2012-1310

UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT

ALLERGAN, INC., ALLERGAN USA, INC., ALLERGAN SALES, LLC, ENDO PHARMACEUTICALS SOLUTIONS INC.,

and SUPERNUS PHARMACEUTICALS, INC., Plaintiffs Appellants,

v.

WATSON LABORATORIES, INC. – FLORIDA, Defendant-Appellee,

and

SANDOZ INC., Defendant-Appellee,

and

PADDOCK LABORATORIES, INC., Defendant-Appellee.

Appeal from the United States District Court for the District of Delaware in consolidated case 09-CV-0511, Chief Judge Gregory M. Sleet

RESPONSIVE BRIEF OF DEFENDANT-APPELLEE WATSON LABORATORIES, INC. – FLORIDA

Charles A. Weiss Cynthia Lambert Hardman KENYON & KENYON LLP One Broadway New York, NY 10004-1007 (212) 425-7200

John W. Bateman KENYON & KENYON LLP 1500 K Street, NW Washington, DC 20005-1257 (202) 220-4200

Attorneys for Defendant-Appellee Watson Laboratories, Inc. – Florida June 1, 2012

CERTIFICATE OF INTEREST

Counsel for Appellee-Watson Laboratories, Inc. – Florida certifies the following: 1. The full name of every party or amicus represented by me is: Watson Laboratories, Inc. – Florida. 2. The name of the real party in interest (if the party named in the caption is not

the real party in interest) represented by me is: Watson Laboratories, Inc. – Florida. 3. All parent corporations and any publicly held companies that own 10 percent

or more of the stock of the party or amicus curiae represented by me are:

Watson Laboratories, Inc. – Florida is owned by Andrx Corporation which is a wholly owned subsidiary of Watson Pharmaceuticals, Inc. By virtue of this arrangement, Watson Pharmaceuticals, Inc. is a publicly held corporation that owns more than 10% of Watson Laboratories, Inc. – Florida.

4. The names of all law firms and the partners or associates that appeared for

the party or amicus now represented by me in the trial court or agency or are expected to appear in this court are:

KENYON & KENYON LLP: Charles A. Weiss, John W. Bateman, Cynthia Lambert Hardman, Brian J. Robinson; RICHARDS, LAYTON & FINGER, P.A.: Chad M. Shandler, Stephen M. Ferguson, Travis S. Hunter.

Dated: June 1, 2012 /s/ Charles A. Weiss CHARLES A. WEISS

TABLE OF CONTENTS

Page

-ii-

STATEMENT OF RELATED CASES....................................................................1

COUNTER-STATEMENT OF THE ISSUES .........................................................2

COUNTER-STATEMENT OF THE CASE ............................................................4

COUNTER-STATEMENT OF FACTS...................................................................5

I. Trospium Was An Old Drug With Known Properties That Made It An Appealing Candidate For A Once-A-Day Product...........5

II. Shire Used Its Existing Multiparticulate Platform—Already Implemented In Two Marketed Extended-Release Products And Well-Described in the Patent Literature—To Formulate Once-Daily Trospium and Quickly Achieved Success........................7

III. The Applicants Obtained Allowance of the Patents By Representing That Trospium Was Known To Have Negligible Absorption In The Colon, Arguing That Federal Circuit Law Made Extended-Release Claims Nonobvious If the Drug Was Not Thought To Be Absorbed in the Colon .........................................8

SUMMARY OF THE ARGUMENT .....................................................................11

ARGUMENT ..........................................................................................................15

I. Standard of Review ............................................................................15

II. The District Court Did Not Commit Legal Error...............................16

A. The District Court Did Not Fall Into Hindsight.......................16

B. Allergan Invited the District Court to Determine if It Rebutted Prima Facie Obviousness With Evidence of Secondary Considerations........................................................17

C. The Result in Cyclobenzaprine Does Not Mandate Reversal....................................................................................21

III. The District Court’s Factual Findings Are Not Clearly Erroneous............................................................................................24

A. The Testimony By Indevus Employee Dr. Sandage of Alleged Failures and Skepticism By Madaus AG And Bayer Pharmaceuticals Was Hearsay Not Subject To Any Exception .................................................................................24

TABLE OF CONTENTS (continued)

Page

-iii-

B. Allergan’s Attempts to Substitute Madaus and Dr. Fuhr for the Hypothetical Person of Ordinary Skill in the Art Are Improper as a Matter of Law ............................................25

C. The Scope and Content of the Prior Art ..................................26

1. The District Court Correctly Found That Art Suggested Use of Multiparticulate Formulations..........26

2. The District Court Correctly Found That Trospium Would Have Been Considered for Modified-Release Formulation ......................................................28

(a) Allergan’s New Argument Concerning IV/IVC Lacks Factual Support............................28

(b) The District Court’s Finding That a POSA Would Consider Trospium for Once-Daily Formulation Is a Factual Determination and Not Clearly Erroneous.........................................31

(c) The Prior Art Demonstrated Colonic Absorption of Trospium......................................31

(d) The Pharmacokinetic Parameters of Trospium were Known and Would Have Been Considered By a Person of Ordinary Skill in the Art as a Positive Factor in Formulating ER Trospium ..................................35

(e) The Half-Life of Trospium Was Known and Would Have Been Considered By a Person of Ordinary Skill in the Art as a Positive Factor in Formulating ER Trospium...................36

3. A Person of Ordinary Skill in the Art Would Have Known to Increase the Amount of Trospium Released in the Colon to Increase Absorption ..............37

4. The District Court Correctly Found Motivation to Formulate Trospium as Once-a-Day Extended-Release Formulation ......................................................38

D. Differences Between the Claims and Prior Art .......................40

TABLE OF CONTENTS (continued)

Page

-iv-

1. Controlled-Release Multiparticulates Were Legion in the Prior Art ...............................................................41

2. The Prior Art Taught Releasing Drug in the Colon for Extended-Release Formulations ..............................42

3. Steady-State Blood Levels and PK Parameters of Immediate-Release Trospium Are In the Prior Art .......43

E. There Was No Evidence Showing Objective Indicia of Nonobviousness .......................................................................45

1. Allergan Failed to Present Evidence of Long-Felt Need ...............................................................................45

2. There Is No Evidence Anyone Failed Making Once-Daily Trospium ....................................................46

3. Bayer and Madaus’ Alleged Skepticism Does Not Show Nonobviousness...................................................48

4. The Schröder Poster Teaches Toward, Not Away From, the Asserted Claims ............................................49

5. Licensing by Others.......................................................51

F. Reasonable Expectation of Success .........................................53

IV. The District Court Erred in Concluding that Watson Infringed the Method Claims .............................................................................54

A. Allergan Did Not Prove, and Indeed Disproved, that Watson’s Product Meets the Steady-State Cmax Element of Claim 1 of the ’359 Patent...................................................54

B. Allergan Did Not Prove Inducement of the Asserted Method Claims.........................................................................58

1. Allergan Did Not Prove Indirect Infringement of the ’359 Patent By Inducement .....................................58

2. Allergan Did Not Prove Indirect Infringement of the ’449 Patent By Inducement .....................................59

v

TABLE OF AUTHORITIES Page(s)

Cases

Abbott Labs. v. Sandoz, Inc., 544 F. 3d 1341 (Fed. Cir. 2008) ............................................................. 29, 30

Adams Respiratory Therapeutics v. Perrigo Co., 616 F.3d 1283 (Fed. Cir. 2010) .....................................................................57

Alza Corp. v. Mylan Labs., Inc., 391 F.3d 1365 (Fed. Cir. 2004.) ...................................................................17

Alza Corp. v. Mylan Labs., Inc., 464 F.3d 1286 (Fed. Cir. 2006) ............................................................. passim

Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343 (Fed. Cir. 2001) .....................................................................25

Anderson v. Bessemer City, 470 U.S. 564 (1985).......................................................................................15

Cordis Corp. v. Medtronic Ave, Inc., 511 F.3d 1157 (Fed. Cir. 2008) .....................................................................18

Dennison Mfg. Co. v. Panduit Corp., 475 U.S. 809 (1986).......................................................................................15

Desper Prods., Inc. v. QSound Labs, Inc., 157 F.3d 1325 (Fed. Cir. 1998) .....................................................................56

Giles v. Kearney, 571 F.3d 318 (3d Cir. 2009) ..........................................................................15

Glassroth v. Moore, 335 F.3d 1282 (11th Cir. 2003) .....................................................................18

Glaxo, Inc. v. Novopharm, Ltd., 110 F.3d 1562 (Fed. Cir. 1997) .............................................................. 56, 57

Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060 (2011)...................................................................................58

vi

Graham v. John Deere Co., 383 U.S. 1 (1966)................................................................................... passim

In re Cyclobenzaprine Hydrochloride Extended-Release Capsule Patent Litigation, 676 F.3d 1063 (Fed. Cir. 2012) ............................................................. passim

In re Fulton, 391 F.3d 1195 (Fed. Cir. 2004) .....................................................................50

In re Gurley, 27 F.3d 551 (Fed. Cir. 1994) .........................................................................50

KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398 (2007).......................................................................................54

Leapfrog Enters., Inc. v. Fisher-Price, Inc., No. 03-927-GMS, 2006 WL 891001 (D. Del. Mar. 30, 2006) .....................18

Leapfrog Enters., Inc., v. Fisher-Price, Inc., 485 F.3d 1157 (Fed. Cir. 2007) .............................................................. 18, 19

Lincoln v. Board of Regents, 697 F.2d 928 (11th Cir. 1983) .......................................................................20

Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008) .....................................................................49

Nagy v. L. Mundet & Son, Inc., 101 F.2d 82 (2d Cir. 1939) ............................................................................47

O2 Micro Int’l Ltd. v. Beyond Innovation Tech. Co., 449 Fed. Appx. 923 (Fed. Cir. 2011) ............................................................18

Pan Am. World Air., Inc. v. Aetna Cas. & Sur. Co., 505 F.2d 989 (2d Cir. 1974) ..........................................................................23

Para-Ordinance Mfg., Inc. v. SGS Importers Int’l, Inc., 73 F.3d 1085 (Fed. Cir. 1995) .......................................................................49

PharmaStem Therapeutics, Inc. v. Viacell, Inc., 491 F.3d 1342 (Fed. Cir. 2007) .....................................................................48

vii

Princeton Biochemicals, Inc. v. Beckman Coulter, Inc., 411 F.3d 1332 (Fed. Cir. 2005) .....................................................................16

Pullman-Standard v. Swint, 456 U.S. 273 (1982).......................................................................................21

Rothman v. Target Corp., 556 F.3d 1310 (Fed. Cir. 2009) .....................................................................25

Ruiz v. A.B. Chance Co., 357 F.3d 1270 (Fed. Cir. 2004) .....................................................................16

SIBIA Neurosciences, Inc. v. Cadus Pharmaceutical Corp., 225 F.3d 1349 (Fed. Cir. 2000) .....................................................................52

Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d 1530 (Fed. Cir. 1983) .............................................................. 51, 52

Syntex (U.S.A.) LLC v. Apotex, Inc., 407 F.3d 1371 (Fed. Cir. 2005) .....................................................................15

Tessera, Inc. v. International Trade Com'n, 646 F.3d 1357 (Fed. Cir. 2011) .....................................................................16

United States v. Price, 458 F.3d 202 (3d Cir. 2006) ..........................................................................16

Statutes

35 U.S.C. § 103................................................................................................... 4, 19

35 U.S.C. § 271(b) ...................................................................................................59

Other Authorities

9 James W. Moore et al., Moore’s Federal Practice (3d ed. 2012) ........................................................20

Rules

Fed. R. Civ. P. 52(a)(6)............................................................................................15

Fed. R. Evid. 201(b).................................................................................................30

viii

Fed. R. Evid. 201(e) .................................................................................................30

Fed. R. Evid. 801(a)-(c) ...........................................................................................24

1

STATEMENT OF RELATED CASES

No other appeal in or from this civil action in the district court was

previously before this or any other appellate court, and no other case is known to

be pending in this or any other court that will directly affect or be directly affected

by this Court’s decision in the pending appeal.

