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 STATEMENT OF RELATED CASES ....................................................................1 COUNTER-STATEMENT OF THE ISSUES .........................................................2 COUNTER-STATEMENT OF THE CASE ............................................................4 COUNTER-STATEMENT OF FACTS ...................................................................5 I. II. Trospium Was An Old Drug With Known Properties That Made It An Appealing Candidate For A Once-A-Day Product...........5 Shire Used Its Existing Multiparticulate PlatformAlready Implemented In Two Marketed Extended-Release Products And Well-Described in the Patent LiteratureTo Formulate Once-Daily Trospium and Quickly Achieved Success........................7 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

III.

SUMMARY OF THE ARGUMENT .....................................................................11 ARGUMENT ..........................................................................................................15 I. II. Standard of Review ............................................................................15 The District Court Did Not Commit Legal Error...............................16 A. B. The District Court Did Not Fall Into Hindsight.......................16 Allergan Invited the District Court to Determine if It Rebutted Prima Facie Obviousness With Evidence of Secondary Considerations........................................................17 The Result in Cyclobenzaprine Does Not Mandate Reversal....................................................................................21

C. III.

The District Courts 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
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TABLE OF CONTENTS (continued) Page

B.

Allergans 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 The Scope and Content of the Prior Art ..................................26 1. 2. The District Court Correctly Found That Art Suggested Use of Multiparticulate Formulations..........26 The District Court Correctly Found That Trospium Would Have Been Considered for ModifiedRelease Formulation ......................................................28 (a) (b) Allergans New Argument Concerning IV/IVC Lacks Factual Support............................28 The District Courts Finding That a POSA Would Consider Trospium for Once-Daily Formulation Is a Factual Determination and Not Clearly Erroneous.........................................31 The Prior Art Demonstrated Colonic Absorption of Trospium ......................................31 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 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

C.

(c) (d)

(e)

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

4.

D.

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

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TABLE OF CONTENTS (continued) Page

1. 2. 3. E.

Controlled-Release Multiparticulates Were Legion in the Prior Art ...............................................................41 The Prior Art Taught Releasing Drug in the Colon for Extended-Release Formulations ..............................42 Steady-State Blood Levels and PK Parameters of Immediate-Release Trospium Are In the Prior Art .......43

There Was No Evidence Showing Objective Indicia of Nonobviousness .......................................................................45 1. 2. 3. 4. 5. Allergan Failed to Present Evidence of Long-Felt Need ...............................................................................45 There Is No Evidence Anyone Failed Making Once-Daily Trospium ....................................................46 Bayer and Madaus Alleged Skepticism Does Not Show Nonobviousness...................................................48 The Schrder Poster Teaches Toward, Not Away From, the Asserted Claims ............................................49 Licensing by Others.......................................................51

F. IV.

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

The District Court Erred in Concluding that Watson Infringed the Method Claims .............................................................................54 A. Allergan Did Not Prove, and Indeed Disproved, that Watsons Product Meets the Steady-State Cmax Element of Claim 1 of the 359 Patent...................................................54 Allergan Did Not Prove Inducement of the Asserted Method Claims.........................................................................58 1. 2. Allergan Did Not Prove Indirect Infringement of the 359 Patent By Inducement .....................................58 Allergan Did Not Prove Indirect Infringement of the 449 Patent By Inducement .....................................59

B.

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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
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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 Intl 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 Intl 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 Intl, Inc., 73 F.3d 1085 (Fed. Cir. 1995) .......................................................................49 PharmaStem Therapeutics, Inc. v. Viacell, Inc., 491 F.3d 1342 (Fed. Cir. 2007) .....................................................................48

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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., Moores Federal Practice (3d ed. 2012) ........................................................20 Rules Fed. R. Civ. P. 52(a)(6)............................................................................................15 Fed. R. Evid. 201(b).................................................................................................30

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Fed. R. Evid. 201(e) .................................................................................................30 Fed. R. Evid. 801(a)-(c) ...........................................................................................24

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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 Courts decision in the pending appeal.

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) trospiums 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.

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 Allergans expert testified that his steadystate modelingwhich the district court accepted to prove infringement of the other claimsshowed that Watsons 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 Watsons accused product?

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-aday 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. Allergans nonobviousness argument rests largely on unproven facts of what a companyMadausthought about the prospects of developing once-daily trospium, and the results of an eight-person study published in a one-page poster.

No one from Madaus testified, and nothing substantiates the inadmissible hearsay testimony of Allergans witness Dr. Sandage about what Madaus was thinking. Allergans 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, Allergans 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 trospiums low colonic absorption was not inconsistent with a reasonable expectation of success. A36. There was no clear error in the district courts 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;

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 Interneurona U.S. drug company that in-licensed products with clinical experience overseas that permits fewer studies for FDA approvalidentified 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 Interneurons business means that it needed access to Madauss 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, twicedaily 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 formoxbutynin (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 becauseas Interneurons business people easily sawthe 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.

