Title
Smith Kline Beckman Corp. vs. Court of Appeals
Case
G.R. No. 126627
Decision Date
Aug 14, 2003
Smith Kline sued Tryco Pharma for patent infringement, claiming Albendazole in Impregon violated its patent. Courts ruled no infringement, deleted damages, awarded temperate damages.
patent infringement
parasite infestation
animals

Case Summary (G.R. No. 126627)

Factual Background

Petitioner filed Patent Application Serial No. 18989 on October 8, 1976 as assignee for an invention entitled “Methods and Compositions for Producing Biphasic Parasiticide Activity Using Methyl 5 Propylthio-2-Benzimidazole Carbamate.” Letters Patent No. 14561 issued on September 24, 1981 for a term of seventeen years and, in its claims, described a new compound named methyl 5 propylthio-2-benzimidazole carbamate and related methods and compositions for controlling gastrointestinal parasites and lungworms in various animals. Respondent Tryco manufactured, distributed and sold a veterinary product called Impregon, containing Albendazole as its active ingredient, which Tryco represented as effective against a range of parasitic infestations in livestock.

Trial Court Proceedings

Petitioner sued Tryco for patent infringement and unfair competition in the Caloocan RTC and secured a temporary restraining order and later a writ of preliminary injunction. Tryco answered denying that Letters Patent No. 14561 covered Albendazole, alleging Albendazole to be unpatentable, asserting regulatory approval to market Impregon, denying any passing off, and contending that petitioner’s Philippine application was filed beyond the one-year priority period in violation of Section 15 of Republic Act No. 165. Tryco counterclaimed for damages. The trial court found for Tryco, dismissed petitioner’s complaint, dissolved the injunction, declared the patent null and void for violating Sections 7, 9 and 15 of the Patent Law, directed cancellation pursuant to Section 46, and awarded Tryco P330,000.00 actual damages and P100,000.00 attorney’s fees.

Court of Appeals Ruling

The Court of Appeals affirmed the trial court’s finding of no infringement because petitioner failed to prove that Albendazole was the same compound as methyl 5 propylthio-2-benzimidazole carbamate, noting the existence of a separate U.S. patent for Albendazole in the name of Smith Kline and French Laboratories as indicative of a distinct compound. The appellate court also found no misrepresentation by Tryco. However, the Court of Appeals reversed the trial court’s cancellation of the patent, accepting petitioner’s explanation that Serial No. 18989 was a divisional application of Serial No. 17280 filed June 17, 1975 and concluding, under Section 17 of the Patent Law, that the Philippine filing complied with the one-year rule of Section 15; it further upheld the Patent Office’s determination of patentability under the presumption of correctness. The Court of Appeals thus deleted the orders for nullification and cancellation and otherwise affirmed.

Issues on Appeal to the Supreme Court

Petitioner’s petition for review on certiorari assigned as errors the Court of Appeals’ failure to find that Albendazole is included in Letters Patent No. 14561 and its award of P330,000.00 actual damages and P100,000.00 attorney’s fees to Tryco. The appeal raised the question whether the doctrine of equivalents could be invoked to bring Albendazole within the scope of petitioner’s patent and challenged the sufficiency of proof for the damage awards.

Petitioner’s Contentions

Petitioner argued that the doctrine of equivalents required a finding of infringement because Albendazole and methyl 5 propylthio-2-benzimidazole carbamate both combat parasitic infestation and thus perform substantially the same function in substantially the same way to achieve substantially the same result. Petitioner relied chiefly on the testimony of Dr. Godofredo C. Orinion to identify the chemical formula in the letters patent as referring to Albendazole and emphasized that its Philippine application was a divisional of an original application that secured a U.S. patent for Albendazole, arguing mutual dependence and unity of result between the compounds. Petitioner later conceded that the patented compound is not identical with Albendazole but contended that it is an improvement thereof.

Respondent’s Contentions

Tryco maintained that Albendazole and the patented compound are chemically and physically distinct and that the separate U.S. patent for Albendazole demonstrates their difference. Tryco asserted that divisional practice demonstrates the existence of multiple independent inventions in the original application and that petitioner’s patent therefore cannot be read to encompass Albendazole. Tryco also denied any deception in marketing Impregon.

Burden of Proof and Standard of Review

The Court reiterated that the burden to prove infringement rests upon the patentee. It stated the proper standard on certiorari under Rule 45, that factual findings of the Court of Appeals are final unless they are mistaken, absurd, speculative, conflicting, tainted with grave abuse of discretion, or contrary to the evidence gathered below, citing Ramirez v. Court of Appeals, 294 SCRA 512 [1998]. The Court reviewed the evidence and found no basis to disturb the appellate court’s factual findings.

Construction of the Patent Claims and the Doctrine of Equivalents

The Supreme Court observed that the claims of Letters Patent No. 14561 expressly identify methyl 5 propylthio-2-benzimidazole carbamate and that the claims contain no reference to Albendazole. The Court emphasized that when claim language is clear and distinct the patentee is bound by it and the courts may not enlarge the patent beyond its expressed scope, citing 69 C.J.S. 684. The Court considered petitioner’s invitation to apply the doctrine of equivalents, and explained that this doctrine requires satisfaction of the function-means-and-result test: the accused product must perform substantially the same function in substantially the same way to achieve substantially the same result. The Court held that petitioner failed to prove equivalence because it offered no proof that Albendazole operates by substantially the same means as the patented compound, and Dr. Orinion was not qualified or presented as an expert in chemical compounds to supply the necessary technical proof, citing Godines v. Court of Appeals, 226 SCRA 338 [1993], and Malta v. Schulmerich Carillons, Inc., 13 U.S.P.Q.2d 1900 [1989].

Divisional Application Doctrine and Patentability

The Supreme Court reviewed the nature of a divisional application, explaining that a divisional arises when two or more inventions are claimed in a single application and the applicant is required to divide the claims so that separate patents may issue for distinct inventions, citing 69 C.J.S. 455. The Court concluded that the fact that petitioner obtained a divisional Philippine patent for methyl 5 propylthio-2-benzimidazole carbamate supports the conclusion that that compound is distinct from Albendazole; otherwise a single patent could have covered both. The Court accepted the Court of Appeals’ conclusion that petitioner’s Philippine filing complied with the one-year priority rule and that the Patent Office’s determination of patentability carried the presumption of correctness.

Damages and Attorney’s Fees

The Supreme Court reversed the award of actual damages and attorney’s fees to Tryco. It explained that indemnity for actual damages and lost profits requires proof with reasonable certainty supported by competent documentary evidence and the best evidence obtainable, citing Integrated Packaging Corporation v. Court of Appeals, 333 SCRA 170 [2000]. The Court held that the testimony of Tryco’s officers regarding average monthly sales and loss after the injunction did not constitute the competent documentary proof

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