information important in allowing the application to issue as a patent. Because there is
conflicting data in the record regarding the significance of relative porosity, Defendants cannot
clearly and convincingly establish that this article was material.

Second, even if this Court were to find the results in this article to be material, it
cannot find as a matter of law that Plaintiffs committed inequitable conduct unless Defendants
also prove that the Applicants withheld this information with intent to deceive the PTO. As
stated previously, “intent to deceive cannot be inferred solely from the fact that the
information was not disclosed; there must be a factual basis for a finding of deceptive intent.”
Upjohn Co., 225 F.3d at 1312. Other than their bald assertions, Defendants submit no
additional evidence that would prove Plaintiffs’ acted with deceptive intent. Rather, they
argue that the overall circumstances, i.e., the “the totality of conduct” by the Applicants,
creates an inference upon which intent can be ascertained, see Baxter Int’l, 149 F.3d at 330.
This Court disagrees.

The totality of conduct to which Defendants refer is their own various allegations that
Applicants’ misrepresented and/or withheld material information. As discussed supra, the
earlier articles regarding porosity were not material. Second, as discussed infra, Defendants
have not established that the Applicants misrepresented the release rate of the Fong patent or
inappropriately withheld information regarding the Elfert reference. Thus, the totality of
conduct in this case hardly creates an inference of deceptive intent. Defendants’ motion for

summary judgment of unenforceability due to inequitable conduct on this ground is denied.

-19-


a. Legal Standard for Anticipation
Under 35 U.S.C. § 102, anticipation is defined as a lack of novelty, and is a question
of fact. Beckson Marine, Inc. y. NFM, Inc., 292 F.3d 718, 725 (Fed. Cir. 2002). Every

element and limitation of the claimed invention must be found in a single prior art reference,

arranged as in the claim. Karsten Mfg. Corp. v. Cleveland Golf Co., 242 F.3d 1376, 1383

(Fed. Cir. 1991). A prior art reference must disclose each limitation of the claimed invention,
either explicitly or inherently. Telemac Cellular v. Topp Telecom, Inc, , 247 F.2d 1316.

“A party asserting that a patent claim is anticipated must demonstrate, among other
things, identity of invention.” Tyler Refrigeration v. Kysor Indus. Corp., 777 F.2d 687, 689

(Fed. Cir. 1985) (citing Kalman v. Kimberly Clark Corp., 713 F. 2d 760, 771 (Fed. Cir. 1983)
cert denied, 465 U.S. 1024 (1984)).

Although anticipation is a question of fact, it may be decided on summary judgment if
the record reveals no genuine dispute of material fact. General Elec, Co. v. Nintendo Co., 179
F.3d 1350, 1353 (Fed. Cir. 1999). “An evidentiary dispute is genuine if a jury could decide the
issue either way, and its verdict would survive a motion for summary judgment.” Id. (citing
Anderson v, Liberty Lobby, 477 U.S. 242, 248 (1986)). For a grant of summary judgment on
the issue of anticipation, a defendant must prove anticipation by clear and convincing evidence.

Helifix Limited y. Blok-Lok, Ltd,, 208 F.3d 1339, 1346 (Fed. Cir. 2000).
b. Alleged Anticipation of ‘542 Patents Claims 15-21 by Fong Patent
The Defendants argue that Fong microspheres are (i) a system for the

administration of drugs, wherein said system comprises (ii) a globe-like (iii) polymeric object

(iv) having extremely fine pores. Furthermore, Defendants argue, Fong microspheres contain a

-40-


LLC vy. Advantage Dental Prods., Inc., 309 F.3d 774, 780 (Fed. Cir. 2002)). Whether a

patent is invalid for failure to meet the definiteness requirement is “a legal conclusion that is
drawn from the court’s performance of its duty as the construe of patent claims[, and]
therefore, like claim construction is a question of law... .” All Dental Prodx , 309 F.3d at
778.

In determining whether the claim of a patent is sufficiently definite, the test is whether
“one skilled in the art would understand the bounds of the claim when read in light of the
specification.” Allen Engineering Corp. v. Bartell Indus,, Inc., 299 F.3d 1336, 1348 (Fed.
Cir. 2002) (citing Personalized Media Communications, LLC v. Int’! Trade Comm’n, 161
F,3d 696, 705 (Fed. Cir. 1998)). Further, any fact critical to a holding on indefiniteness must
be proven by the challenger by clear and convincing evidence. Intel Corp. v. VIA
Technologies, Inc., 319 F.3d 1357, 1366 (Fed. Cir. 2003). Thus, in this case Defendants
need to prove, by clear and convincing evidence, that the ‘542 specification lacks adequate
disclosure of structure to be understood by one skilled in the art as able to perform the recited
functions. This Court finds that Defendants failed to meet their burden.

Defendants assert, without any legal basis, that the inventor must set forth a particular
test by which a competitor can determine the location of the drug within the microspheres or
determine whether most of the passages connect mutually with each other and are open to the
surface.'° To satisfy the definiteness requirement, all that is required is that “one skilled in the

art would understand the bounds of the claim when read in light of the specification.” Allen

10 Defendants cite to Pall Corp. v. Micron Separations, Inc., 66 F.3d 1211 (Fed. Cir.
1995) in support. This case, however, does not stand for Defendants’ proposition.