2

COUNTER-STATEMENT OF THE ISSUES

1. Have plaintiffs-appellants shown that the district court clearly erred in its

fact findings on the first three Graham factors, including its findings on the

subsidiary fact issues that:

(a) trospium’s known physical, chemical, and pharmaceutic characteristics

made it a good candidate for a once-a-day formulation;

(b) market pressure to convert trospium to a once-a-day formulation began

shortly before the date of invention, driven by the recent reformulation of

other OAB drugs to once-daily formulations; and

(c) a person of ordinary skill in the art would have been motivated to make

the claimed invention with a reasonable expectation of success?

2. Have plaintiffs-appellants shown that the district court clearly erred in its

fact finding on objective indicia of nonobviousness, when they, inter alia:

(a) sought to prove “tried and failed” through hearsay testimony that (i)

lacked the details required to link this factor to nonobviousness even if

accepted and (ii) related primarily to events that predated the beginning of

the market pressures to switch OAB drugs to once-daily formulations; and

(b) tried to prove “skepticism of others” through hearsay testimony about

supposed events that predated the publication of significant prior art?

3

3. Did the district court, having discounted or rejected the presence of objective

indicia of nonobviousness without clearly erroneous fact finding, commit legal

error in holding the asserted claims invalid as obvious given its largely uncontested

(and not clearly erroneous) factual findings on the first three Graham factors?

4. As to the asserted method claims, did the district court err in holding that

defendant-appellee Watson infringed:

(a) claim 1 of the ’359 patent, which required a steady-state Cmax of less

than 2,400 pg/mL, by relying on data for the branded product Sanctura XR

published in 2010, even though Allergan’s expert testified that his steady-

state modeling—which the district court accepted to prove infringement of

the other claims—showed that Watson’s product had a steady-state Cmax of

3,560 pg/mL; and

(b) claim 1 of the ’359 patent, and claims 1, 10, and 18 of the ’449 patent,

without evidence that Watson had knowledge of, or intended to cause,

patients to practice claim elements that were shown to occur from use of the

branded product but not from use of Watson’s accused product?

4

COUNTER-STATEMENT OF THE CASE

The district court correctly found that defendants established by clear and

convincing evidence that all asserted claims were invalid as obvious. The district

court made detailed findings on each of the factual inquiries, including (i) the

scope and content of the prior art, (ii) the level of ordinary skill in the art, (iii) the

differences between the claimed subject matter and the prior art, and (iv) objective

indicia of nonobviousness. Graham v. John Deere Co., 383 U.S. 1, 17-18 (1966).

The district court found that the prior art taught that trospium could be used

in a once-a-day formulation and that an “extensive tool kit” was available to

accomplish this goal. A24-26; A11470:14-1471:2. It further found that the prior

art disclosed (1) multiparticulate formulations using extended, delayed, and

immediate-release pellets; (2) multiparticulate formulations designed to target the

lower GI tract; (3) properties of trospium that made it a good candidate for once-a-

day formulation; and (4) market pressure for formulate once-daily formulations.

A18-38. The district court carefully considered evidence of secondary

considerations, but found them weak or nonexistent as a matter of fact. A38-49.

Allergan’s nonobviousness argument rests largely on unproven facts of what

a company—Madaus—thought about the prospects of developing once-daily

trospium, and the results of an eight-person study published in a one-page poster.

5

No one from Madaus testified, and nothing substantiates the inadmissible hearsay

testimony of Allergan’s witness Dr. Sandage about what Madaus was thinking.

Allergan’s reliance on papers from 2008 and 2010 as evidence of the

“prevailing wisdom” that drugs with relative colonic absorption below 30% are not

recommended for extended-release (ER) formulation is improper, because articles

from 2008 and 2010 do not show what a person of ordinary skill in the art (POSA)

thought in 2002. Indeed, Allergan’s expert testified that the 30% “rule of thumb”

was developed years after the alleged invention. A11383:3-9; A11455:16-23.

Even though weak, the district court considered these references with all the other

art, and found as a matter of fact that trospium’s low colonic absorption was not

inconsistent with a reasonable expectation of success. A36.

There was no clear error in the district court’s factual findings. It made the

inquiry required by precedent and properly considered all the evidence before

concluding that defendants proved by clear and convincing evidence that the

asserted claims were invalid as obvious.

COUNTER-STATEMENT OF FACTS

I. Trospium Was An Old Drug With Known Properties That Made It An Appealing Candidate For A Once-A-Day Product

Trospium is an old drug that was first sold by Madaus in Europe as an

immediate-release (IR) twice-daily tablet starting in 1967. A16; A97-122 at A110;

6

A10139:7-12. Trospium suppositories were also available in Europe. A97-122 at

A110. Madaus has no U.S. presence or products.

In 1999, the business-development group at Interneuron—a U.S. drug

company that in-licensed products with clinical experience overseas that permits

fewer studies for FDA approval—identified trospium as a “real interesting

compound” based on its approval in Europe and clinical-study information that

Madaus had accumulated over the years. A10136:13-23; A10138:22-139:12.

Trospium was long off-patent, but Interneuron’s business means that it

needed access to Madaus’s clinical studies and dossier. To get these, Interneuron

in-licensed from Madaus know-how and clinical data for the U.S. market.

A10139:21-140:14. In December 2000, Interneuron filed an IND for IR, twice-

daily trospium. A10146:10-21. While awaiting FDA approval, Interneuron began

considering ER trospium (A10148:2-11) because the two dominant OAB drugs in

the U.S. that were previously available only in IR form—oxbutynin (marketed by

Johnson & Johnson as Ditropan) and tolterodine (marketed by Pfizer as Detrol)—

had just switched to ER, once-a-day formulations. A32-3; A10226:6-15;

A10229:2-11; A10272:9-274:4. This motivated doing the same for trospium

because—as Interneuron’s business people easily saw—“the whole market [was]

moving to a once-a-day dosage form” and a once-a-day product was needed to

compete. Id.; see also A45; A8518-19; A10321:2-7.

7

In September 2001, Interneuron published a non-confidential profile for

prospective marketing partners stating that trospium could “be easily converted to

a once-a-day treatment.” A9201-03 at A9203. Interneuron’s head of research and

development, Dr. Bobby Sandage, testified that Interneuron was “very optimistic”

it could make a once-a-day product based on (i) the clinical data it had obtained

from Madaus, and (ii) trospium’s favorable pharmaceutic properties, including its

half-life and known pharmacokinetics. A37; A10149:10-151:5; A10256:20-257:3.

II. Shire Used Its Existing Multiparticulate Platform—Already Implemented In Two Marketed Extended-Release Products And Well-Described in the Patent Literature—To Formulate Once-Daily Trospium and Quickly Achieved Success

Interneuron engaged Shire to make its once-daily trospium formulation in

February 2002, and within a couple months the claimed invention was complete.

A38; A10155:5-14; A5695-5702 at A5695; see also A10351:1-374:11. Over the

next six months, Shire performed experiments required for FDA approval.

A10351:1-374:11. However, it cannot deny that the invention was complete in

early 2002 because it relied on documents from that time (albeit with the dates

redacted) to swear behind a reference during prosecution. A925-35.

In recounting the work at Shire, inventor Dr. Raoufinia agreed that the “a-ha

moment” during development—recognizing that trospium’s limited absorption in

the colon could be handled by simply releasing more drug in the colon—came

8

from people at Interneuron who are not inventors on the patents. A10492:16-

493:19.

III. The Applicants Obtained Allowance of the Patents By Representing That Trospium Was Known To Have Negligible Absorption In The Colon, Arguing That Federal Circuit Law Made Extended-Release Claims Nonobvious If the Drug Was Not Thought To Be Absorbed in the Colon

The applications that led to the patents-in-suit were filed in November 2003.

A97-122 at A98. The Examiner rejected all claims as obvious. A676-706.

Before responding, the applicants interviewed the Examiner and presented a

one-page poster by Schröder describing a study in which eight male volunteers

were given 5 ml (1 teaspoon) trospium solution by rectum. A745-747. They

argued that Schröder reported a “very low concentration of trospium chloride

found after rectal administration,” and thus established a “lack of colonic

absorption of trospium chloride (and, hence, a corresponding lack of reasonable

expectation of success)” in formulating once-a-day trospium. A777-778. The

interview summary describes argument by attorney Villacorta and inventor Bhatt:

Dr. Villacorta detailed that Maudas AG has been marketing trospium for nearly 40 years, however, they disclose that “modified release preparations of the [trospium] using conventional technology are not expected to improve trospium chloride bioavailability.” The prior art also discloses that absorption of trospium chloride within the colon is negligible through studies of administration into the rectum. Dr. Villacorta also referenced a US Court of Appeals, Federal Circuit decision where it states hypothetically that if absorption in the colon is

9

not already achieved by the prior art composition, an extended release formulation of that composition would be non-obvious. Drs. Bhatt and Villacorta then discussed the novelty of the instant application, wherein the controlled release formulations show greater absorption in the colon when compared to the prior art. A747.

The applicants’ argument that once-a-day trospium “show[ed] greater

absorption in the colon when compared to the prior art,” was a straw man.

Allergan never showed that the claimed invention resulted in “greater absorption”

in the colon. Nor do the claims even require absorption in the colon, speaking as

they do to “release” (not absorption). Nor, for that matter, do most of the claims

even require release in the colon, speaking as they do to release in the “lower GI

tract,” which is defined by the specification as the colon and the ileum (A97-122 at

A111), which is the lower third of the small intestine.1

The applicants also argued for allowance based on dicta in a case on a

different extended-release OAB drug (oxybutynin). The patentee in Alza Corp. v.

Mylan Labs., Inc., 464 F.3d 1286 (Fed. Cir. 2006), argued that a POSA would not

expect oxybutynin to be absorbed in the colon, and would thus be dissuaded from

making a once-a-day formulation. In affirming the district court’s obviousness

judgment, the Court hypothesized that if a drug is “simply not absorbed” in the

colon, a POSA may have little motivation to release drug there. Id. at 1291-92.

1 The district court, with all parties’ agreement, construed “lower GI tract” accordingly. A64; A13913-915.

10

But that was not the evidence, and the judgment of invalidity was affirmed. Id. at

1297.

The applicants here used the hypothetical in Alza to create a fictitious

standard by which claims directed to sustained-release (SR) formulations must be

analyzed:

The CAFC in Alza has laid out for future litigations, the USPTO, and the Applicants a standard by which the obviousness/non-obviousness of patent claims of the sort scrutinized in Alza and at issue here may be determine appropriately: that is, whether one of ordinary skill in the art at the time the invention was made would have had a reasonable expectation that trospium chloride would be colonically absorbed and therefore would have been motivated to produce the claimed controlled release or once a day dosage formulation. A777.

They applied this supposed standard to the alleged results of Schröder to argue

teaching away, even though the Examiner had not cited Schröder in his rejection:

The instant application claims the benefit of a November 4, 2003 priority date. Hence, the proper inquiry is what one of ordinary skill in the art would have known in 2003 about the level of colonic absorption of trospium chloride. To answer this question, Applicants presented at the personal interview, as evidence of the prevailing sentiment in the art of a lack of colonic absorption of trospium chloride (and hence corresponding lack of reasonable expectation of success), a poster presentation … by researchers from Germany. Id.

* * *

[T]he poster presentation teaches away from the subject matter of the various pending claims, as the poster presentation teaches that colonic absorption is almost negligible and effectively rules out any hope of improving trospium chloride bioavailability using modified release preparations. A785.

