JOINT COMM. RE JOINT CLAIM CONSTR. AND PREHEARING STATEMENT

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Gerald Sobel

Benjamin C. Hsing

Kimberly Branch Koch

KAYE SCHOLER LLP

425 Park Avenue

New York, New York 10022-3598

Telephone: (212) 836-8000

Facsimile: (212) 836-8686

Mark D. Petersen (State Bar No. 111956)

Lucas Huizar (State Bar No. 227111)

FARELLA BRAUN & MARTEL LLP

235 Montgomery Street, 30th Floor

San Francisco, CA 94104

Telephone: (415) 954-4400

Facsimile: (415) 954-4480

Attorneys for Plaintiff

CHIRON CORPORATION

Richard P. Doyle, Jr. (State Bar No. 112459)

JANSSEN DOYLE LLP

2540 Camino Diablo, Suite 220

Walnut Creek, CA 94597

Telephone: (925) 295-1800

Facsimile: (925) 295-1801

Attorneys for Defendants

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

CHIRON CORPORATION,

Plaintiff,

vs.

SOURCECF, INC.; SOURCECF

CLINICAL RESEARCH &

DEVELOPMENT, L.L.C.; MAXOR

NATIONAL PHARMACY SERVICES

CORPORATION d/b/a IV SOLUTIONS;

FOUNDATION CARE L.L.C.; and

PHARMACEUTICAL SPECIALTIES,

INC.,

Defendants.

Civil Action No. C 05-01938 WHA

JOINT COMMUNICATION RE JOINT

CLAIM CONSTRUCTION AND

PREHEARING STATEMENT

Judge William H. Alsup

Date: November 16, 2005

Time: 1:30 P.M.

Place: Courtroom 9, 19

th

Floor

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The Court’s August 22, 2005 Order Modifying Claim Construction Schedule requires

the parties to file a Joint Claim Construction and Prehearing Statement by September 28,

2005.

Plaintiff’s Statement

Plaintiff Chiron Corporation (“Chiron”) is unable to comply with this requirement

because Defendants have not provided Chiron with the information necessary for Chiron to

prepare such a joint statement.

As Defendants stated in their August 22, 2005 Communication Re Court Ordered

Dates for Claim Construction, “Defendants have decided not to proceed in this litigation.”

Accordingly, the parties have been working on the language of an appropriate injunction that

would resolve this lawsuit. In this regard, Chiron has proposed the following injunction to

resolve this case:

Defendants are preliminarily and permanently enjoined from infringing, inducing

infringement of, or contributorily infringing the ‘907 patent.

Defendants are preliminarily and permanently enjoined from:

1) Administering, dispensing, making, using, offering for sale, selling, or marketing

in the United States or importing into the United States any compounded tobramycin

formulation with a concentration of about 60 to about 200 mg/ml in a unit dose volume of 4.0

ml or less or the TOFIN

TM

formulation described in the ANDA Suitability Petition TOFIN

TM

(tobramycin for inhalation) filed by SourceCF with the United States Food and Drug

Administration on March 11, 2004 (“the Suitability Petition”) for use with the eFlow

Electronic Inhaler by PARI or any other inhalation device which, like the eFlow Electronic

Inhaler by PARI, has a rate of aerosol output of not less than about 4 μl/sec, delivers said

compounded tobramycin formulation or said TOFIN

TM

formulation with a duration of

nebulization of less than about 10 minutes, releases about 75% of the loaded dose, and

produces aerosol particles having particle sizes between about 1 μm to about 5 μm

(including but not limited to the eFlow Electronic Inhaler device described in the Suitability

Petition );

2) Making, using, offering for sale, selling, or marketing in the United States or

importing into the United States the eFlow Electronic Inhaler by PARI or any other

inhalation device which, like the eFlow Electronic Inhaler by PARI, has a rate of aerosol

output of not less than about 4 μl/sec, delivers said compounded tobramycin formulation or

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said TOFIN

TM

formulation with a duration of nebulization of less than about 10 minutes,

releases about 75% of the loaded dose, and produces aerosol particles having particle sizes

between about 1 μm to about 5 μm (including but not limited to the eFlow Electronic Inhaler

device described in the Suitability Petition) for use with compounded tobramycin

formulations at concentrations of about 60 to about 200 mg/ml in unit dose volumes of 4.0

ml or less or the TOFIN

TM

formulation described in the Suitability Petition; and

3) Instructing doctors and patients how to administer the tobramycin formulations set

forth above using the eFlow Electronic Inhaler by PARI or any other inhalation device

which, like the eFlow Electronic Inhaler by PARI, has a rate of aerosol output of not less

than about 4 μl/sec, delivers said compounded tobramycin formulation or said TOFIN

TM

formulation with a duration of nebulization of less than about 10 minutes, releases about 75%

of the loaded dose, and produces aerosol particles having particle sizes between about 1 μm

to about 5 μm (including but not limited to the eFlow Electronic Inhaler device described in

the Suitability Petition).