-36-


In re Oelrich, 666 F.2d 578 (C.C.P.A. 1981) (quoting Hansgirg v. Kemmer, 26 C.C.P.A. 937
(1939)).
Although anticipation is a question of fact, it may be decided on summary judgment if

the record reveals no genuine dispute of material fact. General Elec. Co. v. Nintendo Co., 179

F,3d 1350, 1353 (Fed. Cir. 1999). “An evidentiary dispute is genuine if a jury could decide the
issue either way, and its verdict would survive a motion for summary judgment.” Id. (citing
Anderson v, Liberty Lobby, 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L.Ed.2d 202 (1986)). For
a grant of summary judgment on the issue of anticipation, a defendant must prove anticipation

by clear and convincing evidence. See Helifix Limited v. Blok-Lok, Ltd., 208 F.3d 1339, 1346

(Fed. Cir. 2000).

b. The Stoy Patent

Defendants first argue that the Stoy patent is prior art under § 102 (b) because it is a
patent issued more than one year prior to the ‘542 patent date, and that it anticipates Claims 15-
21 of the ‘542 patent. In support of this argument, the Defendants cite language from the Stoy
patent that they argue demonstrates that Stoy microspheres are globe-like polymeric objects."
Furthermore, Defendants argue that the drug release rate for the Stoy patent and the ‘542 patent
is remarkably similar, thereby leading to the conclusion that all claim limitations in Claim 15 (as
construed in this Court’s Claim Construction Opinion) are found in the Stoy prior art

microspheres. Finally, the Defendants argue that Claims 16-21 of the ‘542 patent are also

TM Stoy describes his patent as spherical polymeric beads. The Defendants’ expert
Beck argued that photographs of the Stoy patent show spheres having extremely fine pores and
containing a system of tubular enclosed passages.

-45-


Further, in the October 1987 Office Action, the Examiner contemplated whether prior
art anticipated the dilution-extraction-precipitation method in the ‘542 patent. He stated that
“while Schnoring et al. may not use the expression ‘dilution-extraction-precipitation’ this
would be the mechanism of the patentees’ process” and “while Morishita et al. may not use
the expression ‘dilution-extraction-precipitation’ this would be the mechanism of the patentees’
process.”

2. ANALYSIS

Defendants argue that summary judgment should be granted in their favor because the
‘542 patent is unenforceable due to Plaintiffs’ inequitable conduct. Namely, Defendants argue
that the Applicants committed inequitable conduct by: (1) making misrepresentations regarding
porosity to overcome the Fong patent; (2) making misrepresentations regarding release rate
data to overcome the Fong patent; and (3) intentionally withholding another allegedly material
prior art reference (Elfert). This Court disagrees.

Patent applicants have a duty to prosecute applications “with candor, good faith, and
honesty.” Bristol-Myers Squibb Co. v. Rhone-Poulenc Rorer, Inc., 326 F.3d 1226, 1233
(Fed. Cir. 2003) (citing Molins PLC v. Textron, Inc., 48 F.3d 1172, 1178 (Fed. Cir. 1995)).
The doctrine of inequitable conduct punishes patent holders for violating their duties of candor
and disclosure. “In order to prove inequitable conduct in the prosecution of a patent, the
defendant must have provided evidence of affirmative misrepresentations of a material fact,
failure to disclose material information, or submission of false material information, coupled
with an intent to deceive.” Dayco Prods., Inc. v. Total Containment, Inc. , 329 F.3d 1358,

1362 (Fed. Cir. 2003) (citing Purdue Pharma L.P, v. Beohringer Ingelheim GMBH, 237 F.3d

-13-


economic position of the alleged infringer during the time period of delay. Auckerman, 960

F.2d at 1033 (citing Lake Caryonah Improvement Assoc. v. Pulte Home Corp., 903 F.2d 505,

510 (7th Cir. 1990)).
2. Analysis of Parties’ Laches Claims

The Defendants argue that their Motion for Partial Summary Judgment for reasons of
laches should be granted because the Plaintiffs did not bring suit against Defendants until twelve
years after the patent-in-suit was issued, when Defendants’ leuprolide acetate products were
already being sold in the United States, and the Defendants’ had already invested an enormous
amount of economic resources into their products. The Defendants argue that the Plaintiffs have
presented no cognizable defense to their delay in bringing suit, and because of this delay in
bringing suit, the Defendants will suffer material economic and evidentiary prejudice if this
Court does not grant Defendants’ Motion for Partial Summary Judgment based on laches.

In arguing that they are entitled to summary judgment on Defendants’ laches defense,
Plaintiffs do not address whether their delay in filing suit was reasonable. However, Plaintiffs
argue that Defendants suffered no material evidentiary or economic prejudice. While
the Plaintiffs’ argue that whether or not the Defendants can show that Plaintiffs’ delay in
bringing suit was reasonable, the Defendants cannot prove that they suffered material economic
or evidentiary prejudice. The Plaintiffs contend that Defendants have not presented sufficient
evidence of the planned changes Defendants would have made to their leuprolide acetate
products if they had known about the potential infringement claim earlier. Secondly, Plaintiffs
argue that Defendants have not proven that they will suffer sufficient evidentiary prejudice that

will deny them an opportunity of a fair defense. Plaintiffs counter that much of the evidence

-55-



microspheres were similar to the product that he was developing, in that they appeared to have
interconnecting channels.

d. Subsequent Releases of Defendants’ Leuprolide Acetate Products

The Defendants’ continuing research on their leuprolide acetate products led to the
launch of a three-month formulation of the drug in 1996, and a four-month formulation of the
drug in 1997.

