Cephalon, Inc. v. Slayback Pharma Ltd. Co.

456 F.Supp.3d 594

CEPHALON, INC., et al., Plaintiffs,

v.SLAYBACK PHARMA LIMITED LIABILITY CO., et al., Defendants.

Civil Action No. 17-1154-CFC CONSOLIDATED

United States District Court, D. Delaware.

Signed April 27, 2020

John W. Shaw, Karen Keller, Nathan Hoeschen, SHAW KELLER LLP, Wilmington, Delaware; David I. Berl, Adam Harber, Elise Baumgarten, Shaun Mahaffy, Ben Picozzi, Matthew Lachman, WILLIAMS & CONNOLLY LLP, Washington, District of Columbia, Counsel for Plaintiffs

Eve Ormerod, Neal Belgam, SMITH, KATZENSTEIN, & JENKINS LLP, Wilmington, Delaware; Beth Finkelstein, Constance Huttner, Frank Rodriguez, James Barabas, BUDD LARNER, P.C., Short Hills, New Jersey, Counsel for Slayback Pharma Limited Liability Company

Jeremy Cole, Damien Tancredi, Jeffrey Cohen, FLASTER GREENBURG, P.C., Wilmington, Delaware; John Cravero, Sherry Rollo, Steven Feldman, HAHN LOESER & PARKS LLP, Chicago, Illinois, Counsel for Apotex Inc.

Brian Farnan, Michael Farnan, FARNAN LLP, Wilmington, Delaware; Arun Mohan, SCHIFF HARDIN LLP, New York, New York; Helen Ji, Kevin Nelson, Imron Aly, SCHIFF HARDIN LLP, Chicago, Illinois, Counsel for Fresenius Kabi USA, LLC

James Lennon, DEVLIN LAW FIRM LLC, Wilmington, Delaware; David Steuer, Nicole Stafford, Shyamkrishna Palaiyanur, WILSON SONSINI GOODRICH & ROSATI, Austin, Texas; Rhyea Malik WILSON SONSINI GOODRICH & ROSATI, San Diego, California, Counsel for Mylan Laboratories Limited

OPINION

COLM F. CONNOLLY, UNITED STATES DISTRICT JUDGE

Plaintiffs Teva Pharmaceuticals International GmbH, Cephalon, Inc., and Eagle Pharmaceuticals, Inc. have sued Defendants Apotex Inc. and Apotex Corp., Fresenius Kabi USA, LLC, Mylan Laboratories Ltd., and Slayback Pharma LLC under the Hatch-Waxman Act, 35 U.S.C. § 271(e)(2)(A). Defendants seek to bring to market generic versions of Plaintiffs' Bendeka®, a drug indicated for the treatment of chronic lymphocytic leukemia (CLL) and indolent B-cell non-Hodgkin lymphoma (NHL). D.I. 1 ¶¶ 1, 12.¹ Plaintiffs allege infringement of U.S. Patent Nos. 9,265,831 (the #831 patent), 9,572,797 (the #797 patent), 9,144,568 (the #568 patent) and 9,597,399 (the #399 patent) by all defendants and infringement of U.S. Patent No. 9,572,887 (the #887 patent) by Slayback. Defendants have stipulated to infringement of the asserted claims with two exceptions outlined below. Defendants argue that all asserted claims of the asserted patents are invalid.

I held a seven-day bench trial, and, as required by Federal Rule of Civil Procedure 52(a)(1), I have set forth separately below my findings of fact and conclusions of law.

I. BACKGROUND

Plaintiffs sell Bendeka® under New Drug Application No. 208194. D.I. 1 ¶ 13. Eagle is the owner and assignee of the asserted patents and has listed them in connection with Bendeka® in the Orange Book maintained by the Food and Drug Administration (FDA). Teva Pharms. Int'l GmbH v. Apotex Inc. , No. 17-1164 (D. Del. 2017), D.I. 1 ¶¶ 27–35. Cephalon holds an exclusive license to the asserted patents and has assigned to Teva its rights under the license, including the right to sue for infringement. Id. , D.I. 1 ¶¶ 38–39.

Bendeka®'s active ingredient is bendamustine hydrochloride (referred to by the parties as bendamustine), a nitrogen mustard chemotherapy drug that was first developed in East Germany in the 1960s. D.I. 334 at 2; D.I. 364 ¶ 1.

In 2008, Cephalon launched the first U.S. bendamustine product, Treanda®. Tr. 403:18–22. Cephalon initially sold Treanda® in a lyophilized, or freeze-dried, form. Tr. 404:7–11, 1357:13–19. Lyophilized drugs must be reconstituted into an injectable liquid before they can be administered to patients. Tr. 404:7–18, 405:8–06:4. Aware that bendamustine's toxicity makes it potentially dangerous for medical staff to reconstitute the drug, Eagle began in 2009 to develop a liquid bendamustine formulation that ultimately became Bendeka®. Tr. 83:7–84:13, 86:3–19.

In November 2014, Cephalon launched its own liquid version of Treanda®. Tr. 981:25–82:2, 1657:10–11.

