Prilosec Trial Days 31-34

March 18, 2002

PRILOSEC TRIAL DAY 31

Rulings. Despite objections from Genpharm and Cheminor, Judge Jones admitted the expert report of a Dr. Marshall.  The Marshall report had been prepared in the Australian Prilosec litigation involving the foreign counterparts to the ‘505 and ‘230 patents.  Dr. Marshall did not testify here but the document’s admission further undermines Dr. Story’s invalidity opinion. Defendants privately complained about Judge Jones’ bias.

The lawyers for Genpharm’s Australian affiliate hired Marshall in an effort to prove the obviousness of the patents. Dr. Marshall was asked to search for prior art to find an  alternative solution  for the omeprazole degradation problem that was solved by AZ’s formulation patents. Unfortunately, for the generics he failed to “reinvent” AZN’s patents after six tries and prodding by the lawyers.

Dr. Langer Rebuttal Testimony

Summary: Dr. Langer methodically addressed each of the prior art references on which Dr. Story based his opinions of anticipation and obviousness.  His Direct Testimony concluded AZ’s rebuttal case on the invalidity of the ‘505 and ‘230 patents.

Anticipation -The ‘505 patent

1- Langer contradicted Story’s anticipation argument based the ‘495 patent because:

• It does not disclose inert subcoat;
• A gelatin capsule is not a subcoat;
• He has never referred, or heard any one else refer to, or seen any publications characterizing gelatin capsule as a subcoat;
• A capsule acts as a container; and
• A capsule defines a shape while coating clings to what it coats.

2- Dr. Langer explained that neither the ‘495. 664 patents nor the Pilbrant & Cederberg article (Pilbrant) discloses a subcoat because:

• A subcoat is a species of separating layer;
• Andrx’s notice letter to AZ concurred;
• The ‘495,  ‘664 and Pilbrant patents teach enteric coating that is not a separating layer;
• Acid in gelatin is about same as in an enteric coating; and
• Gelatin contains a carboxylic acid that makes it unsuitable as a subcoat.

Obviousness -The ‘505 patent

1- Implicitly accusing Dr. Story of using the wrong form of analysis, Langer explained the obviousness test he applied to prior art:

• Known when filed;
• Cannot reconstruct the invention with hindsight;
• It must be obvious to a person of ordinary skill in the art,
• Must look at entire combination not just individual elements; and
• Must find suggestion within the prior art to combine references.

2- Langer testified that others who tried to solve omeprazole degradation problem without knowing solution in advance were:

• Shin Etsu,
• Dr. Marshall,
• AZ itself, at first.

3- Langer again distinguished the ‘495 patent:

• It did not suggest an enteric coating on gelatin;
• Did not address the degradation problem;
• Did not use pure omeprazole rather an omeprazole salt.

4- Langer distinguished the Pilbrant article [a publication by one of the inventors that defendants contend gave the invention to the public] on the following differences:

• Its disclosure of granulation obviates the need for an alkaline reaction compound;

• Does not describe a formulation;
• It did not involve a commercial product;
• It was only tested on 6 patients; and
• Its oral formulation used sodium bicarbonate.

5-In addition Langer distinguished the Pilbrant disclosure was for a two-layer formulation that was unstable (as distinguished from a three-layer formulation claimed by the patents):

• It could only be stored by refrigeration for week, and by freezing for a year, thus did not meet FDA requirements:
• It was in solution;
• Was not about solid omeprazole;

• Did not disclose a subcoat; and
• Did not identify the degradation problem that the core granules attack enteric coating.

6- Langer distinguished the 4,457.907 patent, [another prior art reference that defendants claim invalidates the two patents in suit] as applicable to erythromycin not omeprazole because:

• Its different sensitivity to acid;
• Its discoloration is prevented by cysteine which is not an alkaline reaction compound; and
• Used different solution for same problem

7- The Japanese Shin Etsu solution to same problem contained fatty acids and would not work for omeprazole

8- The Funakoshi ‘099 patent

• Did not disclose and alkaline reaction compound;
• Was intended to solve a different problem than solved by AZN’s patents;
• Involved IGA which is not acid-sensitive like omeprazole;
• Did not address the gastric juice problem

The ‘230 patent

The ‘664 patent reference did not invalidate the ‘230 patent for all the reasons applicable to the ‘505 patent and in addition, because:

• It did not explain use of sodium carbonate;
• No alkaline reaction compound; and
• Did not disclose an enteric coating.

Lack of Support

Dr. Langer did not address Dr. Story’s lack of support argument, which was pretty well deflated during Dr. Story’s cross-examination and is a low percentage defense.

Genpharm Cross-Examination

Genpharm made the calculated gamble of trying to make points on cross-examination that it had been unable to make through Dr. Story.  Much of this was beyond the scope of Dr. Langer’s direct testimony.  AZ’s counsel refrained form many possible objections, and the end result was that Dr. Langer was able to reinforce the validity of the patents and tie all the various prior art references together in broad sweeps that clearly showed the limitations of the defendants’ attacks.