In 1999, Plaintiff Oakwood claimed in an Abbreviated New Drug Application
(“ANDA”) that it had developed a generic version of Defendant leuprolide acetate products’s in
a one month formulation. This version of the Defendants’ product does not practice the ‘542
patent.

The Plaintiffs did not notify the Defendants of any potential infringement claim related
to the ‘542 patent. However, neither the DeLuca, nor any of the other Plaintiffs, threatened any

of the Defendants with enforcement of the ‘542 patent prior to the filing of this action.

2. Analysis

a. Parties’ Cross Motions for Summary Judgment on the Issue of Laches

1. Standard for Laches

“Laches is a long-recognized defense to a patent-infringement suit that arises when a
patent holder neglects or delays bringing suit to remedy an alleged wrong, which taken together
with lapse of time and other circumstances, causes prejudice to the adverse party and operates as

an equitable bar.” Gassen Chair Co, v. Infanti Chair Mfg. Corp., 60 F.2d 770, 773 (Fed. Cir.

1995) (citing Aukerman, 960 F.2d at 1028-29). Six years’ delay establishes a prima facie case

-53-


infringement or suggested that they take a license to the patent, and Defendants assert that this
silence was in bad faith. The Plaintiffs allege that Defendants cannot prove that any conduct of
DeLuca would have indicated to Defendants that he did not intend to enforce the ‘542 patent
against Defendants. Plaintiffs also argue (and the Defendants admit) that DeLuca never made
threats of patent infringement, nor did he every notify Defendants about any potential patent
infringement, which should preclude a finding of any misleading conduct by DeLuca. “Although
equitable estoppel may in some instances be based upon a misleading silence, mere silence must
be accompanied by some other factor which indicates that the silence was sufficiently misleading
a to amount to bad faith.” Hemstreet v. Computer Entry Systems Corp. , 972 F.2d 1290 (Fed.
Cir. 2002) (citing Hottel Corp. v. Seaman Corp., 833 F. 2d 1570, 1573 (Fed. Cir. 1987)).
Although DeLuca had numerous business contacts with Defendants, these contacts are not
sufficient to suggest that he did not intend to enforce the ‘542 patent. Plaintiffs have provided
sufficient evidence to indicate that DeLuca’s silence in relation to the ‘542 patent was in not bad
faith. DeLuca merely engaged in opportunities to explore research collaboration with
Defendants’ laboratories. As the Defendants themselves admit, Dr. DeLuca never made any
threats of infringement, nor were the Defendants notified of any potential infringement until
after this suit was filed. Plaintiffs have provided sufficient evidence to support their assertion
that DeLuca did not engage in conduct that would lead the Defendants to believe that DeLuca
did not intend to enforce his patent.

As the Court finds that DeLuca did not engage in conduct that would lead the
Defendants to believe that he did not intend to enforce the ‘542 patent against them, the Court

need not address the other two elements necessary for a claim of equitable estoppel: (b) whether

-59-


Plaintiffs nor the Defendants have provided sufficient evidence for a finding of summary
judgment on the issue infringement. Therefore, the Plaintiffs’ Motion for Summary Judgment
for Infringement is DENIED.

G. ss Motions for Summary Judgment on the Issue of Laches and Equitable Estoppel

1, Facts
The court herein incorporates the facts previously set forth, only including here

additional facts.
a. DeLuca’s Research for the ‘542 Patent
In contemplation of the ‘542 patent, and in exploring the licensing of products
related to the ‘542 patent, DeLuca engaged in several notable research endeavors with Abbott,
Takeda, and the University of Kentucky. Those experiences are briefly described herein:
1. De Luca’s Experiences With Abbott
Dr. DeLuca presented several lectures to Abbot in the 1970's regarding parenteral
dosage forms. Between 1985 and 1995, DeLuca acted as a consultant to Abbott. In May 1988,
DeLuca met with Abbott personnel in Kentucky regarding microspheres, and subsequently asked
Donald Keach, of the University of Kentucky Research Foundation, to send patent information
to Abbott.
2. DeLuca’s Experiences With Takeda .
In 1987, DeLuca presented a seminar at Takeda concerning his work on porous
microsphere drug delivery systems, and the ideas that were reflected in the application that led
to his ‘542 patent. In 1987, Dr. DeLuca was aware that Takeda was conducting research on

sustained-release microencapsulated systems for the parenteral delivery of a leutenizing

-51-


deceive). This Court therefore denies Defendants’ motion for summary judgment of
unenforceability due to inequitable conduct in its entirety.

B._Defendants’ Motion for Partial Summary Judgment Setting the ‘542 Patent File Date to

larch 31, 19:

1. FACTS

The Court herein incorporates the facts previously set forth, only including here
additional facts. On May 2, 2003, the Court construed claim 15 of the ‘542 patent as follows:

A system of the administration of drugs, wherein said system comprises a

globe-like polymeric object having extremely fine pores and containing a system

of tubular enclosed passages and canals, in which the tubular passages contain a

drug, in which most of the passages connect with each other and are open to the

surface, wherein at least 90% of the drug lines the walls of said passageways.