11

In allowing the claims, the Examiner accepted the applicants’ arguments

about Schröder:

However the instant invention has disclosed that trospium chloride-bearing particulates comprising at least one enteric and/or release controlling polymers sufficiently release trospium chloride into the lower GI, tract wherein the trospium chloride is sufficiently absorbed and steady state blood level that are comparable to twice daily administration of 20 mg immediate release trospium chloride tablets is achieved. Therefore, Schroder et al. teach away from the instant invention but the instant invention has shown unexpected results of sufficient absorption of trospium chloride into the lower GI tract when formulated in particulates comprising at least one enteric and/or release controlling polymers. A1172.

The asserted claims do not require absorption in the colon, are not directed to

specific formulations, and do not provide improved bioavailability. They require

only release in the lower GI tract (and in two claims, release in the colon).

Inventor Dr. Kidane acknowledged, “what is in the claims is any combination that

would produce delivery to the lower part of the GI tract.” A10407:25-408:20.

SUMMARY OF THE ARGUMENT

The district court found that defendants carried their burden of proving

obviousness by clear and convincing evidence, and its findings of fact are not

clearly erroneous.

There is no real dispute that all elements of the claims are in the prior art,

that conventional sustained-release technology widely used in commercial

products was fully applicable to trospium, and that substantial market pressure

12

demanded a once-daily formulation. Even if there was a dispute, the district

court’s findings all these points are not clearly erroneous.

On the first three Graham factors, the substantial point of disagreement at

trial was whether a POSA would—despite this knowledge and motivation—throw

up his hands in belief that the entire venture would be futile. Reprising the

argument that carried the day during prosecution, Allergan argued at trial (and now

on appeal) that the Schröder poster—a non-peer reviewed, single-page abstract

reporting an eight-subject experiment with rectal administration of one teaspoon of

trospium solution—so convincingly disproves that trospium is absorbed in the

colon that a POSA would disregard everything else that made trospium an

attractive candidate for once-daily formulation. But the district court found based

on substantial evidence, including the testimony of Allergan’s own expert, that the

Schröder poster did not disprove the absorption of trospium in the colon and would

not have negated a POSA’s expectation of success.

Allergan’s other argument is that the district court gave inadequate weight to

objective indicia of nonobviousness, but this too fails because the district court

found against Allergan on the facts. Here, Allergan sought to prove failure-of-

others and skepticism through hearsay testimony that the district court found

unpersuasive. The district court’s evaluations of the evidence are findings of fact,

and not clearly erroneous.

13

Even if credited, Allergan’s hearsay evidence of failure-of-others lacks the

details necessary to link it to obviousness. In summary, its witness Dr. Sandage

testified that Madaus, which marketed immediate-release trospium in Europe, did

not develop a once-daily product. But he did not testify to, and did not know, what

Madaus attempted, its commercial analysis, the business case for such products in

Europe, what resources were available, or any of the myriad factors that may lead a

pharmaceutical company not to invest in a candidate. It is an unreasonable

inference, and certainly not an inference that the district court was obligated to

accept, to equate every instance of nondevelopment with failure a of development

for reasons that bear on obviousness, such as lack of necessary information in the

prior art or significant technological hurdles.

On the facts properly found by the district court, the asserted claims are

indeed obvious. The findings on the first three Graham factors were powerful, the

evidence of secondary considerations was weak to nonexistent, and all that remains

is the use of routine techniques to make a product that performs as would have

been expected.

Separately, Watson includes alternative grounds for affirmance as to the

asserted method claims. Allergan did not prove inducement because it relied on

information outside the label, and not associated in any way with Watson, to prove

direct infringement without showing that Watson knew of this information or

14

intended its accused product to perform in the patented way. As to one of the

claims, Allergan also failed to prove direct infringement because its expert

admitted that Watson’s accused product did not satisfy all elements of the claim.

15

ARGUMENT

I. Standard of Review

Obviousness is a question of law based on underlying facts. Graham, 383

U.S. at 17. The ultimate determination of obviousness is reviewed de novo, the

Graham factors for clear error. Dennison Mfg. Co. v. Panduit Corp., 475 U.S. 809,

810-11 (1986); Syntex (U.S.A.) LLC v. Apotex, Inc., 407 F.3d 1371, 1378 (Fed.

Cir. 2005). Similarly, the presence or absence of (i) motivation to combine

references and (ii) reasonable expectation of success are questions of “pure fact.”

Alza v. Mylan, 464 F.3d at 1289.

The district court’s fact findings can be set aside only if clearly erroneous.

Fed. R. Civ. P. 52(a)(6). Under this standard in the Third Circuit:

It is the responsibility of an appellate court to accept the ultimate factual determination of the fact-finder unless that determination either (1) is completely devoid of minimum evidentiary support displaying some hue of credibility, or (2) bears no rational relationship to the supportive evidentiary data.

Giles v. Kearney, 571 F.3d 318, 322 (3d Cir. 2009). “If the district court’s account

of the evidence is plausible in light of the record viewed in its entirety, the court of

appeals may not reverse … [even if] it would have weighed the evidence

differently.” Anderson v. Bessemer City, 470 U.S. 564, 573-4 (1985).

16

Infringement is a question of fact that requires comparing the accused

product to the properly construed claims. Tessera, Inc. v. International Trade

Com'n, 646 F.3d 1357, 1364 (Fed. Cir. 2011).

Whether a statement is hearsay is a question of law reviewed de novo.

United States v. Price, 458 F.3d 202, 205 (3d Cir. 2006).

II. The District Court Did Not Commit Legal Error

A. The District Court Did Not Fall Into Hindsight

Allergan’s attack on the district court as employing hindsight is misplaced.

Hindsight is using the claims as a roadmap through the prior art, not conducting an

element-by-element analysis. Ruiz v. A.B. Chance Co., 357 F.3d 1270, 1275 (Fed.

Cir. 2004) (assessing prior art with respect to claim elements to determine if claims

as a whole are obvious is not impermissible hindsight); Princeton Biochemicals,

Inc. v. Beckman Coulter, Inc., 411 F.3d 1332, 1336-39 (Fed. Cir. 2005) (affirming

judgment of obviousness that followed element-by-element analysis of prior art

because there was sufficient evidence of motivation to combine).

Allergan even demanded the element-by-element analysis it now complains

of. At trial, it criticized Dr. Kibbe’s opinion of obviousness—which he expressed

after explaining the scope and content of the prior art, and the reasons a POSA

would be motivated to make certain modifications and changes—because there

was no “limitation by limitation, element by element tying of the claims to the

17

prior art.” A11365:1-3. Having complained before that defendants should have

more overtly matched each claim element to the prior art, Allergan’s new

complaint that the district court erred by doing so (Br. at 2, 4) comes with ill-grace,

especially after it told the district court that finding obviousness without doing this

would not “last 10 minutes up at the Federal Circuit.” A11365:8-9.

B. Allergan Invited the District Court to Determine if It Rebutted Prima Facie Obviousness With Evidence of Secondary Considerations

Allergan’s criticism of the district court’s order of analysis—in which it

considered the Graham factors and stated that the claims were prima facie obvious

before moving to secondary considerations—fails because Allergan invited this

approach. The district court acknowledged Allergan’s request, as shown by

comparing Allergan’s post-trial brief with the Opinion:

Allergan’s brief Opinion

105. Plaintiffs are not required to demonstrate any secondary considerations of non-obviousness unless and until defendants establish a prima facie case of obviousness. Alza Corp. v. Mylan Labs., Inc., 391 F.3d 1365, 1373 n. 9 (Fed. Cir. 2004.) The Court finds that defendants did not establish such a case. In any event, had defendants done so, plaintiffs presented evidence of secondary considerations sufficient to rebut any prima facie case, as described below. A15308-15355 at A15349, ¶ 105.

Here, the plaintiffs contend that the defendants failed to establish a prima facie case of obviousness in light of the evidence adduced at trial. The plaintiffs also argue, in the alternative, that should the court determine, as it has, that the defendants established a prima facie case on this issue, the secondary considerations of copying, teaching away, failure of others, licensing, and unexpected results/skepticism sufficiently rebut this prima facie case. A39.

18

Having presented the law this way, Allergan cannot assign error to the district

court’s approach. Cordis Corp. v. Medtronic Ave, Inc., 511 F.3d 1157, 1172 (Fed.

Cir. 2008) (appellant’s challenge to jury instruction it proposed “either constitutes

‘invited error’ that is not reviewable at all, or at most is subject to review under the

‘plain error’ standard”) (Third Circuit law).2

Even if Allergan’s attack is not formally barred as invited error, the

substantial congruence between its statement of law and the district court’s

approach demonstrates that any error was harmless. The Federal Circuit routinely

employs the same shorthand. For example, Leapfrog Enterprises, Inc., v. Fisher-

Price, Inc., 485 F.3d 1157 (Fed. Cir. 2007), came up from the same district judge,

who found the claims obvious and discussed secondary considerations only after

several pages devoted to the prior art:

As to the secondary considerations tending to show nonobviousness, Leapfrog points to only three: commercial success, praise, and long-felt need. While it is true that Leapfrog adduced substantial evidence of these three factors, the court is not convinced that they overcome the very strong case of obviousness presented by Fisher-Price through the testimony of [its expert].

Leapfrog Enters., Inc. v. Fisher-Price, Inc., No. 03-927-GMS, 2006 WL 891001,

*4 (D. Del. Mar. 30, 2006). The Federal Circuit affirmed, rejecting the patentee’s

2 Invited error applies in bench trials. Glassroth v. Moore, 335 F.3d 1282, 1290 (11th Cir. 2003); O2 Micro Int’l Ltd. v. Beyond Innovation Tech. Co., 449 Fed. Appx. 923, 934 (Fed. Cir. 2011) (non-precedential).

19

argument that the district court gave inadequate consideration to secondary

considerations, and using the familiar “prima facie” formulation:

Finally, we do not agree with Leapfrog that the court failed to give proper consideration to secondary considerations. The district court explicitly stated in its opinion that Leapfrog had provided substantial evidence of commercial success, praise, and long-felt need, but that, given the strength of the prima facie obviousness showing, the evidence on secondary considerations was inadequate to overcome a final conclusion that claim 25 would have been obvious. We have no basis to disagree with the district court’s conclusion.

Leapfrog, 485 F.3d at 1162. Indeed, Graham also invites this analysis:

Under § 103, the scope and content of the prior art are to be determined; differences between the prior art and the claims at issue are to be ascertained; and the level of ordinary skill in the pertinent art resolved. Against this background, the obviousness or nonobviousness of the subject matter is determined. Such secondary considerations as commercial success, long felt but unsolved needs, failure of others, etc., might be utilized to give light to the circumstances surrounding the origin of the subject matter sought to be patented. As indicia of obviousness or nonobviousness, these inquiries may have relevancy.

383 U.S. at 17-18. See also KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 426

(2007) (“Like the District Court, finally, we conclude Teleflex has shown no

secondary factors to dislodge the determination that claim 4 is obvious.”).

Unlike the district court’s characterization of the legal role of secondary

considerations in an obviousness analysis—which was legally correct and endorsed

by Allergan—its citation to an ex parte case for the proposition that “once a prima

facie case of obviousness has been established, the burden then shifts to the

applicant to present evidence of secondary considerations” (A38) was misplaced,

20

even though legally correct (because of the reference to “the applicant”). Allergan

does not show, however, that this affected the outcome.

First, the district court’s more detailed statement of the standards for

obviousness (A14-15) was correct. It identified the Graham factors, including

secondary considerations, as framing the factual inquiry and correctly stated that a

party challenging validity bears the burden of proof by clear and convincing

evidence. A14 n.2. Nothing in the Opinion suggests it disregarded these

principles.

