United States District Court, N.D. California, San Jose Division
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For Takeda Pharmaceutical Co., Ltd., Takeda Pharmaceuticals U.S.A., Inc., Takeda Pharmaceuticals America, Inc., Plaintiffs, Counter-defendants: Heather E. Takahashi, LEAD ATTORNEY, Munger, Tolles and Olso66n LLP, Los Angeles, CA; Adam R. Lawton, Ted G. Dane, Esq., Munger, Tolles & Olson LLP, Los Angeles, CA; Amy Lynn Fuetterer Greywitt, Munger Tolles and Olson, San Francisco, CA; Elizabeth Ann Laughton, PRO HAC VICE, John L Schwab, Munger Tolles Olson LLP, Los Angeles, CA; Eric Kelvin Chiu, Munger, Tolles & Olson LLP, San Francisco, CA; Jeffrey I. Weinberger, Munger Tolles & Olson LLP, Los Angeles, CA.
For TWi Pharmaceuticals, Inc., Defendant, Counter-claimant: Donald J Mizerk, LEAD ATTORNEY, Husch Blackwell LLP, Chicago, IL.
ORDER GRANTING IN PART AND DENYING IN PART MOTIONS FOR SUMMARY JUDGMENT
Re: Dkt. Nos. 143, 144
LUCY H. KOH, United States District Judge.
Before the Court are the parties' summary judgment motions. Defendant TWi Pharmaceuticals, Inc. (" TWi" ) moves for summary judgment on all four counts of the complaint filed by Plaintiffs Takeda Pharmaceutical Company Limited, Takeda Pharmaceuticals U.S.A., Inc., and Takeda Pharmaceuticals America, Inc. (collectively, " Takeda" ). ECF No. 143 (" TWi MSJ" ). Takeda moves for summary judgment on TWi's affirmative defenses of inequitable conduct. ECF No. 144 (" Takeda MSJ" ). Having considered the parties' written submissions and their oral arguments at the April 9, 2015 hearing, the relevant law, and the record in this case, the Court hereby GRANTS in part and DENIES in part the parties' summary judgment motions.
A. The Drug and Asserted Patents
Takeda manufactures and sells Dexilant®, a drug for treatment of gastroesophageal reflux disease (" GERD" ), commonly known as acid reflux disease. See
ECF No. 104 (First Am. Answer and Counterclaims) at 14-15. The active ingredient in Dexilant® is dexlansoprazole, which belongs to a class of compounds known as proton pump inhibitors (" PPI" ). Dexilant® is designed to release dexlansoprazole in two stages, based on different acidity levels in the human intestine, to provide overnight relief from acid reflux. See id. Takeda owns patents relating to Dexilant® that are listed in the U.S. Food and Drug Administration's Approved Drug Products with Therapeutic Equivalence Evaluations (the " Orange Book" ). Id. at 4. Takeda asserts two Orange Book patents in this lawsuit: U.S. Patent Nos. 8,461,187 (the " '187 Patent" ) and 8,173,158 (the " '158 Patent" ) (collectively, the " Asserted Patents" ).
The '187 Patent is entitled " Multiple PPI Dosage Form" and is directed to pharmaceutical dosage forms containing a first and second dose of a PPI, as well as methods of administering those dosage forms. According to the '187 Patent, " PPIs rapidly degrade in acidic environments and therefore, dosage forms containing PPIs generally are designed to protect the PPI from the acidic environment of the stomach." '187 Patent at col.1 ll.21-24. The inventors claim to have discovered that combining two doses in a single dosage form taken in the morning can prevent symptoms at night: " Moreover, the first and the second dose can be administered in a single oral dosage form that can be taken once a day to alleviate nocturnal breakthrough events." Id. at col.2 ll.19-21. The '187 Patent issued on June 11, 2013, and claims priority to a provisional application filed on June 16, 2004.
The '158 Patent is entitled " Methods of Treating Gastrointestinal Disorders Independent of the Intake of Food" and is directed to methods of " treating heartburn, acid reflux or gastroesophageal reflux disease in a patient" by administering a " pharmaceutical composition" with two types of solid particles. '158 Patent cl. 1. The '158 Patent notes the preexisting problem that giving patients PPIs (such as dexlansoprazole) together with food can reduce the drugs' effectiveness: " the administration of such PPIs in conjunction with the intake of food decreases the systemic exposure of the PPI." Id. at col.10 ll.7-9. To address this problem, the inventors discuss use of a pharmaceutical composition that " comprises at least two solid particles each of which contain at least one proton pump inhibitor," permitting administration " independent of the intake of food." Id. at col.1 ll.15-20. The '158 Patent issued on May 8, 2012, and claims priority to a provisional application filed on October 12, 2007.