Meanwhile, Defendants have not yet answered the Complaint which was served on

August 1, 2005. Despite repeated requests, Defendants have not provided Chiron with their

Initial Disclosures under FRCP 26(a)(1), which were due on August 19, 2005, nor have they

provided Chiron with Preliminary Invalidity Contentions (“Contentions”) that comply with

Patent Local Rule 3-3. Defendants’ Contentions served on August 22, 2005 consist of a

mere listing of alleged prior art references, but they failed to 1) state “[w]hether each item of

prior art anticipates each asserted claim or renders it obvious” and 2) include a claim “chart

identifying where specifically in each alleged item of prior art each element of each asserted

claim is found.” Moreover, Defendants have not produced any documents which were

required to have been produced with Defendants’ Contentions pursuant to Patent Local Rule

3-4.

To the contrary, Chiron has served Defendants with its Initial Disclosures and its

Preliminary Infringement Contentions, which include a “chart identifying specifically where

each element of each asserted claim is found within” the accused methods in compliance

with Patent Local Rule 3-1. Chiron has also made available for Defendants’ inspection

documents associated with its Preliminary Infringement Contentions pursuant to Patent Local

Rule 3-2. Despite having these materials, Defendants have not identified any claim terms,

phrases, or clauses which it contends should be construed by the Court. As a result, Chiron is

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unable to identify which claim terms, phrases, or clauses are in dispute and assumes that

Defendants are not disputing the meaning of any claim terms, phrases, or clauses.

Defendants’ Statements

Claim Construction Statement

It is correct that Defendants are not disputing the meaning of any claim term, phrase

or clause in this proceeding. As a matter of law, a term in a patent must be used clearly and

with a definite meaning through the specification and the claims. Each patent specification

must conclude with claims “particularly pointing our and distinctly claiming the subject

matter that the applicant regards as his invention.” 35 U.S.C. § ¶ 2. The primary purpose of

this requirement is “to guard against unreasonable advantages to the patentee and

disadvantages to other arising from uncertainty as to their [respective] rights.” General Elec.

Co., v. Wabash Appliance Corp., 304 U.S. 364, 369 (1938). The issue of infringement is

deemed resolved as Chiron has not identified any claim terms, phrases or clauses that it

believes need to be clarified to a scope different than the actual language of the claims.

Defendants intend to fill only those doctor prescriptions which are outside the

parameters of the language of the claims as drafted. In Netword, the Federal Circuit stated:

“The claims are directed to the invention that is described in the specification; they do not

have meaning removed from the context in which they arose.” Netword, LLC v. Centraal

Corp., 242 F.3d 1347, 1352 (Fed. Cir. 2001). For that reason, claims cannot “enlarge what is

patented beyond what the inventor has described as the invention.” SciMed Lifesystems, Inc.

v. Advanced Cardiovascular Systems, Inc., 242 F. 3d 1337, 1340-42, 1344 (Fed. Cir. 2001).

The Federal Circuit emphasized this same point in Bell Atlantic Network Services,

Inc., v. Covad Comm. Group, Inc., 262 F. 3d 1258 (Fed. Cir. 2001). In Bell Atlantic, the

Federal Circuit held that, where the specification provides a consistent description of an

aspect of the invention, the claims cannot be construed to be broader than that limiting

characteristic. Thus, the Federal Circuit upheld a decision construing the claim term “mode”

to be limited to the three modes of data transmission repeatedly disclosed in the specification.

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Id. at 1274. The specification consistently used the term “mode” exclusively to refer to only

three modes. Id. at 1270-73. Because the specification used the term “mode” in a manner

consistent with only a single meaning, the patentee was deemed to have defined the term

“mode” as limited to the three modes discussed in the specification. Id. at 1271. Here, the

patent sets forth specific parameters for the claimed treatment. Chiron is limited to those

limitations, without the need to proceed with any added analysis in a claim construction

proceeding.

Taken together, the Federal Circuit’s SciMed, Netword and Bell Atlantic decisions

make clear that the specification informs what the claims mean because the specification

discloses what the inventors actually invented. We do not need to proceed with claim

construction to confirm what is already set forth in the claims.