Claim 15 is a product claim and this Court ruled that it is not limited to any particular method
of making it.

The ‘542 patent issued from application U.S. Serial No. 846,513 (“the ‘513
application”), which was filed on March 31, 1986. The first application relating to the ‘542
patent, U.S. Serial No. 551,414 (“the ‘414 application” or “parent application”) was filed on
November 14, 1983.

The ‘414 application described three methods for making spherical drug delivery
systems: “Removal of the solvent from the spheres by any one or combination of (1) freeze
drying, (2) evaporation, or (3) dilution precipitation extraction, creates the interconnecting

network of pores.” Claim 15 of the ‘414 application reads:

15. A drug delivery system comprising a spherical microporous polymeric
network of interconnecting channels containing a drug wherein said drug is

-23-


system of tubular enclosed passages or canals, in which most of the tubular passages connect to
each other and are open to the surface, wherein at least 90% of the drug lines the walls of those
passageways. The Defendants allege that because the Fong microspheres release drug as quickly
or more quickly than the drug of the ‘542 patent, Fong must contain a network of
interconnecting channels with the drug distributed essentially within those channels. Therefore,
the Defendants argue, Fong anticipates the ‘542 patent. The Plaintiffs counter that the Fong
patent does not disclose all of the claims of the’542 patent. For instance, the Plaintiffs argue,
the Fong patent makes no mention of an interconnecting channel containing a drug distributed
essentially within the channels, nor does it disclose that 90% of the loaded drug lines the walls
of the channels.
. Secondly, the Defendants argue that Fong teaches the same method used to
‘manufacture microspheres as the ‘542 patent does. The Plaintiffs argue that Dr. DeLuca did not
‘base his conclusions on distinguishing Fong from his ‘542 patent on whether the drug release
was faster or slower, but on the location of the drug and whether bierosion was required for the
release of drug with the Fong patent. The Plaintiffs also contend that no data from the Fong
_ Patent actually shows that Fong microspheres were made with the drug prednesolone. Finally,
the Plaintiffs argue that Defendants have not provided evidence of interconnecting channels with
| the Fong patent, and that the Fong patent microsphere drug release data shows inconsistent
results, all facts which the Plaintiffs argue precludes a finding that the Fong patent anticipates
ihe ‘542 patent.
| ‘ The Defendants have not clearly and convincingly demonstrated that the ‘542 patent is
invalid as anticipated by Fong under § 102 (e). The Plaintiffs have provided more than
|

-41-


each motion. Each set of facts is taken from the parties’ Local Rule 56.1(a)(3) and (b)(3)
Statements of Undisputed Facts, with all inferences resolved in favor of the non-movant.
A. Defendants’ Motion for Summary Judgment of Unenforceability due to Inequitable
Conduct

1, FACTS

a. History of ‘542 Patent Application

In the original patent application in November 1983, the Applicants disclosed and
claimed that their microspheres could be made by removing solvent by any of three methods:
Freeze-Drying, Evaporation, and Dilution Extraction-Precipitation. In their original
specification, Applicants submitted scanning electron micrograph photographs (“SEMs”) of
microspheres made by all three methods, and stated that all three showed the highly porous
microspheres of the invention: “SEM Photomicrographs of Examples 1, 2 and 3 are shown in
Figures 5-7 at 10-fold differences in magnification. The porous nature is evident from the
topography of the magnified surfaces of all three methods of preparation.”

Fong U.S. Patent No. 4,384,975 (“the Fong patent”) was a central prior art relied
upon by the Examiner to reject the ‘542 patent claims prosecution. As the applicants for the
‘542 patent (“Applicants”) noted: “Fong was the principal reference discussed during the
interview of May 11, 1987. Examiner Lovering suggested that if the Applicants could
distinguish their invention over the disclosure of Fong, then all the rejections of record would
likely be withdrawn.” In every Office Action during prosecution, the Examiner rejected
pending claims of the ‘542 patent application as being anticipated by (under 35 U.S.C. § 102)
or obvious (under 35 U.S.C. § 103) over the Fong patent. In every Reply to the Examiner’s

4.



context. These types of argument are not only questions of fact, but they go to the issue of
infringement, not whether the ‘542 patent is enabling. As Defendants do not focus on what

the ‘542 patent actually does and does not claim, this Court cannot apply the Wands factors.

A stated objective of the ‘542 invention is to facilitate “sustained drug release.” The
abstract of the ‘542 patent describes a drug delivery system “comprised of spherical
microporous polymeric network of interconnecting channels containing pore incorporated
drugs or other agents where the drugs or agents are confined within the pore channel.” Even
if this Court were to use Defendants’ interpretation of slow release, which presumably is a
microsphere lasting longer than seven days, Defendants did not produce evidence that would
establish, clearly and convincingly, that the claims in the ‘542 patent are not enabled. Rather,
the record is replete with issues of fact regarding enablement. For example, the parties
dispute whether DeLuca actually has succeeded in producing a microsphere with a maximum
release greater than approximately 15 days. Plaintiffs contend that DeLuca obtained sustained
release in excess of thirty days with salmon calcitonin. Plaintiffs also contend that, by August
26, 1994, DeLuca had obtained leuprolide acetate microspheres releasing in excess of 30 days;
Defendants argue that his efforts were unsuccessful. As a result, Defendants’ motion for
summary judgment of invalidity for lack of enablement is DENIED.

