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July 7, 1978


The opinion of the court was delivered by: MEANOR

This matter comes before the court on defendant's order to show cause seeking a preliminary injunction against plaintiff's alleged patent infringement and unfair competition. On August 30, 1977, plaintiff Zenith Laboratories, Inc. (hereinafter Zenith) brought suit against defendant Eli Lilly and Company (hereinafter Lilly) for a declaratory judgment of non-infringement and invalidity with regard to two of Lilly's patents covering compounds in the family of antibiotic drugs known as cephalosporins. More specifically, Zenith alleged that United States Patent No. 3,507,861 (hereinafter "861 Patent), entitled "Certain 3-Methyl-Cephalosporin Compounds," and United States Patent No. 3,655,656 (hereinafter "656 Patent), entitled "Crystalline Cephalexin Monohydrate," are invalid, and that Zenith's sale of cephalexin monohydrate in capsule form in the United States does not infringe on said patents. Lilly has counterclaimed for infringement of both patents, conspiracy to violate the U.S. patent laws with certain unnamed foreign drug manufacturers, and unfair competition predicated on federal and state statutes and various state common law theories. Jurisdiction of the action is grounded on 28 U.S.C. ┬ž 1338(a) (1976).

Lilly has applied for a preliminary injunction against Zenith's infringement of the "656 Patent by the sale of cephalexin monohydrate and against Zenith's unfair competition by the adoption of trade dress similar to that of Lilly's cephalexin monohydrate product, marketed under the trademark Kelfex. At a limited hearing held on December 12, 1977, both parties agreed that a full evidentiary hearing was unnecessary. Thus, the instant application is before me on affidavits, briefs and oral argument. *fn1" I find that a preliminary injunction against Zenith's infringement of the "656 Patent is justified and grant Lilly's motion to the extent that it pertains to infringement. Because this relief moots the remainder of Lilly's motion, I do not reach Lilly's unfair competition claims.



 The cephalosporins are a family of antibiotic drugs derived from material produced by the fungus Cephalosporium acremonium. Cephalosporin-C, the parent compound from which the drug family was developed, was first isolated by British scientists in the 1950s. As a group the cephalosporins possess a number of properties which make them unusually effective as antibiotics. Bacteria are commonly classified in accordance with whether they take or reject a so-called Gram stain, named after the scientist who discovered the classification test. Those which take stain are termed gram-positive; those which reject it, gram-negative. While penicillin, a comparable antibiotic, is active against only gram-positive bacteria, the cephalosporins are effective against both gram-positive and gram-negative strains. Cephalosporins also have low toxicity and allergenicity, producing relatively few adverse side effects and allergic reactions. One consequence of this is that cephalosporins may sometimes be used to treat penicillin-allergic individuals. (Abraham Affidavit 1-3; Flynn Affidavit 3-4).

 In terms of chemical structure, the members of the cephalosporin family have in common a central structural nucleus formed of a 6-membered ring of 7-aminocephalosporanic acid (7-ACA). The various cephalosporins differ from one another in the number and type of side chains attached to the nucleus. While the family members have approximately the same range of antibiotic activity and toxicity, their structural differences result in variant pharmacological properties, that is, differing chemical behavior in the body.

 In the early 1960s, British scientists discovered a method to isolate 7-ACA nucleus and add various side chains to create a variety of cephalosporins with activity more potent than Cephalosporin-C. However, the methods used were not practicable for the production of cephalosporins on a commercial scale. About this time the National Research Development Corporation, a crown corporation of Great Britain founded to assist in the commercialization of the inventions of British subjects, became involved in promoting cephalosporin research. It concluded agreements with a number of pharmaceutical companies whereby the companies committed themselves to participate in cephalosporin research and to turn over their findings to the corporation in exchange for access to prior research results and other technical aid. Lilly and at least seven other laboratories in several countries agreed to embark on this research effort. (Flynn Affidavit 4).

 Lilly was the first to develop an efficient method of producing 7-ACA nucleus, and by early 1962 Lilly's first cephalosporin antibiotic was ready for clinical trials. (Flynn Affidavit 5-8).