Second, because the ultimate legal issue of obviousness is reviewed de novo,

the Federal Circuit would not simply adopt the district court’s legal conclusions in

any event, rendering harmless any misstatement of the law that did not infect the

district court’s factual findings. 9 James W. Moore et al., Moore’s Federal Practice

§ 52.32[4] at 83-84 (3d ed. 2012) (reviewing court may discard fact findings based

on erroneous view of law only if the legal error affected the challenged findings);

Lincoln v. Board of Regents, 697 F.2d 928, 939-40 n.13 (11th Cir. 1983) (“We

need not depart from the ‘clearly erroneous’ standard, however, if application of

the wrong legal standard did not ‘taint or infect’ the district court’s factual

findings.”). No “infection” occurred here: the district court did not assign to

21

Allergan the burden of proving validity, or relieve defendants of their clear-and-

convincing evidentiary burden.3

C. The Result in Cyclobenzaprine Does Not Mandate Reversal

Allergan’s efforts to shoe-horn this appeal into In re Cyclobenzaprine, 676

F.3d 1063 (Fed. Cir. 2012) fails because Allergan erroneously equates its unproven

and properly rejected “failure of others” to the well-documented failure of Alza to

make a once-a-day formulation of cyclobenzaprine.

First, the evidence in Cyclobenzaprine of Alza’s attempt and failure directly

refuted the challengers’ obviousness case by showing that targeting the known-

effective pharmacokinetics of the immediate-release drug—which was at the heart

of the defendants’ obviousness case—did not work. Specifically:

ALZA chose a straight line that cut through the immediate-release profile, staying below the peaks and above the valleys. ALZA hoped that staying below the peaks would avoid side effects and that staying above the valleys would maintain therapeutic effectiveness. Clinical trials, however, revealed that ALZA’s product was not therapeutically effective. ALZA lost $10 million in its unsuccessful attempt to develop an extended-release formulation.

3 If legal error did render the factual findings infirm, the remedy is remand for new findings under the correct standard. Pullman-Standard v. Swint, 456 U.S. 273, 293 (1982) (“It follows that when a district court’s finding on … [a] fact is set aside for an error of law, the court of appeals is not relieved of the usual requirement of remanding for further proceedings to the tribunal charged with the task of fact finding in the first instance.”).

22

Id. at 1081. The Court explained that Alza’s efforts established what “failure of

others” is all about, i.e., showing “the presence of a significant defect in the prior

art, while serving as a simulated laboratory test of the obviousness of the solution

to a skilled artisan.” Id. at 1082 (citation omitted). Because Alza’s failure showed

that “a therapeutically effective PK profile was lacking in the prior art and that

skilled artisans struggled to attain it,” it was “keyed to the problem that the patents

in suit purport to solve.” Id.

The same cannot be said for the alleged “failure” of Madaus, even if the

Court were to reject the district court’s findings of fact as clearly erroneous (which

they are not) and substitute Allergan’s arguments. Here, there is no evidence that

Madaus made any effort to produce a once-daily trospium formulation, much less

evidence that it tried and failed. Without evidence connecting “tried and failed” in

a logical manner to the asserted claims, prior art, motivation, and everything else

bearing on the ultimate legal question of obviousness—as in Cyclobenzaprine—

“tried and failed” is an empty recitation of patent-law jargon.

Allergan’s evidence is no better than the patentee’s evidence in

Cyclobenzaprine of alleged failures by Merck and Schering-Plough, who were

actually working on development of extended-release cyclobenzaprine and

experimenting with formulations. As to them, the Federal Circuit held that the

23

evidence was weak and the district court did not clearly err in disregarding it. Id.

at 1081, n.9.

Second, Alza’s attempt and failure in Cyclobenzaprine was proven by an

Alza scientist who testified to the difference between (i) Alza’s failed attempt

using the conventional approach (cutting through the pharmacokinetic peaks and

valleys of the IR product) and (ii) the “materially different approach” taken by the

patentee, whose success surprised him. Id. at 1081-82.

The same cannot be said for the alleged “failure” of Madaus. Despite

repeated statements in its appeal brief (never supported by record cites) to the

effect that Madaus spent “years” trying to develop a new formulation (see, e.g., Br.

at 14, 59), Allergan presented no evidence from anyone connected to Madaus of

what Madaus did. Its only evidence was the hearsay testimony of Dr. Sandage—

admitted over defendants’ objections—of what people associated with Madaus

allegedly told him. Further, the absence of details about what Madaus supposedly

attempted deprives its alleged failure of probative value. Again, Allergan has only

ritualistic box-checking, not meaningful evidence that logically bears on

obviousness. At minimum, the district court’s decision not to credit this evidence

is a factual determination and not clearly erroneous.4

4 The common receipt of hearsay by district courts in bench trials “for what it’s worth” carries with it a need for circuit courts to afford great deference to findings (continued…)

24

III. The District Court’s Factual Findings Are Not Clearly Erroneous

A. The Testimony By Indevus Employee Dr. Sandage of Alleged Failures and Skepticism By Madaus AG And Bayer Pharmaceuticals Was Hearsay Not Subject To Any Exception

Allergan’s evidence of “tried and failed” and “skepticism of others” is the

testimony of Dr. Sandage, who testified to what people at Madaus and Bayer

supposedly told him. This is hearsay not within any exception. Inventive Music

Ltd. v. Cohen, 67 F.2d 29, 32 (3d Cir. 1984)5

First, the alleged assertions (“statements”) by persons at Madaus and Bayer

(“declarants”) were made out of court, and the declarants were not present at trial.

Fed. R. Evid. 801(a)-(c).

that do not credit (or severely discount) such testimony. As between the party that offers hearsay and the party that objects, such deference puts the risk where it belongs, i.e., on the party that risks trying to prove facts through hearsay. The rule against hearsay would become meaningless if the district courts were permitted to receive hearsay “for what it’s worth” in bench trials—as a matter of convenience to keep things moving—only to have their findings of fact overturned because they did not credit that hearsay testimony. Cf. Pan Am. World Air., Inc. v. Aetna Cas. & Sur. Co., 505 F.2d 989, 996, 1005 (2d Cir. 1974) (noting that district court received hearsay evidence of “dubious probative value” under “the relaxed rules of evidence applicable in bench-tried cases,” holding that it did not commit clear error in giving it little weight, and rejecting proponents’ argument that “clearly erroneous” standard should not apply because hearsay nature of the evidence meant that the district court had not evaluated the credibility of the out-of-court declarants). 5 Defendants preserved this point by objecting. A014546; A14525-14533 at A14528; A10181:8-10183:9.

25

Second, the statements were offered to prove the truth of the matter asserted,

i.e., that Madaus and/or Bayer had not been able to make once-daily trospium

and/or did not believe it feasible. Id. 801(c).

Third, no hearsay exception applies. In response to defendants’ objections,

Allergan argued that statements made by Dr. Fuhr and unnamed persons at Bayer

to Indevus were probative of Indevus’ state of mind, which in turn was relevant to

Indevus’ intent to mislead the PTO. A10180:3-12; A10183:10-16. This only

supports admissibility for a particular purpose (the effect of the declarant’s out-of-

court statement on the testifying witness’s state of mind), not a hearsay exception

under Rules 803 or 804.6

Allergan’s argument at trial that the out-of-court statements were not

admitted for the truth of the matter asserted is contrary to its use of them now.

Assuming arguendo that the out-of-court declarant told Sandage, e.g., that he (or

his company) tried and failed, the statement is probative of “tried and failed” only

if that was true.

6 Defendants’ had pled inequitable conduct and the issue was in play at trial, but after Therasense came down after trial advised Allergan and the Court they were no longer asserting it.

26

B. Allergan’s Attempts to Substitute Madaus and Dr. Fuhr for the Hypothetical Person of Ordinary Skill in the Art Are Improper as a Matter of Law

Because obviousness is based on the hypothetical POSA aware of all the

pertinent art, evidence that a specific individual did not combine the prior art is

largely irrelevant. Indeed, it is “erroneous as a matter of law” to find

nonobviousness based on testimony of an expert that he himself had never thought

of combining the prior art to arrive at the claimed invention. Amazon.com, Inc. v.

Barnesandnoble.com, Inc., 239 F.3d 1343, 1364 (Fed. Cir. 2001); see also

Rothman v. Target Corp., 556 F.3d 1310, 1318 (Fed. Cir. 2009) (expert’s statement

that the invention was “not imaginable” to him “has little relevance to whether …

[the] invention would have been obvious to a hypothetical person of ordinary skill

in the field with attributed knowledge of the relevant prior art”).

C. The Scope and Content of the Prior Art

1. The District Court Correctly Found That Art Suggested Use of Multiparticulate Formulations

Substantial evidence supports the district court’s finding that a POSA would

have known about, and been motivated to use, a multiparticulate system for

extended-release trospium. A18-25; A11558-11585; A9890-9916; A9044-9050;

A9558-9562; A9068-9083; A9795-9823; A9051-9067; A9084-9101; A9102-9114.

The district court credited Dr. Kibbe’s uncontradicted testimony that

multiparticulates were desirable because pellets with different release

27

characteristics can be combined in a single capsule and disperse widely along the

GI tract, promoting absorption. A18; A10870:4-872:2. It also credited Dr. Davis’s

testimony that the POSA would know that once-a-day formulations should deliver

drug throughout the GI tract, and would be able develop formulations to release

drug in the lower GI tract (ileum and colon). A19; A11472:7-11; A11475:12-

1476:14.

Allergan’s assertion that the district court used hindsight in its discussion of

Carbatrol as prior art mischaracterizes the Opinion and knocks down a straw man.

Defendants never argued that Carbatrol was a direction to use trospium, but rather

that this successful extended-release product and associated literature was

instructive in the use of multiparticulate formulations. The district court properly

found that Carbatrol, though a different drug, teaches “that multiparticulate

formulations can be employed to target release in the lower GI tract by adjusting

the polymer blend used to control release.” A21. Dr. Davis largely agreed.

A11472:7-11; A11475:12-1476:14; A11520:8-14.

Allergan’s argument that “there was no dispute at trial that quaternary

ammonium compounds like trospium present absorption problems in the colon that

tertiary amines do not” (Br. at 42) misreads the cited testimony, which addressed

trospium’s generally low absorption throughout the GI tract but does not address

the ease or difficulty formulating tertiary amines. A11012; A11208-09; A1393. In

28

contrast, Dr. Mayersohn testified that oxybutynin, a tertiary amine OAB drug with

even lower bioavailability than trospium, was successfully reformulated into a

once-daily product (Ditropan XL). A11212:1-3. Allergan’s criticism that some

individual references do not recite trospium misses the point, which is that

substantial art disclosed the desirability of multiparticulate systems to make ER

formulations of many different drugs. Allergan’s anticipation-type argument,

holding up each reference and making a statement about what element it does not

disclose, does not negate obviousness.

2. The District Court Correctly Found That Trospium Would Have Been Considered for Modified-Release Formulation

The district court found, and substantial evidence supports, that a POSA

would consider trospium for once-daily ER formulation. A25-32. It further found

that such a person would have looked to all the known characteristics of trospium,

good and bad. A25; A11026:21-1027:22; A11073:13-24; A11074:3-13;

A11400:4-24. Allergan’s argument that one characteristic controls, the alleged

poor colonic absorption, is contrary to its own expert’s testimony (A11400:9-24)

and was properly rejected.

(a) Allergan’s New Argument Concerning IV/IVC Lacks Factual Support

Allergan's argument on appeal that lack of a known in vitro/in vivo

correlation (IV/IVC) “suggested to everyone but the inventors that it was a poor

29

candidate for once-a-day formulation” (Br. at 42, 45-46) is unsupported by the

record. The entirety of the testimony on this point was Dr. Davis’ passing

comment that lack of known IV/IVC “would be a concern.” A11405:1-16.