b. Written Description

This Court set forth the legal standard for the written description requirement under 35
U.S.C. § 112 41, supra Section II.B.2. Defendants argue that the ‘542 patent is invalid for
lack of a written description of the claimed invention because the ‘542 inventors did not

describe a microsphere that would last more than seven days. However, as with their

-34-


b. The Applicants’ Alleged Misrepresentations Regarding Release Rate

Defendants next allege that Plaintiffs committed inequitable conduct because the
Applicants misrepresented the rate of release from the Fong microspheres. Defendants base
this claim on a 1986 article by Fong entitled “Evaluation of Biodegradable Microspheres
Prepared by a Solvent Evaporation Process Using Sodium Oleate as Emulsifier.” They argue
that data from the Fong article actually showed that Fong microspheres release faster than the
‘542 patent microspheres, not slower as the Applicants asserted to the PTO. Plaintiffs,
however, counter that the Fong article shows various release rates, some lasting up to twenty-
five days, and more important, none of the release profiles show release from microspheres
loaded with prednisolone, which is the drug that Hickey and Redmon experimented with.
Plaintiffs also argue that the Fong article does not contradict the Hickey and Redmon
declarations because the data Defendants point to in the article were actually “dissolution”
profiles (the time course for the drug crystals to dissolve) and not “release” profiles (the time
course for the drug to get out from within the microsphere).

As Defendants acknowledge, Plaintiffs attached a copy of this Fong article along with
their April 1988 Reply to the Examiner in support of their contention that the Fong
microspheres could not have drug located within the pores. The mere fact that the rate, which
Defendants call “release” and Plaintiffs call “dissolve,” is faster does not clearly and
convincingly establish Plaintiffs misrepresented information to the Examiner, especially
considering Plaintiffs provided the Examiner with a copy of the article. Defendants’ motion

for summary judgment on this ground is also denied.

-20-


Compliance with the written description requirement is a question of fact. SunTiger,

Inc. v. Scientific Research Funding Group, 189 F.3d 1327, 1334 (Fed. Cir. 1999); see also

Vas-Cath, Inc, v. Mahurkar, 935 F.2d 1555, 1563 (Fed. Cir. 1991) (“In written description
cases, the primary consideration is factual and depends on the nature of the invention and the
amount of knowledge imparted to those skilled in the art by the disclosure) (citations omitted).
Further, precisely how close the original description must come to comply with the description
requirement must be determined on a case-by-case basis. lue Pharma L.P. v. Faultin
Inc., 230 F.3d 1320, 1323 (Fed Cir. 2000) (citing Vas-Cath, 935 F.2d at 1561).

The first paragraph of section 112 requires:

The specification shall contain a written description of the invention, and of the

manner and process of making and using it, in such full, clear, concise and

exact terms as to enable any person skilled in the art to which it pertains, or

with which it is most nearly connected, to make and use the same, and shall set

forth the best mode contemplated by the inventor of carrying out his invention.
35 U.S.C. § 112. “The purpose of the written description requirement is to prevent an
applicant from later asserting that he invented that which he did not; the applicant for a patent
is therefore required to recount his invention in such detail that his future claims can be

determined to be encompassed within his original creation.” Amgen, Inc. v. Hoechst Marion

Roussel, Inc., 314 F.3d 1313, 1330 (Fed. Cir. 2003). To meet this requirement, the prior

application must reasonably convey to one skilled in the art that the inventor had possession at
the time the earlier application was filed, Tronzo, 156 F.3d at 1158. One shows that he is in
possession of the invention by describing the invention, with all its limitations. Gentry.
Gallery v. Berkline Corp., 134 F.3d 1473, 1479 (Fed. Cir. 1998). This is accomplished by

“such descriptive means as words, structures, figures, diagrams, formulas, etc., that fully set

-26-


submitting yet another non-explicit reference to provide disclosure of what the Examiner
already considered.

As to the materiality of the Elfert reference, this Court agrees with Defendants. A
reasonable Examiner most certainly would have found a prior art method of dilution-
extraction-precipitation important in assessing the ‘542 patent. Plaintiffs’ argument that their
belief that this reference was cumulative goes to intent, rather than materiality. Especially
because the Elfert patent application was given “X” reference status in the international search
Teport, the Applicants should have erred on the side of disclosing what they thought to be a
cumulative reference rather than nondisclosure, See AEA Tech., PLC v. Thomas & Betts
Corp., 167 F.Supp.2d 993, 999 (N.D. Ill. 2001) (“Applicants are required to bring any
material prior art cited or brought to their attention in a foreign application to the attention of

the USPTO.”) citing Molins PLC v. Textron, Inc., 48 F.3d 1172, 1180 (Fed. Cir. 1995).