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. Interneurons 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) trospiums 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 PlatformAlready Implemented In Two Marketed Extended-Release Products And WellDescribed in the Patent LiteratureTo 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 developmentrecognizing that trospiums limited absorption in the colon could be handled by simply releasing more drug in the coloncame

from people at Interneuron who are not inventors on the patents. A10492:16493:19. 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 Schrder describing a study in which eight male volunteers were given 5 ml (1 teaspoon) trospium solution by rectum. A745-747. They argued that Schrder 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

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 courts 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. The district court, with all parties agreement, construed lower GI tract accordingly. A64; A13913-915. 9
1

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 Schrder to argue teaching away, even though the Examiner had not cited Schrder 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.

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In allowing the claims, the Examiner accepted the applicants arguments about Schrder: However the instant invention has disclosed that trospium chloridebearing 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

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demanded a once-daily formulation. Even if there was a dispute, the district courts 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 woulddespite this knowledge and motivationthrow 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 Schrder postera non-peer reviewed, single-page abstract reporting an eight-subject experiment with rectal administration of one teaspoon of trospium solutionso 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 Allergans own expert, that the Schrder poster did not disprove the absorption of trospium in the colon and would not have negated a POSAs expectation of success. Allergans 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-ofothers and skepticism through hearsay testimony that the district court found unpersuasive. The district courts evaluations of the evidence are findings of fact, and not clearly erroneous.

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Even if credited, Allergans 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

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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 Watsons accused product did not satisfy all elements of the claim.

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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 courts 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 courts 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).

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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

Allergans 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. Kibbes opinion of obviousnesswhich 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 changesbecause there was no limitation by limitation, element by element tying of the claims to the

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prior art. A11365:1-3. Having complained before that defendants should have more overtly matched each claim element to the prior art, Allergans 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

Allergans criticism of the district courts order of analysisin which it considered the Graham factors and stated that the claims were prima facie obvious before moving to secondary considerationsfails because Allergan invited this approach. The district court acknowledged Allergans request, as shown by comparing Allergans post-trial brief with the Opinion: Allergans brief 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. Opinion 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.

17

Having presented the law this way, Allergan cannot assign error to the district courts approach. Cordis Corp. v. Medtronic Ave, Inc., 511 F.3d 1157, 1172 (Fed. Cir. 2008) (appellants 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 Allergans attack is not formally barred as invited error, the substantial congruence between its statement of law and the district courts approach demonstrates that any error was harmless. The Federal Circuit routinely employs the same shorthand. For example, Leapfrog Enterprises, Inc., v. FisherPrice, 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 patentees
2

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

18

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 courts 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 Intl 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 courts characterization of the legal role of secondary considerations in an obviousness analysiswhich was legally correct and endorsed by Allerganits 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, 19

even though legally correct (because of the reference to the applicant). Allergan does not show, however, that this affected the outcome. First, the district courts 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 courts legal conclusions in any event, rendering harmless any misstatement of the law that did not infect the district courts factual findings. 9 James W. Moore et al., Moores 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 courts factual findings.). No infection occurred here: the district court did not assign to

20

Allergan the burden of proving validity, or relieve defendants of their clear-andconvincing evidentiary burden.3 C. The Result in Cyclobenzaprine Does Not Mandate Reversal

Allergans 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 Alzas attempt and failure directly refuted the challengers obviousness case by showing that targeting the knowneffective pharmacokinetics of the immediate-release drugwhich was at the heart of the defendants obviousness casedid 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 ALZAs product was not therapeutically effective. ALZA lost $10 million in its unsuccessful attempt to develop an extendedrelease formulation.

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 courts 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.). 21

Id. at 1081. The Court explained that Alzas 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 Alzas 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 courts findings of fact as clearly erroneous (which they are not) and substitute Allergans 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 obviousnessas in Cyclobenzaprine tried and failed is an empty recitation of patent-law jargon. Allergans evidence is no better than the patentees 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

22

evidence was weak and the district court did not clearly err in disregarding it. Id. at 1081, n.9. Second, Alzas attempt and failure in Cyclobenzaprine was proven by an Alza scientist who testified to the difference between (i) Alzas 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 objectionsof 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 courts decision not to credit this evidence is a factual determination and not clearly erroneous.4

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

23

III.

The District Courts 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

Allergans 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 its worth in bench trialsas a matter of convenience to keep things movingonly 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 outof-court declarants). 5 Defendants preserved this point by objecting. A014546; A14525-14533 at A14528; A10181:8-10183:9. 24

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 declarants out-ofcourt statement on the testifying witnesss state of mind), not a hearsay exception under Rules 803 or 804.6 Allergans 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.