 By the end of 1970, Lilly had put three cephalosporin products on the market. Cephalothin, introduced in 1964 under the trademark Keflin, and cephaloridine, introduced in 1968 under the trademark Loridine, are effective only when administered by injection because they are not sufficiently absorbed in the body when given orally. *fn2" Cephaloglycin, introduced in 1970 under the trademark Kafocin, was Lilly's first oral cephalosporin. Cephaloglycin was found to be 18 to 22% Absorbed into the bloodstream upon ingestion, a percentage sufficient to make it a satisfactory oral drug. However, cephaloglycin has reduced activity in comparison with other cephalosporins. This is so because upon ingestion about 90% Of the cephaloglycin dose is converted by a chemical reaction into a related compound. This compound has gram-positive activity about equal to that of cephaloglycin, but its gram-negative activity is substantially lower. (Van Heyningen Affidavit 2-3).

 In an effort to find an oral cephalosporin which would not undergo the chemical changes exhibited by cephaloglycin, Dr. Robert E. Morin and Dr. Billy G. Jackson, researchers at Lilly, proposed modifying cephaloglycin by substituting a methyl group for the side chain attached to the cephaloglycin molecule at position 3 on the nuclear ring. The resulting compound is known as cephalexin.

 Clinical studies of cephalexin demonstrated that, unlike cephaloglycin, the compound underwent no chemical changes upon ingestion, and thus retained its gram-negative activity when given orally. In addition, cephalexin was found to be 100% Absorbed from the gastrointestinal tract, and to be completely excreted in the urine without chemical alteration. (Van Heyningen Affidavit 3-4; Griffith Affidavit 4). Thus, cephalexin, one of a group of compounds called 3-methyl-cephalosporins, is highly satisfactory for oral administration.

 On September 14, 1966, Morin and Jackson applied for a patent on their discovery of the usefulness of various 3-methyl-cephalosporin compounds as oral antibiotics. The "861 Patent was subsequently issued on April 21, 1970. Cephalexin is one of the compounds included within this patent.

 Morin and Jackson also developed a process for the generation of cephalosporins from penicillin. Cephalexin can be manufactured by this method. (Van Heyningen Affidavit 4-5). This Morin-Jackson process is the invention claimed in United States Patent No. 3,275,626, entitled "Penicillin Conversion Via Sulfoxide," of which the "861 Patent is a continuation in part.

 The "656 Patent.

 While cephalexin was known to be effective for oral administration, it could not be marketed in the forms in which it was originally produced. It was first crystallized from water at room temperature as a dihydrate, that is, as a crystal containing two molecules of water per molecule of cephalexin. The dihydrate crystals so formed are characteristically small, fluffy and fiber-like, and they are so bulky that a full dose cannot be put into a single capsule of acceptable size. On drying, the dihydrate crystals convert readily into monohydrate crystals by the loss of a single molecule of water per molecule of cephalexin in the crystalline structure. However, the monohydrate so formed is likewise fluffy, and the crystals tend to pick up static charge and become "flyaway," making handling and encapsulation impracticable on a commercial basis.

 Lilly research efforts were directed towards the modification of the crystallization process to generate a more manageable product. While crystallization had originally been conducted at low temperatures to reduce the danger of degradation of the cephalexin, Earle Van Heyningen proposed that crystallization be tried at elevated temperatures. It was discovered that at temperatures of about 60o C. or above, cephalexin monohydrate could be crystallized directly, and the crystals so obtained were relatively large, non-hygroscopic, dense and non-electrostatically excitable. Further, a single dose would fit into a capsule of acceptable size. (Van Heyningen Affidavit 6-7).

 On April 21, 1969, Van Heyningen filed an application with the Patent Office on this dense form of cephalexin monohydrate (hereinafter sometimes referred to as DCM). The "656 Patent, here at issue, ultimately issued on April 11, 1972.

 The patent contains two independent claims as to the crystalline product taught therein. DCM is said to have unique x-ray diffraction properties and its density is said to fall within the range of 0.50 to 0.60 g./ml. The term density is nowhere defined in the patent. Lilly has admitted that all forms of cephalexin monohydrate have the same x-ray diffraction pattern. (Lilly's Answer to Zenith's Interrogatory No. 22).

 Lilly's Commercial Production Of Keflex.

 Before human clinical research can be done on a new drug, an investigational new product application must be submitted to the Food and Drug Administration. Lilly filed such an application for DCM in early 1967 and commenced funding clinical work in 1968. The Food and Drug Administration ...

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