Defendants, however, have not clearly and convincingly established that Plaintiffs
withheld the Elfert reference with an intent to deceive the PTO. Contrary to Defendants’
assertions, the record is devoid of evidence that the Applicants knew they were withholding
material prior art. Indeed, Hahn’s interpretation and analysis led them to believe that Elfert
was cumulative and not material. Thus, at this point in the proceedings, at most Defendants
have established that Plaintiffs were grossly negligent in withholding the Elfert reference,
which does not meet the Defendants’ clear and convincing standard. See AEA Tech, 167
F.Supp.2d at 999 (denying motion for summary judgment because of inequitable conduct and
holding that, while failure to reveal information and category “X” references from the

European Search Report was gross negligence, it did not provide evidence of intent to

-22-


argument regarding enablement, Defendants conflate their argument of noninfringement with
their argument that the ‘542 patent does not meet the written description requirement. As
stated supra, the claims at issue in this case are product claims describing a specific structure.
Namely, a spherical microporous polymeric matrix of interconnecting channels containing a
drug, wherein the drug is distributed essentially within the channels. Defendants do not
explain how Plaintiffs’ description of the claimed structure is inadequate. Rather, they
erroneously measure the claim against its ability (or inability) to develop products such as their
accused drug. However, the claims themselves, and not Defendants’ activities, are what
dictate the scope of what must be described. See Vas-Cath, 935 F.2d at 1563-64. As a result,
this Court finds that Defendants do not meet their heavy burden of establishing, by clear and
convincing evidence, that the ‘542 patent lacks written description. Their motion for summary
judgment on this ground is therefore DENIED.

c. Definiteness

Finally, Defendants’ argue that the ‘542 patent is invalid under 35 U.S.C. § 112 {2 for
indefiniteness. Specifically, Defendants argue the claims 15-21 of the ‘542 patent are
indefinite because they fail to provide a standard to determine the scope of the claims. This
Court disagrees.

To be definite, a patent must “conclude with one or more claims particularly pointing
out and distinctly claiming the subject matter which the applicant regards as his invention.”
35 U.S.C. § 112 [2. Further, “the primary purpose of the definiteness requirement is to
allow competitors to make a determination as to whether or not they infringe.” Lockformer

Co. v. PPG Indus., Inc., 264 F.Supp.2d 622, 627 (N.D. Ill. 2003) (citing All Dental Prodx,

-35-


during experiments done at that time. They do not conclusively contradict later experiments
and determinations that the evaporation method resulted in microspheres with the lowest
porosity. As the original specification had already disclosed the belief that evaporation could
produce porous microspheres, and the Examiner himself repeatedly asserted this belief, the
earlier documents at most would have been cumulative information and therefore not an
appropriate basis for a finding of inequitable conduct. Regents of Univ. of Cal. v. Eli Lilly &
Co., 119 F.3d 1559, 1574-75 (Fed. Cir. 1997) (holding that failure to disclose cumulative
reference is not clear and convincing evidence of inequitable conduct).
2. Misrepresentation and Withholding Material Information Regarding Relative Porosity

Second, Defendants allege that the Applicants misrepresented the porosity information
provided in the Hickey and Redmon declaration. One of four references Hickey and Redmon
cited in support of their statements that the ‘542 claimed microspheres had a specific surface
area greater than 12 m’/gram was an article entitled “Prednisodone-21-Acetate Polyglycolic
Acid Microspheres: Influences of Matrix Characteristics on Release.” At the time of the
declarations, the article was “in press” and was not submitted to the Examiner. The article,
which was eventually published in 1989, states that the specific surface area of microspheres
made according to the freeze-drying method claimed in the ‘542 patent was between 4-6
m?’/gram, which is clearly less than 12 m’/gram. Thus, Defendants argue, the Applicants
misrepresented the porosity of the claimed microspheres as well and withheld these material
results from the Examiner.

Plaintiffs counter that, when Hickey and Redmon made these declarations, they were
only providing porosity information for microspheres created by evaporation and dilution-

-17-



Summary Judgment of Infringement is DENIED [112-1]; Defendants’ Motion for Partial
Summary Judgment of Laches and Equitable Estoppel [124-1] is DENIED and Plaintiffs’ Motion

for Summary Judgment of No Equitable Estoppel or Laches [115-1] is GRANTED.

Dati,

David H. Coar
United States District Judge

Enter:

Dated: October 21, 2003

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In the April 1988 Reply, and in the Hickey and Redmon declarations, the Applicants
argued that, regardless of any porosity attributable to the Fong patent, their invention was still
patentable over Fong because “[t]he drug in the Fong microspheres is not located in the inside
lining of pores” and that Fong’s microspheres have a very different release rate from that of
the ‘542 microspheres. Hickey and Redmon conclude that the “difficulty experienced in
extracting the drug from the Fong microspheres indicate that the drug does not reside in the
pores but rather is encapsulated in the polymer matrix.”

2. Other Pertinent Publications

In November 1982, more than one year before he originally filed his patent application,
DeLuca submitted an abstract of his invention to the American Pharmaceutical Association for
the 33rd National Meeting presumably held in San Diego, California on November 14-18,
1982.° The abstract listed the three methods--freeze-drying, evaporation, and precipitation
and stated in part that “the freeze dry method yielded spheres with the lowest porosity.”

In a 1984 publication by inventors DeLuca, Sato, and Kanke entitled “Biodegradable

Microspheres for Injections or Inhalation,” Microspheres and Drug Therapy, Pharmaceutical.
Immunological and Medical Aspects, Elsevier Sci. Pubs., (S.S. Davis et al., Eds.), pp. 343-
344 (1984), the inventors stated that the freeze-dry method yielded spheres with the lowest

porosity. Specifically, this publication stated: “Smaller, more porous spheres were obtained

by the precipitation method; the freeze-dry method yielded spheres with the lowest porosity.”

methods.