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. 25

B.

Allergans 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) (experts 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 courts 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. Kibbes uncontradicted testimony that multiparticulates were desirable because pellets with different release

26

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. Daviss 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; A11475:121476:14. Allergans 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. Allergans 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 trospiums generally low absorption throughout the GI tract but does not address the ease or difficulty formulating tertiary amines. A11012; A11208-09; A1393. In

27

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. Allergans 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. Allergans 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. Allergans argument that one characteristic controls, the alleged poor colonic absorption, is contrary to its own experts testimony (A11400:9-24) and was properly rejected. (a) Allergans 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

28

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. Allergans 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. Allergans 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 Allergans post-trial argument on IV/IVC. Compare A17 n.7 with A115340, 85. Allergans 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 Circuits 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

29

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 sustainedrelease 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 onand based only onthe 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 crossexamination. The only factual shortcut permitted by the Rules of Evidence is a The district courts 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 immediaterelease cyclobenzaprine to make the sustained-release drug. As shown in that case by Alzas failure to succeed using this approach and the patentees 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. 30
7

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 Courts Finding That a POSA Would Consider Trospium for Once-Daily Formulation Is a Factual Determination and Not Clearly Erroneous

Contrary to Allergans 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 courts 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 witnesss 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 courts findings that several attributes demonstrated that trospium was a good candidate for once-a-day

31

formulation, including its absorption in the GI tract, pharmacokinetics, and halflife. 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. Mayersohns 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. Allergans 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. Allergans 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 32

existing therapeutics, or (ii) it did not think it could get sufficiently broad patent claims. Allergans 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 Schrders 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 longterm 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

33

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 Schrder 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 Schrder 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 Schrders 5 ml mini-enema would not reach the colon (A11462:7-15), and testified that a POSA would have ignored the Schrder poster. A11490:51491:10. 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

On this point, Allergans statement that Watsons 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. 34

Allergan again tries to rely on caselaw to refute the district courts fact finding. Br. at 44. In Alza v. Mylan, the Federal Circuit affirmed the invalidity of claims to extended-release oxybutynin despite the patentees argument that a POSA would not have believed that oxybutynin could be absorbed in the colon. 464 F.3d. at 1292. The Courts 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 extendedrelease 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

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). 35

(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 courts 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. Kibbes 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

36

make a once-a-day product. A26-27; A11014:4-1016:5. It also found that Fsgen (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; A10256:5257:4. 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 trospiums 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. Kibbes testimony

37

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; A97939794 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. Kidanes testimony confirm Dr. Kibbes interpretation of Langguths 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. Allergans argument that it is incorrect to use the fact that an inventor [Kidane] gleaned an idea from the prior art against him when the inventors idea is different from what was taught (Br. at 49) misstates the district courts use of the evidence. The contemporaneous non-litigation-motivated evidence of how Dr. Kidane read

38

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 courts 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-aday extended-release product, including Dr. Kibbes 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

39

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 Allergans argument that decades of inaction is proof of nonobviousness. Graham, 383 U.S. at 36 (fact 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. 40
10

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 chloridebearing 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

41

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. Kibbes 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; A10870:4872:2. 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 13, 18, 20; A148-174 at A172, claims 1, 10; A175-199 at A198, claims 1, 10, 18; 42

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; A90519067. 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; A91309141; 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. 43

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 (A91219129; A9130-9141) and a known Cmin of about 0.6 ng/ml (A9583-9781). A24. In addition, the court credited Dr. Kibbes 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. Kibbes 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

44

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; A98719879. Allergans 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

45

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 Fuhrs alleged nay-saying, telling Madaus I have got to try because thats where the markets 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 trospiums 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 sustainedrelease formulations and proved by doing so that the conventional approach did not work for cyclobenzaprine. 676 F.3d at 1081-82. Even if Allergans spin on the 46

facts and the inferences were acceptedin disregard of the district courts fully justified findings to the contraryit does not show that Madaus put meaningful resources into a serious effort to make a once-daily formulation.12 Allergans 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 depositiondespite his role as a consultant to its licensor Madaus, which has a financial interest in the sales of Sanctura XR in Europeit 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.). 47

the district courts 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. Bhatts only memory of his discussions with Bayer was a general sense of skepticism from them regarding the chances of success in developing a once-aday controlled release product of trospium, and thats 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. 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. 48
13

Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318, 132728 (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 Schrder Poster Teaches Toward, Not Away From, the Asserted Claims

Allergans argument that Schrder teaches away from the claimed invention is undercut by the district courts express findingssupported by substantial evidencethat (i) Schrder does not teach away from the claimed invention, and (ii) a POSA interested in developing once-daily trospium would have found Schrder encouraging. A41-43. See Para-Ordinance Mfg., Inc. v. SGS Importers Intl, 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 Schrders methodology. A42; A11010:17-1011:16; A11020:1027:22; A11210:4-22; 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 Bayers 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. 49
15