Allergan’s only mention of IV/IVC in its post-trial brief is one sentence that

includes “lack of IV/IVC” in a list of properties it says “made for a low expectation

of success.” A15308-15355 at A15340, ¶ 85.

Even so, the district court considered the lack of a known IV/IVC. A17,

A25-32. Allergan’s criticism that the district court “relegated the lack of IV/iVC

[sic] to a footnote” is poorly taken because the Opinion recites the entirety of

Allergan’s post-trial argument on IV/IVC. Compare A17 n.7 with A115340, ¶ 85.

Allergan’s attempt to find support in Cyclobenzaprine and Abbott Labs. v.

Sandoz, Inc., 544 F. 3d 1341 (Fed. Cir. 2008), are unavailing. Appellate decisions

do not establish facts that relieve litigants in other cases who need to prove (or

disprove) what a POSA would believe, disbelieve, or find important from putting

on evidence. Indeed, the factual findings in Cyclobenzaprine would not even

apply in a new case on the same patents if an unrelated company (not precluded by

collateral estoppel) tried to prove them invalid as obvious. The Federal Circuit’s

conclusion that District Judge Robinson, sitting as the trier of fact in

Cyclobenzaprine, made some findings that were clearly erroneous on that record,

and that the facts as properly found on that record did not establish obviousness of

30

those claims by clear and convincing evidence, does not establish facts that apply

to other cases on other sustained-release patents.7

Cyclobenzaprine emphasized that no doctrine makes patents to sustained-

release formulations automatically obvious over the immediate-release prior art.

676 F.3d at 1084. But neither does any doctrine make such patents automatically

nonobvious over the immediate-release prior art unless certain subsidiary facts

(like PK/PD relationships) are proven. There are no short cuts in judging

obviousness; importing the facts of one case to an unrelated case would deprive the

parties of their right to a trial in which a court or jury renders a decision or verdict

based on—and based only on—the properly admitted evidence in the case before

it. It is not too much to ask of a litigant that wants to rely on some aspect of

pharmacology and drug development in opposition to (or in support of) an

obviousness challenge to disclose it in response to interrogatories, include it in

expert reports, and present it at trial through a qualified witness subject to cross-

examination. The only factual shortcut permitted by the Rules of Evidence is a

7 The district court’s error in Cyclobenzaprine was not taking into account the substantial evidence that a lack of a known PK/PD correlation belied the challengers’ theory that it would be routine to use the PK profile of immediate-release cyclobenzaprine to make the sustained-release drug. As shown in that case by Alza’s failure to succeed using this approach and the patentee’s success by going well outside the PK profile of the IR formulation, the claimed invention was not the product of routine experimentation. Allergan does not show (and did not prove at trial) that this has anything to do with IV/IVC.

31

request for judicial notice, but that must be done in a way that lets the other side

challenge it. Fed. R. Evid. 201(e). And regardless of how compelling the evidence

may have been in Cyclobenzaprine or Abbott, Allergan would not have been

entitled to judicial notice of the proposition that IV/IVC or a PK/PD relationship is

important to sustained-release formulation development because those are not a

facts “generally known” in the District of Delaware. Id. 201(b)

(b) The District Court’s Finding That a POSA Would Consider Trospium for Once-Daily Formulation Is a Factual Determination and Not Clearly Erroneous

Contrary to Allergan’s arguments, it is not true that “[t]he question of

whether the lower court balanced this evidence correctly is ultimately a legal one–

the content of the prior art is largely undisputed.” Br. at 46. The only legal

determination is the ultimate issue of obviousness. The sifting of evidence to

decide if a POSA would consider trospium viable for once-daily formulation is the

district court’s job as the trier of fact. The sifting of the evidence regarding the

“positive” and “negative” attributes of trospium, the relative weight given to each

witness’s testimony, and the finding that a POSA would have considered trospium

a viable candidate for extended-release formulation are fact issues reviewed for

clear error. Substantial evidence supports the district court’s findings that several

attributes demonstrated that trospium was a good candidate for once-a-day

32

formulation, including its absorption in the GI tract, pharmacokinetics, and half-

life. A25-32 (discussed infra 31-38).

(c) The Prior Art Demonstrated Colonic Absorption of Trospium

Substantial evidence credited by the district court shows that a POSA would

have understood that trospium, while having low absorption overall, is absorbed in

the colon. A42-43. For example, the court credited Dr. Mayersohn’s testimony

(discussing Drees, A9574-9582) that successful use of trospium suppositories for

bedwetting “suggests colonic absorption following rectal administration.” A43;

A11210:4-12; A11259:13-16.

Allergan’s claim that Madaus’ sale of trospium suppositories “did not lead it

to conclude that colonic absorption was a feasible approach for extended-release as

evidenced by its later work and skepticism” (Br. at 57) is lawyer argument, not a

fact or inference the district court was required to accept. There is no evidence that

“Madaus” (a company, not a person) considered the suppositories in making an

alleged decision (never proven) not to pursue an extended-release trospium for

reasons probative of nonobviousness. Allergan’s factually unsupported

supposition that “Madaus” made a legally probative decision not to spend money

on ER trospium is no better than a conjecture that its alleged decision (if any such

decision was actually made) was because (i) the German health-care system has

poor reimbursement for me-too drugs not shown to be clinically superior to

33

existing therapeutics, or (ii) it did not think it could get sufficiently broad patent

claims. Allergan’s failure to secure testimony from Madaus means that neither the

district court nor this Court can find the facts as Allergan argues them.

The district court found, and substantial evidence supports, that a POSA

reading Schröder’s statement about poor colonic absorption based on rectal

administration of 5 ml (1 teaspoon) of trospium solution would find it inconsistent

with “the known therapeutic effectiveness of trospium suppositories.” A42. Dr.

Kibbe explained that because the suppositories gave about the same clinical

response as intravenous trospium, “there must be drug being absorbed [from] the

suppository.” A11010:12-1011:16 (discussing Heynen (A9880-9889 at 5-6

(English translation)), on trospium suppositories in adults with fractures,

appendectomies, or GI problems). Dr. Davis complained that Heynen was not

placebo controlled (A11431:20-1432:7), but acknowledged there was a positive

control, i.e., suppositories were compared to trospium IV and showed similar

efficacy. A11478:15-1480:9. Similarly, inventor Flanner admitted that the

availability of trospium suppositories “would seem to be a contradiction” to the

notion that trospium is not absorbed in the lower GI tract. A11341:5-9.

There is substantial evidence that a POSA would find encouraging the long-

term presence on the market of trospium suppositories, and the district court so

found. A42. There is no evidence that a POSA would try to adjudicate efficacy

34

the way an FDA reviewer would if trospium suppositories were the subject of an

application for approval here. It was not clearly erroneous for the district court to

find, based on the known therapeutic effectiveness of trospium suppositories

detailed in Drees (A9574-9582) and Heynen (A9880-9889), that a POSA would

conclude that trospium is absorbed in the colon.

Allergan relies on Schröder to argue that poor colonic absorption was known

to one of ordinary skill. Br. at 43; see also id. at 15, 16, 56, 57. But the district

court reasonably credited the testimony of all the experts that Schröder would not

have taught to a POSA that there was poor colonic absorption and would not have

taught away from a once-daily extended-release formulation. A40-44. Dr. Davis

agreed that Schröder’s 5 ml mini-enema would not reach the colon (A11462:7-15),

and testified that a POSA “would have ignored the Schröder poster.” A11490:5-

1491:10. Compounding its error, Allergan points to articles that published years

after the date of invention in an attempt to show the existence of a 30% absorption

threshold, even though Dr. Davis testified regarding this threshold that “[i]t was

formulated in an article, I think for the first time, by Karen Jones some years ago,

but after the 2003 date.” A11383:3-9.8

8 On this point, Allergan’s statement that “Watson’s abandoned expert Dr. Park proposed a classification system” (Br. at 43) is factually inaccurate. The article was written by Zhang and Surian, and published in 2010 in a book edited by Dr. Park.

35

Allergan again tries to rely on caselaw to refute the district court’s fact

finding. Br. at 44. In Alza v. Mylan, the Federal Circuit affirmed the invalidity of

claims to extended-release oxybutynin despite the patentee’s argument that a

POSA “would not have believed that oxybutynin could be absorbed in the colon.”

464 F.3d. at 1292. The Court’s “Description of the Technology” provided a

hypothetical where if:

a particular drug is simply not absorbed from the colon to the bloodstream, then it may make little sense to develop an extended-release dosage form that is capable of “withholding” the release of some fraction of that drug until it reaches the colon.

Id. at 1291-92 (emphasis added). As discussed above (infra at 29-30), this does not

establish “precedential facts” that relieve a litigant seeking to prove (or disprove)

what a POSA would know, believe, or disregard from introducing evidence. In

any event, Allergan did not establish that trospium is “simply not absorbed” from

the colon. To the contrary, the district court found, supported by substantial

evidence (discussed in the preceding paragraphs) that a POSA would have known

that trospium is absorbed in the colon.9

9 Nor does Allergan explain how that hypothetical helps its many claims that do not require release in the colon, i.e., those directed to release in the ileum or colon (lower GI tract).

36

(d) The Pharmacokinetic Parameters of Trospium were Known and Would Have Been Considered By a Person of Ordinary Skill in the Art as a Positive Factor in Formulating ER Trospium

Substantial evidence supports the district court’s finding that the PK

parameters of trospium were known in the art and would have provided valuable

information to a POSA designing a once-a-day extended-release formulation.

A26. The district court credited the testimony of Drs. Kibbe, Mayersohn, and

Kidane that a POSA would have used them. A26; A11038:22-1039:21;

A11207:19-1208:2; A10296:3-9, A10302:5-13. For example, Dr. Kibbe testified

without contradiction or impeachment that a POSA would start with the “goal of

having a lower Cmax and slightly higher Cmin” than the IR formulation.

A11035:21-1036:12. He similarly explained that a POSA would be able to use and

apply the literature on immediate-release trospium to make a once-a-day product.

A31; A11035:21-1036:12; A11036:21-1037:8.

(e) The Half-Life of Trospium Was Known and Would Have Been Considered By a Person of Ordinary Skill in the Art as a Positive Factor in Formulating ER Trospium

The district court found, based on substantial evidence, that the half-life of

trospium would have been considered as a significant positive factor. A28-29. It

credited Dr. Kibbe’s testimony that trospium was known to have a relatively long

half-life and relatively long Tmax that only needed to be extended “a little bit” to

37

make a once-a-day product. A26-27; A11014:4-1016:5. It also found that Füsgen

(A9130-9141) and Zerres (A9583-9781) teach that trospium has a half-life of 5 to

17 hours, in the range considered favorable for a once-daily formulation. A27;

A9132; A11206:25-1208:9; A11215:3-7; A11281:19-1283:15; A11469:17-22. Dr.

Davis agreed with Dr. Mayersohn that drugs with a medium half-life, like

trospium, are good candidates for ER formulations because only a small increase in

the effective half-life is needed to provide a 24-hour therapeutic effect.

A11294:11-24; A11513:1-19; A11515:6-23. Additionally, Indevus told

prospective marketing partners that trospium could “easily” be converted to a

once-daily product because of its long half-life. A9201-9203 at A9203; A10256:5-

257:4.

3. A Person of Ordinary Skill in the Art Would Have Known to Increase the Amount of Trospium Released in the Colon to Increase Absorption

The district court found, and substantial evidence supports, that a POSA

would have known to increase the amount of trospium released in the colon to

overcome its binding to mucus (which reduces absorption). A29-31. It found, and

Allergan did not dispute, that Langguth (A9142-9149) disclosed that trospium’s

limited absorption resulted from binding to mucus, particularly at the neutral pH of

the colon, and suggested compensating by saturating the binding sites with excess

quaternary ammonium. A29; A9145. The court credited Dr. Kibbe’s testimony

38

that a POSA would understand that excess trospium could be employed so “the

residual trospium that was available would have an opportunity to be absorbed.”