In 2015, Teva acquired Cephalon, Tr. 1660:10–14, and Cephalon thereafter commercialized Bendeka® as permitted by its exclusive license agreement with Eagle, PTX-0408; Tr. 1660:10–24, 1795:4–9.

On December 7, 2015, the FDA approved Bendeka®, D.I. 307-1 ¶ 152, and on January 27, 2016, Teva launched Bendeka®, DTX-0500; Tr. 984:17–85:23, 1006:6–07:5. Bendeka® subsequently received orphan drug exclusivity, a seven-year period during which the FDA is precluded from approving any other manufacturer's application to market the same drug to treat the same rare disease. Eagle Pharm., Inc. v. Azar , 2018 WL 3838265, at *1 (D.D.C. June 8, 2018), aff'd , 952 F.3d 323 (D.C. Cir. 2020) ; Tr. 1725:15–19.

In March of 2016, Teva stopped selling liquid Treanda®. DTX-0500_0001; Tr. 1623:7–8.

In July and August of 2017, Defendants each filed an Abbreviated New Drug Application (ANDA) with Paragraph IV certifications under § 505(j) of the Federal Food, Drug and Cosmetic Act to gain FDA-approval for the commercial manufacture, use, and sale of a generic version of Bendeka®. E.g. , D.I. 1 ¶ 15. In August of 2017, Plaintiffs filed these suits alleging that Defendants' ANDA filings with Paragraph IV certifications constituted acts of infringement. E.g., D.I. 1. These cases were consolidated for all purposes. See December 13, 2017 Order.

At trial, Plaintiffs accused all Defendants other than Slayback of infringing six formulation claims in two of the asserted patents: claims 2, 3, and 5 of the #831 patent; and claims 9 and 11 of the #797 patent. Plaintiffs also alleged infringement of six administration claims in four of the asserted patents: claims 11, 18, and 22 of the #568 patent and claim 15 of the #399 patent (by all Defendants); claim 13 of the #399 patent (by Apotex only); and claim 13 of the #887 patent (by Slayback only). Defendants countered that (1) the asserted formulation and administration claims are invalid for obviousness under 35 U.S.C. § 103 ; (2) the asserted formulation claims are invalid for indefiniteness under 35 U.S.C. § 112 ; (3) the asserted formulation claims are invalid for lack of enablement under 35 U.S.C. § 112 ; and (4) claim 9 of the #797 patent is invalid for lack of written description. Defendants stipulated that they infringe or induce infringement of each of the asserted claims with two exceptions: Apotex, Fresenius Kabi, and Mylan argue that (1) their ANDA products do not contain "a stabilizing amount of an antioxidant" as the asserted formulation claims require; and (2) they do not induce infringement of claim 9 of the #797 patent.

II. OBVIOUSNESS

A. Legal Standards for Obviousness

Under § 103 of the Patent Act, codified at 35 U.S.C. § 1 et seq. , a patent "may not be obtained ... if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art [POSITA] to which said subject matter pertains." 35 U.S.C. § 103. As the Supreme Court explained in the seminal case, Graham v. John Deere Co. , 383 U.S. 1, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966), under § 103, "[a]n invention which has been made, and which is new in the sense that the same thing has not been made before, may still not be patentable if the difference between the new thing and what was known before is not considered sufficiently great to warrant a patent." Id. at 14, 86 S.Ct. 684. Section 103 ensures that "the results of ordinary innovation are not the subject of exclusive rights under the patent laws." KSR Intern. Co. v. Teleflex Inc. , 550 U.S. 398, 427, 127 S.Ct. 1727, 167 L.Ed.2d 705 (2007). "Were it otherwise patents might stifle rather than promote, the progress of useful arts." Id. (citing U.S. Const. art. I, § 8, cl. 8 ).

The Court reaffirmed in KSR that the "framework" set out in the following paragraph from Graham governs the application of § 103, id. at 406, 127 S.Ct. 1727 :

While the ultimate question of patent validity is one of law, the [§] 103 condition [of patentability], ... lends itself to several basic factual inquiries. 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.

Graham , 383 U.S. at 14–15, 86 S.Ct. 684 (citations omitted).

It is clear that under this framework, a district court must consider in an obviousness inquiry the three primary factors identified by the Court in Graham: (1) the scope and content of the prior art, (2) the differences between the prior art and the claims at issue, and (3) the level of ordinary skill in the pertinent art. Less clear is the role, if any, secondary considerations should play in the analysis.

The logical—some would say necessary—implication of the Court's use of the word "secondary" in Graham and its holding that the secondary considerations "might be utilized" and "may have relevancy" is that a district court is permitted—but not required in all cases—to examine such considerations in evaluating an obviousness-based invalidity challenge. The Court seemed to confirm as much in KSR , when it noted that " Graham set forth a broad inquiry and invited courts, where appropriate , to look at any secondary considerations that would prove instructive." KSR , 550 U.S. at 415, 127 S.Ct. 1727 (emphasis added).

But a district court ignores Graham 's "invitation" to examine secondary considerations at its peril. One legal scholar, Harmon, has...