The Federal Circuit has upheld a Delaware district court's judgement as a matter of law that Abbott did not infringe two of Novartis' patents (US 5,342,625 and 6,007,840) relating to pharmaceutical compositions of the drug cyclosporin. Although the appellate court disagreed with the district court's claim construction in determining whether Abbott infringed the patents under the doctrine of equivalents (a concept employed to prevent someone from getting the benefit of the invention by making a minor change that avoids literal infringement), it upheld the decision in favour of Abbott after applying the all-elements rule.

Cyclosporin is a drug that prevents organ rejection in transplant patients. The drug is highly lipophilic and it is consequently difficult to administer in a convenient form that provides the desired bioavailability. Novartis' patents cover oil-in-water micro-emulsion compositions that facilitate human absorption of cyclosporin, which include lipophilic components. Novartis sued Abbott for patent infringement over their product Gengraf, which is a cyclosporin formulation that contains hydrophilic excipients and the surfactant Span 80, which reduces the surface tension of water at appropriate concentrations and increases drug solubility. The parties disputed whether the term 'surfactant', as it is used in the patents, encompasses both hydrophilic and lipophilic molecules.

Although the Federal Circuit stated that the district court's construction of 'lipophilic component' as excluding the function of a surfactant was too narrow, it determined that, even with a broader construction, there would still be no infringement by Abbott. This is because application of the doctrine of equivalents in this case would violate the all-elements rule, which requires that the determination of equivalency proceed on an element-by-element basis, rather than comparing the overall similarity of the accused invention as a whole to the claims. This ensures that the application of the doctrine is not allowed such broad coverage as to effectively eliminate every similar invention.