A29; A11029:10-1030:9. The court further found that this solution was also taught

in U.S. Patent 2,899,357. A29; A11030:24-1031:3; A11101:11-1102:3; A9793-

9794 at col. 1:35-50. And Dr. Davis admitted that increasing the amount of drug

delivered to the colon was a known way to address decreased absorption there.

A11486:24-1489:2.

Shire e-mails and Dr. Kidane’s testimony confirm Dr. Kibbe’s interpretation

of Langguth’s teachings:

Recent transport study results as well as literature search revealed that the low bioavailability of Trospium is at least partially due to its binding to mucin (negatively charged for the most part). Blocking the binding of trospium to mucin by incorporating other quaternary ammonium compounds resulted in permeability enhancement. With this in mind, one avenue of enhancing ‘bioavailability’ is to increase the dose in the DR portion. This is basically to use trospium itself to saturate the binding sites (mucin) hence what comes beyond the saturation point will be absorbed.

A31; A9994; A10398:11-403:17; A11028:17-1033:4; see also A9992-9993.

Allergan’s argument that it is incorrect to use “the fact that an inventor [Kidane]

gleaned an idea from the prior art against him when the inventor’s idea is different

from what was taught” (Br. at 49) misstates the district court’s use of the evidence.

The contemporaneous non-litigation-motivated evidence of how Dr. Kidane read

39

Langguth is probative (but of course not controlling) of what that reference

discloses. In any event, any error in this regard was harmless because other

evidence amply supports the district court’s findings on Langguth.

4. The District Court Correctly Found Motivation to Formulate Trospium as Once-a-Day Extended-Release Formulation

The district court credited substantial evidence that a person of ordinary skill

in the art as of 2002 would have been motivated to formulate trospium as a once-a-

day extended-release product, including Dr. Kibbe’s testimony and the Rovner

review article (A9871-9879). A32-33.

The district court found that Rovner taught “that the OAB market was

moving towards once-a-day formulation.” A32. For instance, Rovner stated that

by 2002, two OAB drugs, Ditropan (oxybutynin) and Detrol (tolterodine), had

been reformulated to once-a-day dosage forms:

The poor tolerability and/or the need for frequent daily dosing with current antimuscarinic IR formulations has led to the search for new treatment approaches. Alternative drug delivery systems, in terms of the development of ER formulations for once-daily administration, is one such approach to improve not only dosing, but potentially also affecting tolerability and efficacy. Indeed, given the established link between prescribed dose frequency and compliance, such formulations can be expected to maximize convenience and thereby improve compliance. This is of direct relevance to patients with OAB, a chronic condition often requiring satisfactory adherence to long-term therapy. Moreover, the pharmacokinetic profile of such ER formulations should lessen the ‘peak-and-trough’ serum concentrations seen following multiple daily dosing with IR

40

formulations. A lowering of peak drug levels may be associated with a reduction in dose-related adverse effects, such as dry mouth. ER formulations of oxybutynin and tolterodine are now available and their profiles and role in the once-daily treatment of OAB are discussed below. A32; A9873; A9876-9877.

The district court found, and Allergan does not dispute, that Rovner taught

“an extended-release formulation should have a lower Cmax and higher Cmin than

its corresponding immediate release formulation.” A32. The court found that

Rovner discloses that the extended-release tolterodine formulation (Detrol LA) fell

within these limits (i.e., a lower Cmax and a higher Cmin than immediate-release

Detrol).10 A32; A9875.

The district court found and the evidence supports that as of 2002,

significant market pressure would have motivated a POSA to develop once-daily

trospium. A32-33. By 2002, the entire market for OAB drugs in the U.S. was

moving to once-daily dosage forms, and this was a significant motivating factor for

the once-a-day trospium project. A8518-8519; A10226:6-15; A10229:2-11;

A10272:9-274:4; see also A10320:1-321:7. The same cannot be said for the many

years before Rovner and this market pressure, contrary to Allergan’s argument that

“decades” of inaction is proof of nonobviousness. Graham, 383 U.S. at 36 (fact

10 The POSA would have also known that oxybutynin, with an even lower bioavailability than trospium, was successfully reformulated into a once-daily product (Ditropan XL), suggesting trospium could also be so formulated. A11212:1-3.

41

that industry did not make an invention before important prior art became available

is not probative of nonobviousness).

D. Differences Between the Claims and Prior Art

The district court found that the prior art discloses each of the claim

limitations and that a POSA would have been motivated to combine these elements

to make a trospium composition for once-daily administration with a reasonable

expectation of success. A16-38.

1. Controlled-Release Multiparticulates Were Legion in the Prior Art

Regarding claim limitations to “controlled release solid, trospium chloride-

bearing particulates” “comprising at least one polymer selected from enteric

polymers, release controlling polymers, or combinations” (A97-122 at A120,

claims 1-3, 19-20; A175-199 at A198, claims 1, 10 and 18), and further limitations

to enteric polymers (A97-122 at A120, claim 18), the district court credited the

testimony of Dr. Kibbe that prior art disclosed multiparticulate controlled-release

formulations utilizing at least one polymer selected from enteric polymers, release

controlling polymers, or combinations. A18-25. It also found that combinations of

XR, DR, and/or IR components (A148-174 at A172, claim 1, A97-122 at A120,

claim 1; A123-147 at A147, claim 1) and combinations of XR and DR components

(A148-174 at A172, claim 10; A175-199 at A198, claim 10) were known in the art.

Id. For example, the district court found that multiparticulate formulations were

42

“standard technology” disclosed in several prior-art references including the ’570

patent on Carbatrol, which teaches the combination of IR, ER, and DR pellets

including pellets coated with enteric or other release controlling polymers. A18-20,

crediting Dr. Kibbe, A10872; A10875-6; A9044-9050.

The court found the claim limitation that the DR component releases at a pH

of about 7.0 (A148-174 at A172, claim 16) was disclosed in the art, including

CA ’155, CA ’560, and the ’819 patent. A19-25; A9068-9083, A9795-9823;

A9051-9067.

The court credited Dr. Davis that multiparticulate dosage forms using

extended-release and delayed-release pellets were “conventional” and “well-known

systems that had been described in the literature and patents” A19; A11472:7-11;

A11475:12-1476:14; A11520:8-14. It credited Dr. Kibbe’s testimony that

multiparticulate formulations were preferred because pellets with different release

characteristics can be combined in a single dosage form, and that they promote

absorption by dispensing particles widely along the GI tract. A18-19; A10870:4-

872:2.

2. The Prior Art Taught Releasing Drug in the Colon for Extended-Release Formulations

The district court found the limitations that the particulate “releases trospium

in the lower GI tract” or “in the ileum, colon or both” (A97-122 at A120, claims 1-

3, 18, 20; A148-174 at A172, claims 1, 10; A175-199 at A198, claims 1, 10, 18;

43

A123-147, claim 1) or more specifically in the colon (A97-122 at A120, claim 19)

were known in the art. A25, A32.11 For example, the court found that several

prior art references, including the ’570 patent, CA ’155, CA ’560, and the ’819

patent taught multiparticulate formulations that release drug in the lower GI tract

and colon. A18-25; A9044-9050; A19-25; A9068-9083, A9795-9823; A9051-

9067. In addition, the district court credited the testimony of Dr. Kibbe that

releasing trospium in the lower GI tract was suggested in the prior art, and because

trospium had limited absorption in the lower GI tract, targeting release there to

obtain a once-a-day formulation would be “a natural consequence of that.” A32;

A11040:22-1042:2; A11042:8-1043:7. Dr. Davis agreed. A11486:24-1489:2.

3. Steady-State Blood Levels and PK Parameters of Immediate-Release Trospium Are In the Prior Art

Finally, the court found that the claim limitation that the once-daily

formulation achieve steady-state blood levels of trospium (i) comparable to the

twice-daily administration of the 20 mg immediate-release tablets (A97-122 at

A120, claim 1, 18, 19); and (ii) in the range of about 0.5 ng/ml to about 6:0 ng/ml

(A97-122 at A120, claim 2, 20; A148-174 at A172, claims 1, 10, 16; A175-199 at

A19, claims 1, 10, 18) are disclosed in the prior art. A26-27; A9121-9129; A9130-

9141; A9583-9781. The court also found that the claim limitation requiring steady 11 The lower GI tract was construed to mean the ileum and/or colon. Thus, the limitations requiring at least some release in the “lower GI tract” or in the “ileum, colon or both” have equal scope. A64; A013913-13915.

44

state Cmax levels of trospium in the range of about 2.5 ng/ml to about 4.5 ng/ml

and Cmin levels of trospium in the range of about 0.5 ng/ml to about 1.5 ng/ml

(A97-122 at A12, claim 3) were disclosed in the art and known to a POSA. Id.

The court found that IR trospium had a known Cmax of 3-5 ng/ml (A9121-

9129; A9130-9141) and a known Cmin of about 0.6 ng/ml (A9583-9781). A24. In

addition, the court credited Dr. Kibbe’s testimony that a POSA making a

sustained-release formulation has the “goal of having a lower Cmax and slightly

higher Cmin” than the IR dosage form. A26-27; A31; A11035:21-1036:12. The

court also found that Rovner (A9871-9879) taught targeting blood levels based on

the IR formulation with the Cmax lower and the Cmin higher than the IR

formulation. A32-33; A9873. Rovner also taught that this approach was

successfully used in the development of a once-daily formulation of the OAB drug

tolterodine (Detrol LA). Id.

Regarding limitations to “minimizing side effects” (A175-199 at A198,

claim 1, 10, 18), the court credited Dr. Kibbe’s testimony that this is a natural

consequence of reducing the Cmax of the once-daily formulation, because there

was a documented relationship between dry-mouth and peak trospium levels.

A32-34; A11053:7-1055:15; see also A9871-9879.

The court also found that the claim limitation requiring “average Cmax at

steady state of less than 2400 pg/ml and at a Tmax of less than 6 hours (A123-147

45

at A147, claim 1) were disclosed in the art. Targeting the trospium levels of a

once-daily formulation to have a lower Cmax than the IR formulation (3-5 ng/ml)

was known, as was the goal to delay the Tmax as compared to the IR trospium

formulation, which is about 5 hours. A31; A11045:7-1048:11, A9583-9781.

E. There Was No Evidence Showing Objective Indicia of Nonobviousness

1. Allergan Failed to Present Evidence of Long-Felt Need

In support of its finding of no demonstrated long-felt need, the district court

cited substantial evidence, including testimony of Drs. Sandage and Kidane, that

once-a-day formulations were where the “market [was] headed” by 2002. A45;

A10226:6-15; A10229:2-11; A10272:9-274:4; A10320:1-321:7. The district court

correctly found this “demonstrate[s] that the need for once-daily OAB

formulations was generated by market development and demand in the early 2000s,

just prior to formulation of the claimed invention.” A45; A8518-8519; A9871-

9879.

Allergan’s argument that this was “clear error caused by . . . hindsight

analysis” because “[t]here is no evidence the need for once-a-day overactive

bladder drugs appeared only in 2000” (Br. at 60), has it backwards: defendants

showed that the need was caused by recent market pressure, and Allergan did not

show otherwise. Ditropan (oxybutynin) and Detrol (tolterodine) were available in

the U.S. as IR products since 1975 and 1998, respectively, and not converted to

46

once-a-day products until 1999 and 2000. A3; A10861:17-862:8; A9871-9879 at

9873 and 9875.

2. There Is No Evidence Anyone Failed Making Once-Daily Trospium

Allergan presented no evidence to show that Madaus failed to make the

claimed invention. Dr. Sandage testified that he was not sure if or when he learned

Madaus was trying to make a once-daily formulation of trospium, and that he

“might have known they were thinking about it and had done some work on it.”