Consistent usage of a given claim term in the specification (e.g., the term “mode”

used to refer only to thee modes in the specification) is the litmus test for determining

whether and how the specification defines a term. See also North American Vaccine, Inc., v.

American Cyanamid Co., 7 F3d 1571, 1577 (Fed. Cir.), cert. denied 511 U.S. 1069 (1993)

(“A patent applicant cannot disclose and claim an invention narrowly and then, in the course

of an infringement suit, argue effectively that the claims should be construed to cover that

which is neither described nor enabled in the patent.”). It is the limitations in the claim to

which Defendants will agree to be bound and will only fill prescriptions in a manner which

avoids the claim limitations in the Chiron patent.

In Aqua-Aerobics Sys., Inc. v. Aerators, Inc., 211 F.3d 1241, 1245 (Fed. Cir. 2000)

the court held that claims must be read as they are written . . .even if such limitations are not

physically possible or do not make sense. The court must construe claims based upon their

plain meaning and resist the temptation to re-construe or reform claims. Here there is no

basis or reason to re-construe or reform the claims. That resolves claim construction and it

resolves this lawsuit.

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As for what documents have been filed, Defendants’ note that Chiron has attempted

no discovery as to claim construction and that Chiron has taken no steps, as it cannot under

the law, to expand the actual parameters set forth in the language of the claims.

By comparison, the issue of validity will be addressed in a reexamination proceeding

which is being finalized for filing. Towards this end, Defendants did file Preliminary

Invalidity Contentions, but currently intends to pursue those issues in the Patent Office.

Defendants’ Prehearing Statement

On August 18

th Defendants’ sent proposed language for a permanent injunction to

resolve this case. That language is reproduced below:

Defendants are preliminarily and permanently enjoined from:

1) Making, using, offering for sale, or selling in the United States a compounded

tobramycin formulation specifically for use in the eFlow Electronic Inhaler by PARI

or any other inhalation device which is prescribed to operate within the parameters

set forth in the claims of the patent.

2) Defendants are preliminarily and permanently enjoined from inducing

infringement of, or contributorily infringing the ‘907 patent by promoting the

prescription of a compounded tobramycin formulation specifically for use in the

eFlow Electronic Inhaler by PARI or any other inhalation device which is to be

prescribed to operate within the parameters set forth in the claims of the patent.

Defendants’ by way of a communication have also contacted the Court to inform the

Court that the Defendants have NO intention of fighting the lawsuit.

Instead of a timely response to the proposed injunction language, Chiron sent a demand

for procedural filings that wound cost tens of thousands of dollars, will interfere with the

parties negotiations towards a business resolution, and which ignores the fact Defendants

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have offered language on which Chiron can declare a victory without spending an additional

dollar. Defendants are agreeing to let Chiron win.

In the alternative, Defendants’ asked that Chiron’s counsel check with its client and get

answers to the following questions:

1. Will Chiron agree to dismiss the lawsuit, with the ability to refile? This would be

coupled by an agreement that the Defendants will not to pursue a DJ action in any

other District Court in the interim.

2. If Chiron will not dismiss the case, will Chiron agree to the proposed injunction

language I have sent to you?

3. If Chiron will not dismiss the case, or agree to an injunction, will Chiron agree to a

Stay the proceedings while we proceed through the reexamination process?

As to the date of service, there was an issue as to the date of service, to which Chiron’s

counsel never responded. That is the reason no Answer has yet been filed. Since there has

been no substantive response, the Defendants will now file its answer.

Accordingly, Defendants are preparing a motion asking that the Court enter an

injunction, and stay or dismiss the case, while we proceed to reexamination.

In conclusion, it is correct that the Defendants are not currently planning to fight this

case. Defendants have proposed that it reach a business deal with Chiron or that the parties

agree to an injunction. Defendants will ask the Court to enter appropriate relief.

Concurrence to the filing of this document was obtained from Richard P. Doyle,

Jr. in compliance with General Order No. 45, Section X.

Respectfully submitted,

DATED: September 28, 2005 FARELLA BRAUN & MARTEL LLP

By:____________/s/__________________

Mark D. Petersen

Attorneys for Plaintiff

CHIRON CORPORATION

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Gerald Sobel

Benjamin C. Hsing

Kimberly Branch Koch

KAYE SCHOLER LLP

JANSSEN DOYLE LLP

By:__________/s/____________________

Richard P. Doyle, Jr.

Attorneys for Defendants

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