B. TAP Pharmaceuticals and TAK-390MR
In the 1970s, Takeda Chemical Industries, Ltd. (" Takeda Japan" ) and Abbott Laboratories, Inc. (" Abbott" ) formed a joint venture called TAP Pharmaceuticals, Inc. (" TAP" ). See ECF No. 144-36 (" Stipulation of Interests" ) ¶ 3; see also ECF No. 143-18 (" Watkins Dep." ) at 16:23-18:21. TAP developed Prevacid®, a PPI that is generally administered once a day before breakfast. Some patients who took Prevacid®, or other conventional PPIs, would nevertheless experience nighttime heartburn. See generally '187 Patent at col.1 ll.28-48.
In early 2003, TAP scientists Drs. Majid Vakily and Rajneesh Taneja began working
on a new PPI dosage form that could be taken once a day but still prevent nighttime heartburn. Their work led to the Asserted Patents.
Meanwhile, Takeda Japan, separately from the TAP joint venture, was developing a new PPI containing dexlansoprazole. The new PPI dosage form was called TAK-390MR, the development code name for Dexilant® . See ECF No. 144-8 (Kurasawa Dep.) at 9:21-11:3. One of the scientists working on TAK-390MR was Dr. Akiyama. Id. Dr. Akiyama's work led to Takeda Japan's international patent application disclosing TAK-390MR. PCT Publication No. WO 2004/035020 (" Akiyama I" ). The international application entered the U.S. phase and in September 2010 was issued as U.S. Patent No. 7,790,755 (" Akiyama II" ).
In 2003, Takeda Japan began sharing data about TAK-390MR with TAP. See ECF No. 143-28 (" Taneja Dep." ) at 42:4-44:20. Soon thereafter, Dr. Vakily recognized that TAK-390MR could be useful in his own research into a new PPI. Vakily Dep. at 182:1-185:6. Accordingly, TAP agreed to work with Takeda Japan to develop TAK-390MR. In February 2004, TAP and Takeda Japan signed an agreement whereby Takeda Japan licensed TAP to, inter alia, develop, use, and sell TAK-390MR. See ECF No. 144-35 (License Agreement). From that point forward, TAP led the clinical development of TAK-390MR in the United States. The work eventually culminated in Takeda obtaining approval from the Food and Drug Administration (" FDA" ) to sell Dexilant® in the United States on January 30, 2009. ECF No. 144-37 (NDA Approval) at DEX0091470.
C. Procedural History
On May 29, 2013, Takeda filed the instant lawsuit against TWi, alleging infringement of the '158 Patent. ECF No. 1 (Compl.) ¶ ¶ 26-35. On July 9, 2013, Takeda filed its First Amended Complaint, this time alleging infringement of both Asserted Patents. ECF No. 17 (First Am. Compl.) ¶ ¶ 29-48. On October 29, 2013, Takeda filed its four-count Second Amended Complaint (" SAC" ), which is the operative complaint in this action. ECF No. 36. TWi answered the SAC on November 18, 2013. ECF No. 41.
On February 6, 2014, the parties filed a Joint Claim Construction and Prehearing Statement, identifying disputed claim terms, proposed constructions, and citations to supporting evidence. ECF No. 60. After receiving claim construction briefing, the Court held a technology tutorial and claim construction hearing on June 5, 2014. The following day, the Court issued its Order Construing Claims, which construed two terms from the '187 Patent and four terms from the '158 Patent. ECF No. 78 at 38.
At a case management conference held on December 10, 2014, it was brought to the Court's attention for the first time that Takeda had failed to produce various documents, including TAP inventor e-mails and licensing documents. ECF No. 129. As the fact discovery cutoff date had elapsed two months prior, see ECF No. 87, the Court amended the case schedule to allow Takeda sufficient time to produce the missing documents and TWi sufficient time to review them prior to the filing of dispositive motions, ECF No. 129. At the Court's request, Takeda filed a case narrowing statement on February 2, 2015,
indicating that Takeda was asserting seven claims: claim 1 of the '158 Patent and claims 1, 2, 5, 6, 7, and 16 of the '187 Patent. ECF No. 138. Takeda will file a further statement narrowing its case to at most five asserted claims by April 16, 2015. ECF No. 167.
The Court also allowed Takeda to file a Motion to Strike portions of TWi's expert reports, which Takeda did on February 9, 2015. ECF No. 139. Specifically, Takeda moved to strike expert opinion testimony regarding two invalidity theories TWi had allegedly failed to disclosed in its Invalidity Contentions: (1) anticipation of the asserted claims of the '187 Patent by the Dietrich reference, and (2) nonenablement of the formulation of the asserted claim of the '158 Patent. Id. at 1. Finding that TWi had not adequately disclosed either theory in violation of the Patent Local Rules, the Court granted Takeda's motion on March 17, 2015. ECF No. 156.