5 Plaintiffs dispute that the November 1982 conference was held and that this abstract
was distributed to attendees.

-9-



a. Enablement

Section 112, paragraph 1 provides:

The specification shall contain a written description of the invention, and of the

manner and process of making and using it, in such full, clear, concise, and

exact terms as to enable any person skilled in the art to which it pertains, or

with which it is most nearly connected, to make and use the same... .
35 U.S.C. § 112 4.1. Whether a claim is enabled is a question of law based upon underlying
factual findings. Nat’l Recovery Tech v. Magnetic Separation Sys. , 166 F.3d 1190, 1194
(Fed. Cir. 1999); Spectra-Physics v. Coherent, Inc,, 827 F.2d 1524, 1534 (Fed. Cir. 1987).
Once issued, patents are presumed valid. 35 U.S.C. § 282. The presumption of validity
includes the presumption that the patent complies with §112. Nat’l Recovery, 166 F.3d at
1195. Thus, the party challenging validity must prove invalidity by clear and convincing

evidence. John Hopkins Univ. v. CellPro, Inc., 152 F.3d 1342, 1359 (Fed. Cir. 1998). Put

another way, Defendants must show that no reasonable jury would conclude, under a clear and
convincing standard, that the claim is enabled. AK Steel v. Sollac & Ugine, 234 F.Supp.2d
711, 716 0.5 (S.D. Ohio 2002).

For a patent to be enabling, “the specification of the patent must teach those skilled in
the art how to make and use the full scope of the claimed invention without undue
experimentation.” Plant Genetic Sys., N.V. v. DeKalb Genetics Corp. , 315 F.3d 1335, 1339
(Fed. Cir. 2003). Further, “[e]nablement is determined as of the effective filing date of the
patent.” Id. Enablement may require some experimentation, so long as the amount of
experimentation is not undue. PPG Indus. v. Guardian Indus, Corp., 75 F.3d 1558, 1564

(Fed. Cir. 1994) (“The question of undue experimentation is a matter of degree.”). Thus, the

-32-


C._ Defendants’ Motion for Sum Judgment for Invalidity of the Patent under 35
U.S.C. § 112
1. FACTS”

The Court herein incorporates the facts previously set forth, only including here
additional facts. During prosecution, the Applicants stated to the PTO:

The art of preparing microcapsules is not so simplistic that each disclosure in a

Prior art reference can be viewed as a building block that can be easily

exchanged with another building block of another reference. Indeed, the art of

Preparing microcapsules is complex and unpredictable. A small change in one

process parameter could provide undesirable consequences, such as an

extremely slow release rate.

It is a stated objective of the ‘542 invention to facilitate “sustained drug release.” The
abstract of the ‘542 patent describes a drug delivery system “comprised of spherical
microporous polymeric network of interconnecting channels containing pore incorporated
drugs or other agents where the drugs or agents are confined within the pore channel.”
Further, columa 1 of the ‘542 patent describes “spherical polymer matrices with . . .
therapeutics, dispersed within the confines of the pores . . .” and column 5 describes that
“agents are matrix confined within the interconnecting channels or pores of the spherical
polymer.”

The parties dispute that the ‘542 patent includes disclosure and examples of how to

make a globe-like polymeric object having extremely fine pores and containing a system of

tubular enclosed passages or canals, in which the tubular passages contain a drug, in which

7 The Court does not include portions of either party’s proposed statement of facts
where the statement is either unsupported by the record, or is inappropriate argument rather
than fact as Local Rule 56.1 requires.

-29-


In a February 1987 Office Action, the Examiner rejected the Applicants’ claims, stating
that “[t]he products of Fong would presumably be microporous” and “[t]here is no evidence of
record showing, or tending to show, that the products of Fong are not microporous.” In an
August 1987 Reply to the Examiner's rejections, the Applicants argued that they had tested the
porosity of microspheres made by evaporation, freeze-drying, and dilution-extraction-
precipitation and found that the evaporation microspheres had the lowest porosity and
specifically, that evaporation microspheres had a lower porosity than freeze-dried
microspheres. In his declaration, DeLuca concluded that “the evaporation method is not
suitable for obtaining microspheres having high porosity, whereas, the dilution-extraction-
precipitation and freeze-dry methods were very effective in achieving microspheres having
high porosity... .”

Another ‘542 patent inventor working in DeLuca’s laboratory, Dr. Toyomi Sato
(“Sato”), testified at his deposition about data in his laboratory notebook that shows the
evaporation method produced greater microspheres than freeze drying. Sato stated that the
data in his laboratory notebook reflects observations from an experiment at that time, the
intention of those notes at that time was that presumably the porosity of the microspheres made
from the Diluted Method was greater than the porosity of the microspheres from the
Evaporation method, which, in turn, was greater than the porosity of the microspheres from
the Freeze-Dried Method. The laboratory notebook in which this porosity data appears
reflects Sato’s work in DeLuca’s laboratory sometime before his departure in July or August

of 1983.