A10158:10-16. He did not testify about how much work, if any, Madaus actually

did. And Sandage was unpersuaded by Fuhr’s alleged nay-saying, telling Madaus

“I have got to try because that’s where the market’s headed.” A10272:19-274:4.

Indeed, even after Fuhr allegedly told Sandage once-daily trospium would not

work, Indevus remained “optimistic” that once-daily trospium could be made

“easily” based on trospium’s long half-life. A37; A9201-9203 at 9203;

A10256:20-257:3.

Madaus’ alleged attempt to reduce the frequency of dosing by doubling the

immediate-release dosage to 80 mg does not compare to the “tried and failed”

evidence found to be compelling in Cyclobenzaprine, in which Alza invested $10

million in formulation development using the conventional approach to sustained-

release formulations and proved by doing so that the conventional approach did not

work for cyclobenzaprine. 676 F.3d at 1081-82. Even if Allergan’s spin on the

47

facts and the inferences were accepted—in disregard of the district court’s fully

justified findings to the contrary—it does not show that Madaus put meaningful

resources into a serious effort to make a once-daily formulation.12

Allergan’s talismanic incantation of “Dr. Fuhr” as some super-formulator

and master of all-things trospium is as pointless as it is tiresome: there is no

evidence that Dr. Fuhr spent time on these supposed efforts, was ever tasked with

developing a once-daily formulation, or had the resources and interest to undertake

such efforts while a full-time professor at University of Cologne. Allergan not

only failed to bring Dr. Fuhr to trial or obtain his testimony by deposition—despite

his role as a consultant to its licensor Madaus, which has a financial interest in the

sales of Sanctura XR in Europe—it did not even have Dr. Davis give him a phone

call. A11507:14-20. Having shielded Dr. Fuhr from cross-examination, and

“proven” his supposed analysis through hearsay, Allergan cannot assign error to

12 Nagy v. L. Mundet & Son, Inc., 101 F.2d 82, 82 (2d Cir. 1939) (L. Hand, J.) (“It is not safe to assume, because a single manufacturer for a few years has not discovered an improvement, that it was beyond the powers of rather commonplace talent; like most people he may have been content to let things stand, if his business was otherwise satisfactory; and that may be true, even when he accepts the change after it is brought to his notice. The case is much stronger for an invention when it appears at the end of a period of active competition among several manufacturers; though even then four years is not a very long time upon which to base any inference.”).

48

the district court’s finding that its evidence was unconvincing, and certainly cannot

show that that the district court made “clear error” in not crediting this evidence.13

3. Bayer and Madaus’ Alleged Skepticism Does Not Show Nonobviousness

The district court found the evidence did not establish skepticism of others.

A47-49. Dr. Sandage could not recall significant facts and had no documents to

support his testimony. A10189:10-12; A10248:5-249:4; A10250:10-23;

A10251:6-17; A10254:9-21.14

Dr. Bhatt’s only memory of his discussions with Bayer was “a general sense

of skepticism from them regarding the chances of success in developing a once-a-

day controlled release product of trospium,” and “that’s it.” A11347:19-1348:2.

Skepticism has relevancy to an obviousness inquiry if it sheds light on the

circumstances surrounding the origin of the subject matter sought to be patented.

Graham, 383 U.S. at 17-18. Skepticism has been rejected when there is no

evidence that the skeptic had knowledge of all the prior art. PharmaStem

Therapeutics, Inc. v. Viacell, Inc., 491 F.3d 1342, 1365 (Fed. Cir. 2007). Similarly,

skepticism has been found insufficient to overcome a strong showing of

obviousness absent a nexus between the skepticism and the claimed invention. 13 Had this been a jury trial, Watson would have requested a missing-witness instruction if Allergan invoked Dr. Fuhr in closing arguments the way it now does on appeal. 14 Dr. Sandage was also paid by Allergan to come to trial, even though he was a fact witness. A10277:12-24.

49

Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318, 1327–28 (Fed. Cir. 2008)

(finding secondary considerations, including praise, skepticism, copying, and

commercial success, to be insufficient due to a lack of a clear nexus or an inability

to overcome a final conclusion that the claims were obvious). Here, the facts were

insufficient to show such nexus.15

4. The Schröder Poster Teaches Toward, Not Away From, the Asserted Claims

Allergan’s argument that Schröder “teaches away” from the claimed

invention is undercut by the district court’s express findings—supported by

substantial evidence—that (i) Schröder does not teach away from the claimed

invention, and (ii) a POSA interested in developing once-daily trospium would

have found Schröder encouraging. A41-43. See Para-Ordinance Mfg., Inc. v. SGS

Importers Int’l, Inc., 73 F.3d 1085, 1088 (Fed. Cir. 1995) (whether prior art teaches

away in an issue of fact). The court credited the testimony of Drs. Kibbe,

Mayersohn, and Flanner, each of whom questioned the legitimacy of Schröder’s

methodology. A42; A11010:17-1011:16; A11020:1027:22; A11210:4-22;

15 Allergan erroneously asserts that the district court was “legally and factually wrong” that the testimony involved unnamed Bayer employees. Br. at 55-56. The document Allergan cites (A8432) is an e-mail from Indevus with names of Bayer personnel scheduled to do a conference call that never took place. See A8503 (“the Indevus/Bayer/Shire conference call . . . will have to be rescheduled.”). The e-mail relied on by Allergan to show Bayer’s alleged skepticism is the same e-mail announcing the cancellation of the call. This e-mail goes on to describe statements by unnamed Bayer employees.

50

A11259:20-1260:20; A11272:9-16; A11335:12-1336:9. Allergan presented no

first-hand testimony concerning how anyone interpreted Schröder other than

through Dr. Davis, whose testimony (i) bolstered Drs. Kibbe and Mayersohn’s

conclusion that the results of the study were speculative, inconclusive, and

inconsistent with known therapeutic effectiveness of trospium suppositories, and

(ii) undermined Allergan’s argument that it taught away from the claimed

invention. A46; A11462:7-15; A11463:12-20; A11458:10-1465:4.

Allergan’s “teaching away” argument also stretches that concept beyond its

proper scope. A reference may teach away when a POSA reading it “would be

discouraged from following the path set out in the reference, or would be led in a

direction divergent from the path that was taken by the applicant.” In re Gurley, 27

F.3d 551, 553 (Fed. Cir. 1994). But the disclosure of one alternative does not

teach away from other alternatives unless it criticizes, discredits, or otherwise

discourages them. In re Fulton, 391 F.3d 1195, 1201 (Fed. Cir. 2004). Here, it

cannot be said that Schröder criticizes, discredits, or otherwise discourages an

extended-release trospium formulation that releases some (unspecified) amount of

drug in the lower GI tract and mimics the PK profile of the IR product, because it

has nothing to do with such subject matter. A4986.

Only by a string of inferences and facts that were rejected by the district

court would Allergan’s theory have legs, i.e., if a POSA believed in 2002 based on

51

a 2008 review article that 30% colonic absorption was important to sustained-

release formulations, and if a POSA read Schröder as meaningfully showing a lack

of colonic absorption, and if a POSA did not consider favorably other prior art

indicating that trospium was absorbed in the colon, and if a POSA did not

understand from the prior art ways of overcoming poor colonic absorption. But

those are factual issues resolved against Allergan and supported by substantial

evidence. Even Allergan’s own expert Dr. Davis said that a POSA would have

largely ignored Schröder and given it no more than a minute’s thought. A43;

A11490:8-1492:19.

5. Licensing by Others

The district court properly concluded that Allergan’s case for licensing as a

secondary consideration of nonobviousness not compelling. A47. Allergan’s

reliance on the license to it from Indevus to market Sanctura XR in the U.S. and

the license to Madaus for Sanctura XR in Europe (A10088:10-15; A10190: 1-17;

A10208:23-209:6) fails because Allergan has shown neither (i) that the licenses are

attributable to a belief in the validity of the patent, nor (ii) a nexus between the

licenses and the claimed invention. Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d

1530, 1539 (Fed. Cir. 1983).

Allergan’s decision to in-license Sanctura from Indevus was motivated by

the desire to move into the new area of urologics. A10088:10-15. Allergan

52

obtained rights under the patents as part of a much larger commercialization and

supply agreement (A10190: 1-17; A8242-A8345) that included transfer of the

NDA to Allergan (A8259-10), know-how and trade secrets (A8259; A8251), and

trademarks (A8301).

Similarly, the license to Madaus under foreign patents (A5306-A5367) was

part of a larger commercialization and supply agreement (see A5307). Madaus

obtained an exclusive license to the Sanctura XR trademark (A5315), all Indevus

know-how, including copies of the FDA submissions (A5309, A5314), and a

supply agreement with Indevus. In addition, because the foreign patents are not in

evidence there is no way of telling whether they are relevant to nonobviousness of

the patents at issue here.

These licenses have no probative value as objective indicia of

nonobviousness because there is no evidence to show that either was motivated by

a belief in the validity of the patents, rather than the other substantial rights granted

under the agreements. Stratoflex, 713 F.2d at 1539 (rejecting plaintiff’s licensing

by others where the license included trademarks and other patents stating that

plaintiff “has shown neither a nexus between the merits of the invention and the

licenses of record, nor that those licenses arose out of recognition and acceptance

of the patent”); SIBIA Neurosciences, Inc. v. Cadus Pharm. Corp., 225 F.3d 1349,

1358–59 (Fed. Cir. 2000) (rejecting licensing by others because “the three licenses

53

or sub-licenses of the … patent, all … were part of larger licensing packages” and

thus “failed to point to any evidence establishing a nexus between the licensing

activity and the merits of the claimed screening method”).

F. Reasonable Expectation of Success

The district court found, and substantial evidence supports, that a POSA in

2002 would have had a reasonable expectation of success in making a once-daily

trospium formulation. A34-38. Dr. Davis testified that he would expect the

difficulty of formulating once-daily trospium as “medium difficulty.” A11380:19-

1381:3. Dr. Kibbe testified that using a multiparticulate dosage form to make the

claimed once-a-day formulations would have been “a reasonable approach that is

expected to be successful. You have high expectations of it working.” A11016:6-

13.

Allergan’s argument of legal error regarding the district court’s findings on

reasonable expectation of success (Br. at 62-64) is misplaced because this is a

question of fact. Alza v. Mylan, 464 F.3d at 1289; Velander v. Garner, 348 F.3d

1359, 1370-71 (Fed. Cir. 2003). Allergan would elevate “reasonable expectation

of success” to a fifth Graham factor such that it must be balanced with the others

de novo, but it is part of the overall inquiry into motivation, i.e., a POSA is

unlikely to make modifications or combinations she thinks unlikely to succeed, and

more likely to make them when she thinks they likely will succeed.

54

The district court carefully considered all the teachings in the prior art about

trospium, both positive and negative, considered and credited testimony from both

side’s respective experts, and reasonably found that a POSA would have been

encouraged by trospium’s positive attributes and the teachings on how to remedy

the negative attributes. A34-36. Allergan’s attempt to reargue the facts are

unavailing.

IV. The District Court Erred in Concluding that Watson Infringed the Method Claims

A. Allergan Did Not Prove, and Indeed Disproved, that Watson’s Product Meets the Steady-State Cmax Element of Claim 1 of the ’359 Patent

Each of the asserted claims—except claims 18 and 19 of the ’978 patent—

recites steady-state PK parameters. Because Watson’s ANDA contained only

single-dose data, Allergan’s expert Dr. Weiner used linear superposition to model

the steady state. Dr. Weiner testified that such modeling is “reliable” and “quite

often used.” A10517:5-518:4. Watson did not contest Dr. Weiner’s modeling, and

the district court credited it to find that Watson’s product would meet the steady-

state elements of the asserted claims of the ’978, ’448, and ’449 patents. A77-84.16

16 Watson’s noninfringement defense as to these claims was that Allergan did not prove the site of release in the lower GI tract or colon. The district court, however, found as a matter of fact that Allergan carried its burden of showing the site of release (A66-75), and Watson does not challenge that as clearly erroneous.