The motions at hand--TWi's Motion for Summary Judgment on all four counts of Takeda's SAC and Takeda's Motion for Summary Judgment on TWi's affirmative defenses of inequitable conduct--were filed on February 19, 2015. The parties opposed each other's motions on March 5, 2015. ECF No. 147 (" TWi Opp." ); ECF No. 149 (" Takeda Opp." ). The parties replied on March 12, 2015. ECF No. 152 (" Takeda Reply" ); ECF No. 155 (" TWi Reply" ). The Court held a hearing on the summary judgment motions on April 9, 2015.
II. LEGAL STANDARD
Summary judgment is appropriate if, viewing the evidence and drawing all reasonable inferences in the light most favorable to the nonmoving party, there are no genuine disputes of material fact, and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 321, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). At the summary judgment stage, the Court " does not assess credibility or weigh the evidence, but simply determines whether there is a genuine factual issue for trial." House v. Bell, 547 U.S. 518, 559-60, 126 S.Ct. 2064, 165 L.Ed.2d 1 (2006). A fact is " material" if it " might affect the outcome of the suit under the governing law," and a dispute as to a material fact is " genuine" if there is sufficient evidence for a reasonable trier of fact to decide in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
The moving party bears the initial burden of identifying those portions of the pleadings, discovery, and affidavits that demonstrate the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323. Where the moving party will have the burden of proof on an issue at trial, it must affirmatively demonstrate that no reasonable trier of fact could find other than for the moving party. Id. at 322-23. But on an issue for which the opposing party will have the burden of proof at trial, the party moving for summary judgment need only point out that " the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof." Id. at 323. Once the moving party meets its initial burden, the nonmoving party must set forth, by affidavit or as otherwise provided in Rule 56, " specific facts showing that there is a genuine issue
for trial." Anderson, 477 U.S. at 250.
If evidence produced by the moving party conflicts with evidence produced by the nonmoving party, a court must assume the truth of the evidence set forth by the nonmoving party with respect to that fact. See Leslie v. Grupo ICA, 198 F.3d 1152, 1158 (9th Cir. 1999). " Bald assertions that genuine issues of material fact exist," however, " are insufficient." Galen v. Cnty. of L.A., 477 F.3d 652, 658 (9th Cir. 2007); see also United States ex rel. Cafasso v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1061 (9th Cir. 2011) (" To survive summary judgment, a plaintiff must set forth non-speculative evidence of specific facts, not sweeping conclusory allegations." ). " If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Anderson, 477 U.S. at 249-50 (citations omitted).
Each side has filed a motion for summary judgment. TWi moves for summary judgment on all four counts of Takeda's SAC, arguing that the Asserted Patents are invalid as a matter of law and, in the alternative, that Takeda cannot show infringement of the '158 Patent as a matter of law. See generally TWi MSJ. Takeda moves for summary judgment on TWi's ninth and tenth affirmative defenses--i.e., that the Asserted Patents are unenforceable due to inequitable conduct. See generally Takeda MSJ. For the reasons stated below, the Court GRANTS in part and DENIES in part the parties' summary judgment motions.
An invention is not patentable if " the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date of the application for patent in the United States" or if " the invention was described in (1) an application for patent, published under section 122(b), by another filed in the United States before the invention by the applicant for patent or (2) a patent granted on an application for patent by another filed in the United States before the invention by the applicant for patent." 35 U.S.C. § 102(b), (e) (2006). In its summary judgment motion, TWi argues that the asserted claims of the '187 Patent are anticipated by Takeda Japan's alleged offer to sell TAK-390MR to TAP. TWi MSJ at 5-9. TWi argues further that the asserted claims of both the '187 and '158 Patents are anticipated by Akiyama II. Id. at 9-11, 14-19. The Court addresses each argument in turn.
1. Offer for Sale
a. Legal Standard
The Supreme Court has held that § 102(b)'s " on-sale bar applies when two conditions are satisfied before the critical date" : (1) " the product must be the subject of a commercial offer for sale" ; and (2) " the invention must be ready for patenting." Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 67, 119 S.Ct. 304, 142 L.Ed.2d 261 (1998).
Application of the " on-sale bar" to patentability is a question of law " based upon underlying factual considerations." Monon Corp. v. Stoughton Trailers, Inc., 239 F.3d 1253, 1257 (Fed. Cir. 2001) (internal quotation marks omitted). " In order to overcome the presumption of validity, such underlying facts supporting a determination of invalidity must be proven by clear and convincing evidence." Id.