Final Comments

• · Andrx counsel expressed frustration with Dr Langer’s performance;
• Dr. Langer clearly had the judge’s ear;
• The validity case ultimately comes down to Dr. Story vs. Dr. Langer;
• In that contest, given the presumption of validity and the burden to prove invalidity by “clear and convincing” evidence, Judge Jones will not invalidate $5 billion per year patents on the testimony of Dr. Story.

PRILOSEC TRIAL DAY 32

Introduction. Today was the first trial devoted to the ’281 process patent.  AZ only asserts the patent against Andrx.  Andrx appears to have reversed strategies.  Whereas Andrx conceded validity but vigorously contested infringement of the ‘505 and ‘230 formulation patents, it is virtually conceding infringement but contesting the validity of process patent #281.

Rulings. Judge Jones made two important rulings:

• She precluded Genpharm from designating further deposition transcripts into the trial record.  This ruling is important because it effectively closes the record on invalidity arguments;
• She admitted the file history of the recently issued AZ ‘706 patent. This ruling is important because it admits evidence that AZ will be able to use to undermine Andrx’s invalidity and inequitable conduct defenses against the ’281 patent.

The ’281 patent claims a process for making the three layer Prilosec dosage form of the formulation patents by:

• In situ formation of a protective layer
• By the reaction between the core containing a proton pump inhibitor [omeprazole] and an alkaline reaction compound; and
• An enteric coating;
• Within certain process parameters.

Infringement of the 281 patent

Dr. Langer testified that Andrx infringed claims 1, 2, 3, 7, 9, 16, 20 and 21.  He based his testimony on Andrx’s admissions and Dr. Davies’ investigation of Andrx’s proposed generic Prilosec.  Andrx formal admissions included:

• The claim preamble’s reference to an oral pharmaceutical formulation for omeprazole;
• That omeprazole is a proton pump inhibitor [PPI]
• That disodium phosphate is an alkaline reaction compound [ARC];
• That it used the ARC in the required concentration;
• That it applied an enteric coated material to the pellets; and
• That Andrx’s enteric coating is among the specified polymers.

The only element of the claim Andrx does not admit is whether its pellet includes an HPMC salt layer.  Its presence was established by Dr. Davies’ tests, but denied by Andrx.

Andrx Cross-Examination was so perfunctory that Verdict concluded that Andrx has given up trying to shake Dr. Langer on cross-examination.

Andrx’s Expert on Non-Infringement and Invalidity

Dr. Banakar testified that the ’281 patent is invalid, and Andrx does not infringe. Because he has given expert testimony for Andrx in a number of other cases, Banakar’s credibility with the judge was questionable from the start of his testimony. The Andrx’s case for non-infringement of the ‘281 patent was half-hearted and its case for invalidity was weak.

Its case therefore depends on the inequitable conduct case that it has not yet presented.

Andrx claims it does not infringe because:

• Andrx’s core has omeprazole on its surface;
• Dr. Davies’ conditions for creating a protective film are not present in Andrx’s product;
• There is no free water;
• It is an organic rather than an aqueous suspension;
• It contains insufficient dibasic hydrogen phosphate;
• An AZ in-house report discloses that too little ARC prevents DHP reaction;

Dr. Banakar relied on some Astra’s documents to show what occurred under prior art processes. Dr. Banakar also based his invalidity opinion on two prior art references:

• A Korean manufacturing process patent application, and
• A decision of a Korean court or agency involving AZN’s suit against Chong Kun Dang Corp. (CKD decision)

Dr. Banakar also relied on the Affidavit of a Dr. Rhodes to show that formation of a separating layer is “inherent.” Invalidity by inherency is generally a long shot, but particularly here where it is based on two references and it depends on two documents that are not “prior art” because:

• • They are not publications, and
  • They post-date the ‘281 application dates.

On Cross-Examination,  Dr. Banakar

• Blundered into asserting that the internal Astra document and Rhodes affidavit were prior art.  This casts doubt on his opinion to the extent he relied on them;
• Was unable to distinguish arguments that contradicted his non-infringement arguments;
• Contradicted Andrx’s earlier positions on the need for testing to determine the existence of a separating layer; and gave factual testimony that further undermined the inherency argument.

PRILOSEC TRIAL DAY 33

Motions and Rulings: Judge Jones made an unexpected ruling, allowing Mr. Shin, a Korean lawyer to testify for Andrx as a quasi-expert on Korean patent law to authenticate documents and explain Korean patent procedures.

• Mr. Shin testified on direct examination for Andrx, authenticating the Korean documents relied upon by Dr. Banakar.  His cross-examination was put off until tomorrow, to give Andrx time to produce certain additional documents that AZ had requested at his deposition.
• Judge Jones also issued an order setting the post trial briefing schedule on the trial to date.  While she is scheduling post trial filings seriatim as the trial phases conclude, she is not expected to rule on any part of the case until all the evidence is completed in and proposed filings of fact and conclusions of law and other post trial briefs are filed.