A11259:20-1260:20; A11272:9-16; A11335:12-1336:9. Allergan presented no first-hand testimony concerning how anyone interpreted Schrder other than through Dr. Davis, whose testimony (i) bolstered Drs. Kibbe and Mayersohns conclusion that the results of the study were speculative, inconclusive, and inconsistent with known therapeutic effectiveness of trospium suppositories, and (ii) undermined Allergans argument that it taught away from the claimed invention. A46; A11462:7-15; A11463:12-20; A11458:10-1465:4. Allergans 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 Schrder 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 Allergans theory have legs, i.e., if a POSA believed in 2002 based on

50

a 2008 review article that 30% colonic absorption was important to sustainedrelease formulations, and if a POSA read Schrder 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 Allergans own expert Dr. Davis said that a POSA would have largely ignored Schrder and given it no more than a minutes thought. A43; A11490:8-1492:19. 5. Licensing by Others

The district court properly concluded that Allergans case for licensing as a secondary consideration of nonobviousness not compelling. A47. Allergans 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). Allergans decision to in-license Sanctura from Indevus was motivated by the desire to move into the new area of urologics. A10088:10-15. Allergan

51

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 plaintiffs 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, 135859 (Fed. Cir. 2000) (rejecting licensing by others because the three licenses

52

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. A11380:191381:3. 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. A11016:613. Allergans argument of legal error regarding the district courts 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.

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The district court carefully considered all the teachings in the prior art about trospium, both positive and negative, considered and credited testimony from both sides respective experts, and reasonably found that a POSA would have been encouraged by trospiums positive attributes and the teachings on how to remedy the negative attributes. A34-36. Allergans 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 Watsons Product Meets the Steady-State Cmax Element of Claim 1 of the 359 Patent

Each of the asserted claimsexcept claims 18 and 19 of the 978 patent recites steady-state PK parameters. Because Watsons ANDA contained only single-dose data, Allergans 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. Weiners modeling, and the district court credited it to find that Watsons product would meet the steadystate elements of the asserted claims of the 978, 448, and 449 patents. A77-84.16

Watsons 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. 54

16

Dr. Weiners modeling of the steady-state PK profile of Watsons 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 Watsons 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 products steady-state Cmax from its single-dose data, which he said was the preferable approach (A10577:21-578:2), Watsons 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 dont. *** Q. Now, you just testified, your modeling measurements, do they meet this limitation or not? A. They do not. A10545:10-546:2. Allergans expert Dr. Davis agreed that using Dr. Weiners modeling, Watsons 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. 55

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. Weiners 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. Weiners linear superposition modeling, relied on by Allergan and adopted by the district court, proves that Watsons 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 Watsons product infringed. A8486. This was error because there are no special rules for infringement in ANDA 56

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. Allergans 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 courts 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 XRs label (which was copied to Watsons 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, Watsons proposed label

57

(and Sanctura XRs 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 Watsons 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 Allergans own evidence. Therefore, the district courts 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 Allergans 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

58

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 defendants knowledge of unstated characteristics of its own product, doing so here would impute to Watson proof of noninfringement, because the modeled steadystate Cmax of its productaccording to Allergan and the district courtis 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 Watsons ANDA was submitted to FDA. 59

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 Watsons or Sanctura XRs label to suggest that extended-release trospium would meet this limitation. Indeed, Dr. Davis admitted: (1) there is nothing on Watsons 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) Watsons 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 Watsons 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

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their proposed products were developed to mimic or match the claimed invention. A91-93. This conclusion is error for two reasons. First, Watsons 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 courts 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. A81388168 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

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try to prove infringement. Accordingly, Watson cannot be found liable for inducement.

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CONCLUSION For the foregoing reasons, the district courts judgment should be affirmed.

Respectfully submitted,

/s/ Charles A. Weiss Charles A. Weiss DATED: June 1, 2012

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CERTIFICATE OF SERVICE AND FILING I certify that on June 1, 2012, the foregoing Responsive Brief of DefendantAppellee 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 Deanne E. Maynard, Esq. Morrison & Foerster LLP 2000 Pennsylvania Avenue, NW Suite 6000 Washington, DC 20006 dmaynard@mofo.com Wendy M. Ward, Esq. Merchant & Gould P.C. 3200 IDS Center 80 South 8th Street Minneapolis, MN 55402 wward@merchantgould.com Attorneys for Plaintiffs-Appellants

Attorneys for Defendant-Appellee Sandoz Inc.

Attorneys for Defendant-Appellee Paddock Laboratories, Inc.

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

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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

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