Federal Circuit Suggests That “Insubstantial Differences” Test May Be More Suitable Than “Function-Way-Result” Test For Evaluating Equivalence In Chemical Patent Cases

5 min

In a May 19, 2017 panel decision, Federal Circuit Justices Lourie, Moore and Reyna suggested that an “insubstantial differences” test may be more suitable than a “function-wayresult” test for evaluating infringement under the doctrine of equivalents in patent cases involving the chemical arts.

The decision arises from unusual procedural circumstances. Apicore US LLC and Mylan Institutional LLC (collectively “Apicore”) are the owner and licensee, respectively, of one composition patent (US 9,353,050) and two process patents (US 7,622,992 and US 8,969,616) concerning isosulfan blue (ISB), a dye used to map lymph nodes. The ‘050 patent claims ISB having a purity greater than 99.0% as measured by high performance liquid chromatography. The ‘992 and ‘616 patents claim processes for making ISB involving the use of silver oxide to oxidize isoleuco acid to ISB acid. Aurobindo sought FDA approval to make an ISB product having a purity greater than 99.0% — but produced by a process using manganese dioxide rather than silver oxide. Apicore subsequently sued Aurobindo in the District Court for the Eastern District of Texas for infringement of the ‘050, ’992 and ‘616 patents, and sought a preliminary injunction against Aurobindo’s ISB product.

In preliminary injunction proceedings, the district court found that Apicore was likely to succeed in demonstrating that Aurobindo infringed the ‘992 and ‘616 process patents under the doctrine of equivalents, and that Aurobindo had not raised a substantial question as to the validity of the ‘050 patent. The district court also found that Apicore’s proof of irreparable harm, the Download PDF balance of equities, and the public interest weighed in favor of a preliminary injunction. Accordingly, the district court granted the preliminary injunction. Aurobindo appealed the grant of the injunction.

On appeal, the Federal Circuit determined that the district court had erred in finding that Apicore was likely to succeed in demonstrating that Aurobindo would infringe the ‘992 and ‘616 process patents under the doctrine of equivalents.

In reaching that determination, the Federal Circuit first noted that the Supreme Court’s decision in Graver Tank & Mfg. Co. v. Linde Air Prod. Co., 339 U.S. 605, 608, 609 (1950) established two different tests for evaluating infringement under the doctrine of equivalents: (i) the “function-way-result” (FWR) test, i.e., whether the accused product performs substantially the same function in substantially the same way to obtain the same result; and (ii) the “insubstantial differences” test, i.e., whether the accused product or process is substantially different from what is patented. Next, the Federal Circuit addressed the Supreme Court’s subsequent encounter with the doctrine of equivalents in Warner-Jenkinson Co. v. Hilton Davis Chem. Co., 520 U.S. 17 (1997). According to the Federal Circuit, the Supreme Court in Warner-Jenkinson acknowledged that the “suitability of the two tests may vary, depending on the circumstances of the case,” and that “non-mechanical cases may not be well-suited to consideration under the FWR test. That seems to be particularly true in the chemical arts.”

The Federal Circuit further elaborated that, “[e]specially when evaluating an equivalents dispute dealing with chemical compositions having many components, chemical compounds with many substituents (which are usually claimed as separate limitations), and those having a medical or biological use, it is often not clear what the ‘function’ or ‘way’ is for each claim limitation. How a particular component of a composition, or substituent of a compound, functions in a human or animal body, or in what way, may not be known or even knowable (although, as technology evolves, that may change). And precedent requires that, for infringement under the doctrine of equivalents, each limitation must satisfy an equivalence test.”

Turning to the case at hand, the Federal Circuit noted that the district court had opted to evaluate doctrine-of-equivalents infringement of the ‘992 and ‘616 process patents only under the FWR test. The Federal Circuit then faulted the district court for having effectively ignored the “way” step of the FWR test. According to the Federal Circuit, although the district court may have correctly found that the silver oxide recited in Apicore’s process patents and the manganese dioxide used in Aurobindo’s accused process shared the “same function” (i.e., to convert isoleuco acid to ISB acid), the district court did not adequately consider, for example, the fact that manganese dioxide and silver oxide have different oxidation strengths, the fact that the use of manganese dioxide in Aurobindo’s accused process requires the use of acid whereas the use of silver oxide in the patented process does not, and the fact that the two processes result in different yields.

The Federal Circuit continued:

In this case, the district court conducted an incomplete FWR analysis while essentially bypassing the substantial differences test, in a situation where the latter test might seemingly be more appropriate. The claims in the process patents recite a method for preparing a specifically named compound by combining another specifically depicted compound with a third specific compound, viz., silver oxide. Each of these compounds is expressly named, and an infringement analysis must not take lightly the specific recitation of these materials. The district court found that the accused process using manganese dioxide was equivalent to the claimed process using silver oxide. But the court failed to consider whether the key reagent in the process, manganese dioxide, was substantially different from the claimed reagent, silver oxide, and hence whether the substitution for, and omission of, silver oxide left the accused infringer outside of the bounds of the claims. . . . When the case returns to the district court for a full trial on the merits, the court should, in addition to providing further analysis regarding fulfillment of the FWR test, if it determines that it should still utilize that test, also consider whether an evaluation of equivalence under the substantial differences test may be better suited to the particular facts of this case. (emphasis in original).

Despite its admonitions concerning the district court’s doctrine-of-equivalents analysis, the Federal Circuit allowed the preliminary injunction to stand, because the district court did not clearly err in finding that Aurobindo’s ISB product would infringe the ‘050 patent, that the ‘050 patent was not invalid (as Aurobindo had asserted in preliminary injunction proceedings), and that Apicore would suffer irreparable harm due to Aurobindo’s infringement.