TWi argues that a May 5, 2003 letter sent from Takeda Japan's managing director to Tom Watkins (" Watkins" ), then-president of TAP, amounts to an offer for sale under § 102(b) that renders the '187 Patent invalid. TWi MSJ at 6-9. In that letter, titled " Re: TAK390MR licensing terms," Takeda Japan's managing director wrote: " I understand that our R& D experts will explain Takeda [Japan]'s sustained release form of TAK 390 ('TAK390MR') at the upcoming [management committee meeting]. In this connection, we would like to propose the following terms and conditions." ECF No. 143-17 (" Offer Letter" ) at DEX1169490. Those terms included an initial payment of 3 billion Yen " upon signing TAK390MR license agreement" ; a royalty payment of 6% of net sales; a transfer price per 60 mg capsule; and a supply term stating that " TAP shall purchase TAK390MR preparations from [Takeda Japan] until the last TAK390MR patent is expired." Id.
Takeda disagrees. The Offer Letter, according to Takeda, " was a licensing offer and not an offer for sale." Takeda Opp. at 4. Takeda says it " was not seeking to sell TAK-390MR tablets; rather, Takeda [Japan] was seeking a licensing partner to perform the work necessary to commercialize an eventual product" --conduct that does not come under § 102(b)'s ambit. Id. " At a minimum," Takeda concludes, " a significant factual dispute exists regarding the nature of the [Offer Letter]." Id. at 5. In addition, Takeda argues that the Offer Letter was not sufficiently " definite" to constitute an offer for sale under § 102(b). Id. at 5-6. Because the Offer Letter " specifically reference[d] a future 'TAK390MR license agreement'" and " omitted numerous material terms," Takeda says " it could not have been accepted by TAP" in its existing form. Id. at 5.
Viewing the evidence, as the Court must, in the light most favorable to Takeda, the Court finds a genuine dispute as to whether the Offer Letter constituted an offer for sale under § 102(b). It is well established that " a sale of rights in a patent, as distinct from a sale of the invention itself, is not within the scope of the statute, and thus does not implicate the on-sale bar." Elan Corp., PLC v. Andrx Pharms., Inc., 366 F.3d 1336, 1341 (Fed. Cir. 2004) (quoting Grp. One, Ltd. v. Hallmark Cards, Inc., 254 F.3d 1041, 1049 (Fed. Cir. 2001)). " In certain situations," however, " a 'license' . . . may be tantamount to a sale ( e.g., a standard computer software license), whereupon the bar of § 102(b) would be triggered because the product is just as immediately transferred to the 'buyer' as if it were sold." In re Kollar, 286 F.3d 1326, 1331 n.3 (Fed. Cir. 2002) (alterations and internal quotation marks omitted).
Whether this case presents such a situation is a question for the trier of fact. Indeed, the Offer Letter's title refers to " TAK390MR licensing terms," and the letter itself speaks of a " license agreement." Offer Letter at DEX1169490 (emphases added). Watkins, to whom the Offer Letter was addressed, testified in his deposition that the letter was " a proposal to license to TAP . . . whatever existed at the time on a compound that was referred to as 390 or 390MR." Watkins Dep. at
33:18-22; see also id. at 35:13-15 (" [T]his memo apparently is proposing licensing terms should we agree that we want to license this thing." ). According to Watkins, " this is not an uncommon way for a holder of a chemical entity to talk to a potential developer of that chemical entity about licensing what they have." Id. at 34:3-7.
At the same time, however, the Offer Letter contains a " Supply Term" stating that " TAP shall purchase TAK390MR preparations from [Takeda Japan] until the last TAK390MR patent is expired." Offer Letter at DEX1169490 (emphasis added). The Offer Letter also contains other terms indicative of an offer for sale: an initial payment of 3 billion Yen upon signing the license agreement, a royalty payment of 6% of net sales, and a transfer price per 60 mg capsule. Id. In addition, the letter indicates that the transfer price would be the same for TAK-390MR as for Prevacid®, which Takeda Japan was already selling to TAP. Id.
Viewing this competing evidence in the light most favorable to Takeda, the Court finds a genuine dispute as to whether the Offer Letter amounts to an offer for sale under § 102(b) or an offer to license rights under a patent. See Grp. One, 254 F.3d at 1049 (holding that the documentary evidence was " unclear" as to whether Group One " was offering only to license the patent to Hallmark, and was not offering to license or sell the invention as such," and that, as a result, " [t]he district judge erred in deciding this disputed question of fact on summary judgment" ). Because there is a genuine dispute of material fact on this score, the Court DENIES TWi's summary judgment motion as to the on-sale bar.
2. Anticipation by Akiyama II
TWi asserts that Akiyama II, U.S. Patent No. 7,790,755, anticipates the asserted claims of both the '187 and '158 Patents. TWi argues that Akiyama II is prior art to the '187 Patent and anticipates its claims. Takeda disputes that Akiyama II is prior art to the '187 Patent, but admits that Akiyama II would anticipate the '187 Patent if it is prior art. TWi also asserts that Akiyama II anticipates the '158 Patent. The parties do not dispute that Akiyama II is prior art to ...