Mr. Shin obtained the following documents from the Korean patent office (KIPO):

• The Korean patent application;
• The Korean CKD decision;
• Opposition proceeding documents;
• Appeal briefs, including submissions by AZN;

His testimony:

• Authenticated the documents;
• Authenticated their translations;
• Assisted in dating the documents where dates were in question or in error; and
• Explained KIPO publication (“laid open”) procedures.

Comment. Dr. Shin’s testimony appears to be an effort to embarrass AZ by claiming that AZ:

• Failed to produce documents during discovery;
• Did not disclose the existence of foreign proceedings to the U.S. patent office– this appears to be the foundation of the “inequitable conduct” defense.

Dr. Langer.  On direct examination, Dr. Langer contradicted Dr. Banakar on validity and refuted his inherency argument: namely that the two Korean disclosures, if followed, produced the separating lawyer required by the ‘261 patent claims, whether or not anyone knew that the separating layer was formed.  Dr. Langer refuted the notion that the separating layer formed automatically.

Dr. Langer testified that:

• Formation of a separating layer depends on the process parameters used;
• The Korean references do not disclose process parameters;
• The patent office has considered the documents in the ‘706 prosecution and nonetheless granted claims virtually identical to the ‘281 claims;
• The Korean CKD decision and patent application both contradict the inherency claim by stating that no separating layer is formed.
  • CKD requires an amino acid;
  • Requires either phosphoric, carboxyl or silcic acid, neither of which includes what the acids disclosed by the ‘281 patent; and
  • The Rhodes affidavit’s inclusion of L-argemine, which is included in the ‘281 and ‘505 patents cannot capture from the ‘505 patent other disclosure not in the ‘281.

Therefore following the references would not form a separating layer and the ‘281 patent is valid.

Andrx Cross

Andrx took a new tack in cross-examining Dr. Langer.  A new attorney began in a very hostile manner, aggressively questioning Dr. Langer’s credentials, experience, preparation and memory.  Dr. Langer quickly got the upper hand, and cross-examination bogged down.  Andrx’s new attorney ended his examination early, leaving the substance of Dr. Langer’s rebuttal untouched.

Final Comments

Andrx’s strategy  in changing lawyers suggested that Andrx has decided that their original lawyer was too passive to shake Dr. Langer and a new lawyer would be more effective. He didn’t succeed and implicit in this change in lawyers is a concession that Dr. Langer’s testimony may carry the day.  In discussions with analysts, Andrx’s counsel acknowledged that “some people” had thought this was a “slam dunk” case for the generics, but “it has not turned out that way.”

PRILOSEC TRIAL DAY 34

Introduction. The trial resumes on Monday April 1, 2002. This was the last day of trial phase involving AZ’s assertion of its ’281 patent against Andrx. Shin’s story [Andrx’s witness] wilted on cross examination; and Judge Jones expressed skepticism of Andrx’s defenses that rely on the Shin testimony and documents.

Shin Cross-Examination

Shin’s testimony from Day 33, was never compelling, but it unraveled when correspondence between Shin and Andrx’s lawyers established that Mr. Shin set out to prove the publication dates of the two Korean documents upon which Dr. Banakar had staked his invalidity opinion.  After more than 20 phone calls Mr. Shin had been unable to establish the date with any certainty.  As a result, Shin was either forced to admit or left significant questions about his credibility in his testimony on Day 33 relating to:

• The Korean  “court decision” document: The Korean patent office (KIPO) employee responsible for “publishing” documents at the time:
  • Is no longer employed by KIPO;
  • Could not remember the actual publication dates;
  • KIPO no longer publishes these decisions;
  • Shin ‘s testimony was hearsay without personal knowledge; and
  • KIPO appears not to have actually published the decision until after the critical date relevant to the ‘281 patent; and
  • As to the application document, KIPO initially published only abstracts without formulations;
  • Shin had no personal knowledge of when the full document was “published;”
  • Apart from the date, there are questions whether the applications were “published” within the meaning of US law, given that:
    • The documents were not made available even at KIPO and
    • Were only available by request for viewing on a CD-OM at KIPO in Seoul; and
    • There were questions about the translation and meaning of the Korean “layed open” law.

Judge Jones’ Comments

During arguments on the admissibility of evidence, Judge Jones made repeated comments showing that she was unconvinced by Andrx’s inherency theory of obviousness:

• The judge questioned the factual basis for the theory;
• She questioned its reliance upon the Shin testimony KIPO documents; and
• She questioned the adequacy of Andrx’s notice to of its intent to advance the theory.

Comments

Before the judge’s critical remarks, Genpharm’s lawyer privately criticized:

• Andrx’s Inherency argument,
• Andrx’s reliance on Mr. Shin,
• Andrx’s early “slam dunk” projections, and
• UBS Warburg’s reports as reflecting a different trial than he is trying.

Even Andrx’s in-counsel was privately dismissive of Mr. Shin’s testimony.