55

Dr. Weiner’s modeling of the steady-state PK profile of Watson’s product

showed, however, that it did not meet the element of claim 1 of the ’359 patent that

required steady-state Cmax of less than 2,400 pg/mL. Indeed, his modeling proved

noninfringement by showing that the steady-state Cmax of Watson’s product was

3,560 pg/mL. A82; A10530:20-531:4; A8208-11 at A8211. Dr. Weiner testified

that based on his modeling of the Watson product’s steady-state Cmax from its

single-dose data, which he said was the “preferable approach” (A10577:21-578:2),

Watson’s proposed product does not have a Cmax at steady state less than 2,400

pg/mL:

Q. By your modeling techniques, do defendants’ products meet the limitations of having a Cmax at steady state of less than 2400 picograms per milliliter? A. No, they don’t. * * * Q. Now, you just testified, your modeling measurements, do they meet this limitation or not? A. They do not.

A10545:10-546:2. Allergan’s expert Dr. Davis agreed that using Dr. Weiner’s

modeling, Watson’s product does not infringe the ’359 patent:

Q. The data that [Dr. Weiner] did model from the defendants’ products shows that they do not infringe that claim because the Cmax is above 2400; correct? A. Correct.

56

A10697:22-698:5. Rather than dropping this claim, Allergan argued that Watson

infringes because Sanctura XR has a steady-state Cmax of less than 2,400 pg/mL,

and that Watson somehow “adopted” this number by copying the single-dose PK

data from the label of Sanctura XR, even though neither the Sanctura XR label nor

the Watson label includes steady-state data for either product.

Because there is no dispute as to the pertinent characteristic of the Watson

product, the content of the label, or the accuracy of Dr. Weiner’s modeling, the

typical two-step infringement analysis collapses into a single question that can be

resolved as a matter of law. Cf. Desper Prods., Inc. v. QSound Labs, Inc., 157

F.3d 1325, 1332-33 (Fed. Cir. 1998) (resolution of infringement on summary

judgment appropriate when material characteristics of accused product are not

subject to genuine dispute). Here, the district court erred because the proper

infringement inquiry compares the asserted claims to the product that is likely to be

sold following FDA approval, Glaxo, Inc. v. Novopharm, Ltd., 110 F.3d 1562,

1570 (Fed. Cir. 1997), and Dr. Weiner’s linear superposition modeling, relied on

by Allergan and adopted by the district court, proves that Watson’s product will

not infringe claim 1 of the ’359 patent.

The district court erred by relying on the steady-state Cmax of Sanctura XR

from a paper published in 2010 to conclude that Watson’s product infringed. A84-

86. This was error because there are no special rules for infringement in ANDA

57

cases, Glaxo, 110 F.3d at 1567-68, and liability “is determined by traditional patent

infringement analysis.” Warner-Lambert Co. v. Apotex Corp., 316 F.3d 1348,

1365-66 (Fed. Cir. 2003). Thus, the district court should have compared the claims

to the product that Watson is likely to sell, not to Sanctura XR.

Allergan’s argument at trial that Adams Respiratory Therapeutics v. Perrigo

Co., 616 F.3d 1283 (Fed. Cir. 2010), permitted trial courts to compare a

bioequivalent ANDA product to the branded product to show infringement is

unavailing. That decision vacated the district court’s summary judgment of

noninfringement for errors of claim construction, and observed for the claim

limitation at issue there (ER product having a Cmax “equivalent” to the Cmax of

an IR product) that when a commercial product meets all of the claim limitations,

“then a comparison to that product may support a finding of infringement.” Id. at

1289 (emphasis added). It did not (and could not) hold that bioequivalency

necessarily establishes infringement or trumps actual evidence of noninfringement.

Allergan led the district court into error by conflating the single-dose PK

data on Sanctura XR’s label (which was copied to Watson’s proposed label) with

steady-state PK data on Sanctura XR published years later in the 2010 Silver paper.

Specifically, the district court erroneously concluded that Watson infringed

because “defendants can be held to their published steady state Cmax value, which

fall within claim 1 of the ’359 patent.” A85. However, Watson’s proposed label

58

(and Sanctura XR’s label) only reports single-dose PK data. A8072-8093 at 8084;

A8094-8137 at 8116. The “published steady-stated Cmax value” is from Allergan,

not Watson, and is for Sanctura XR, not for Watson’s product.

Claim 1 of the ’359 patent requires that the formulation provides “an

average Cmax at steady state of less than 2400 pg/ml,” which was not proven for

the Watson product and actually disproven by Allergan’s own evidence. Therefore,

the district court’s finding of infringement of claim 1 of the ’359 patent must be

reversed.

B. Allergan Did Not Prove Inducement of the Asserted Method Claims

1. Allergan Did Not Prove Indirect Infringement of the ’359 Patent By Inducement

Other fatal deficiencies exist in Allergan’s inducement proof of the ’359

patent. Inducement requires knowledge that the induced acts constitute patent

infringement, and at least some intent is required. Global-Tech Appliances, Inc. v.

SEB S.A., 131 S. Ct. 2060, 2065, 2068 (2011).

The district court found that Watson infringed claim 1 of the ’359 patent by

inducement because Watson would have known that persons using its ANDA

product were likely to infringe any patent rights associated with PK data copied

from the Sanctura XR label. A86. This finding was clearly erroneous because

Allergan presented no evidence that Watson possessed the requisite levels of

59

knowledge and intent to induce infringement. Watson cannot be charged with

knowledge or intent based on the steady-state data for Sanctura XR published in

the 2010 Silver paper because Allergan never established that Watson had

knowledge of the paper.17 And while it may be reasonable in some cases to infer a

defendant’s knowledge of unstated characteristics of its own product, doing so here

would impute to Watson proof of noninfringement, because the modeled steady-

state Cmax of its product—according to Allergan and the district court—is 3,560

pg/mL, not less than 2,400 pg/mL. A82. And certainly intent to induce

infringement cannot be inferred from sale of a product that does not meet all

elements of the claim. Accordingly, Watson cannot be found liable for inducement.

2. Allergan Did Not Prove Indirect Infringement of the ’449 Patent By Inducement

Allergan also argued that Watson infringed the ’449 patent by inducement.

The claims of the ’449 patent are directed to a “method for treating bladder

dysfunction in a mammal comprising an oral administration . . . of a once-daily

dose of a pharmaceutical composition comprising . . . trospium chloride, where

said administration . . . results in minimizing the occurrence of side effects as

compared to twice daily administration of 20 mg of immediate release trospium

chloride tablets.” A175-199 at 198.

17 The Silver paper was published in 2010, more than a year after Watson’s ANDA was submitted to FDA.

60

Just as it did with the ’359 patent, Allergan relied on the 2010 Silver paper

to prove direct infringement of the ’449 patent because that paper was said to show

the “minimizing of side effects.” A10685:3-17. Because Allergan did not

establish that Watson had knowledge of the 2010 Silver paper, Watson cannot be

charged with knowledge (or intent) that its product would “result[] in minimizing

the occurrence of side effects as compared to twice daily administration of 20 mg

of immediate release trospium chloride tablets.” There is nothing on Watson’s or

Sanctura XR’s label to suggest that extended-release trospium would meet this

limitation. Indeed, Dr. Davis admitted:

(1) there is nothing on Watson’s proposed label that compares side effects of its proposed product to side effects observed with the immediate-release twice-a-day trospium product (A10716:17-22); (2) Watson’s proposed label does not report side effect data from the immediate-release twice-a-day trospium product (A10716:23-717:1); and (3) there is no information with the four corners Watson’s proposed label, or the label of Sanctura XR, that once-daily trospium reduced or minimizes side effects as compared to the immediate-release product. (A10717:2-11)

The district court concluded that Watson induces infringement of claim 1 of

the ’449 patent because (i) defendants had knowledge of the ’449 patent and

intended for their products to be used consistent with the labeled conditions copied

from the Sanctura XR label, and (ii) defendants made statements to the FDA that

61

their proposed products were developed to “mimic” or “match” the claimed

invention. A91-93. This conclusion is error for two reasons.

First, Watson’s knowledge of the ’449 patent is necessary but not sufficient.

Rather, the key point is whether Watson had knowledge and intent that its product

infringe by meeting each element of the asserted claims. Allergan presented no

evidence that Watson possessed the requisite knowledge and intent because it

failed to show that Watson had knowledge of the 2010 Silver paper. In addition,

Allergan did not show that Watson compared the side-effect data of its product (or

of Sanctura XR) to the side-effect data of immediate-release trospium, as Allergan

did in its attempt to prove infringement. Nor can such a comparison be inferred,

given that Watson does not market immediate-release trospium.

Second, contrary to the district court’s finding, Watson did not make

statements to the FDA that its proposed product was developed to “mimic” or

“match” the claimed invention. A93. Rather, Watson stated that its ANDA

product “was designed to have a similar drug release profile as the RLD.” A8138-

8168 at 8138 (emphasis added). This statement cannot be used to infer that

Watson had knowledge or intent that its trospium product would result in

minimizing side effects compared to immediate-release trospium, nor can it be

used to infer that Watson compared the incidences of side effects observed from

administration of Sanctura XR to immediate-release Sanctura, as Allergan did to

62

try to prove infringement. Accordingly, Watson cannot be found liable for

inducement.

63

CONCLUSION

For the foregoing reasons, the district court’s judgment should be affirmed.

Respectfully submitted, /s/ Charles A. Weiss Charles A. Weiss

DATED: June 1, 2012

64

CERTIFICATE OF SERVICE AND FILING

I certify that on June 1, 2012, the foregoing Responsive Brief of Defendant-

Appellee Watson Laboratories, Inc. – Florida was electronically filed with the

Clerk of Court using CM/ECF and served by e-mail to:

Jonathan E. Singer, Esq. Fish & Richardson P.C. 60 South Sixth Street 3200 RBC Plaza Minneapolis, MN 55402 singer@fr.com

Attorneys for Plaintiffs-Appellants

Deanne E. Maynard, Esq. Morrison & Foerster LLP 2000 Pennsylvania Avenue, NW Suite 6000 Washington, DC 20006 dmaynard@mofo.com

Attorneys for Defendant-Appellee Sandoz Inc.

Wendy M. Ward, Esq. Merchant & Gould P.C. 3200 IDS Center 80 South 8th Street Minneapolis, MN 55402 wward@merchantgould.com

Attorneys for Defendant-Appellee Paddock Laboratories, Inc.

/s/ Charles A. Weiss

Charles A. Weiss

Dated: June 1, 2012

65

CERTIFICATE OF COMPLIANCE WITH TYPE-VOLUME LIMITATION, TYPEFACE REQUIREMENTS,

AND TYPE STYLE REQUIREMENTS

1. This brief complies with the type-volume limitation of Federal Rule of Appellate

Procedure 32(a)(7)(B) or Federal Rule of Appellate Procedure 28.1(e).

The brief contains 13,923 words, excluding the parts of the brief exempted

by Federal Rule of Appellate Procedure 32(a)(7)(B)(iii).

2. This brief complies with the typeface requirements of Federal Rule of Appellate

Procedure 32(a)(5) or Federal Rule of Appellate Procedure 28.1(e) and the type

style requirements of Federal Rule of Appellate Procedure 32(a)(6).

The brief has been prepared in a proportionally spaced typeface using

Microsoft 2003 in 14 point Times New Roman font.

/s/ Charles A. Weiss CHARLES A. WEISS

Attorney for Defendant-Appellee Watson Laboratories, Inc. — Florida

DATED: June 1, 2012