mr Alexander, you substituted the glycofural with ethanol. That is a legitimate supposition because ethanol is a contemplated hydrophilic phase (see p.14). And ethanol is miscible with miglyol. So non-miscibility with the hydrophilic phase cannot have been the patentee's touchstone for the lipophilic phase. Mr Thorley provided the terse answer. One does not know what would happen if one made the substitution. And no skilled man would even consider such an artificial point if he were trying to decide what the patentee meant by his claim.

Lord Justice Hughes:

29. I agree.

Lord Justice Buxton:

30. I also agree.