-6-



Office Actions during prosecution, the Applicants argued that their claims were patentable
over the Fong patent. Beginning early in the prosecution, in 1985, and in every subsequent
Office Action, the Examiner rejected the product and method claims based on the Fong patent
because he believed Fong products would be microporous.

b. The Applicants’ Alleged Inconsistencies in Distinguishing the Fong Patent

Though the Applicants initially had included evaporation as one of the techniques
through which they could make their microspheres, the Applicants deleted substantially all
reference to the evaporation method in their patent application,' including the SEM
photographs they previously had submitted. In March 1986, the Applicants told the PTO that
“it [was] not possible to obtain a microporous polymeric network of interconnecting channels
containing a pore incorporated agent therein by removing the solvent in their process via
evaporation.” The Applicants distinguished the Fong patent by arguing, in part, that the Fong
patent removed solvent by evaporation and therefore would not be as porous as the
microspheres made by dilution-extraction-precipitation or freeze-drying. During prosecution,
inventor Patrick DeLuca (“DeLuca”) submitted a declaration to the PTO in which he stated
that: “[iJt is not possible to prepare highly porous microspheres using an evaporation technique

to remove the organic solvent.””

' Plaintiffs have identified three areas in the ‘542 patent that contain references to
evaporation: Col. 1, line 56; Col. 2, lines 19-20; and Col. 7, line 61.

? At his deposition, DeLuca stated that he always believed it was possible to produce
the porous microsphere with all three methods, including evaporation. He stated, however,
that he did not pursue evaporation to the extent he pursued dilution-precipitation because the
latter was a much better method.

-5-



extraction-precipitation techniques, not freeze-drying. There is ample ambiguity in the record
to lend some support to their claim, and Plaintiffs therefore have cast doubt as to whether they
in fact misrepresented the porosity of the claimed microspheres. Further, neither Defendants
nor Plaintiffs address whether any of the other three references contradicted the porosity
information that Hickey and Redmon provided. Thus, Defendants have not clearly and
convincingly shown at this stage of the proceedings that Plaintiffs intentionally misrepresented
the porosity of the claimed microspheres.

Defendants also argue that Plaintiffs intentionally and improperly withheld this article
from the Examiner. Defendants, however, cannot clearly and establish, first, that this article
was material and, second, that Plaintiffs intended to deceive the PTO office. At first glance,
results in an article that tend to show that the microspheres produced by evaporation had a
higher surface area than those produced by freeze-drying would seem to be material. Even if
Hickey and Redmon primarily focused on comparing the porosity of microspheres produced
by dilution-extraction-precipitation vs. those produced by evaporation, that would not
necessarily reduce the potential significance of results showing freeze-drying produced less
porous microspheres than evaporation, especially given that the Examiner had expressed
concerns about relative porosity on several occasions. Yet, there also is evidence in the
record that porosity was not the Examiner’s sole concern in considering the patent application.
As this Court noted in its claim construction opinion, the “prosecution history shows that the
declarants said the porosity of Fong microspheres was irrelevant in terms of drug release
because the Fong drug does not appear to reside in the pores.” Oakwood Labs , 2003 WL
21011785, at * 4. Thus, it is not clear that the Examiner would have considered this

-18-


1. Measure of Porosity via Surface Area

In an April 1988 Reply to Office Action, the Applicants submitted declarations from
Martin Redmon (“Redmon”) and Anthony Hickey (“Hickey”), Based on those declarations,
the Applicants stated that their microspheres, specifically those made by the dilution-
extraction-precipitation method and presumably those made by freeze-drying,° had a specific
surface area higher than microspheres made by the Fong patent. Specific surface area is a
measure of porosity.

In the Hickey and Redmon declarations, the declarants cited an article by Redmon,
Hickey, and DeLuca entitled “Prednisodone-21-Acetate Polyglycolic Acid Microspheres:
Influences of Matrix Characteristics on Release” as being “in press.” An article with virtually
the same title was ultimately published at 9 Journal of Control Release 99-109 (1989). Hickey
and Redmon cited this article, along with three others references, in support of their statements
that the ‘542 claimed microspheres had a specific surface area greater than 12 m’/gram. This
Hickey, Redmon, and DeLuca article states that the specific surface area of microspheres made

according to the freeze-drying method claimed in the 542 patent was between 4-6 m’/gram.‘

* Plaintiffs dispute that the declarations of Redmon and Hickey mentioned the freeze-
drying method. However, both the declarations and the April 18, 1988 Reply to Office Action
refer to the microspheres prepared by “the process of the present invention,” which includes

freeze-drying.

‘ Plaintiffs cite another ‘article entitled “Porous Biodegradable Microspheres for
Controlled Drug Delivery,” in Pharmaceutical Research, Vol. 5, No.1, 1988. At Table V in
this article, authors Sato, Kane, Schroeder, and DeLuca disclose that (1) microspheres
prepared by evaporation had “low” qualitative porosity, (2) Microspheres prepared by freeze-
drying had “high” qualitative porosity, and (3) Microspheres prepared by dilution-extraction-
precipitation had “very high” qualitative porosity. In his declaration, DeLuca disclosed these
same conclusions regarding the porosity of the microspheres prepared by the three different

-8-



distributed essentially within the channels of said microporous polymeric
network.

Further, page 8 of the ‘414 application states that the “incorporated agent or agents are matrix
confined within the interconnecting channels or pores of the spherical polymer.” On page 9, it
explains, “essentially all of the agent(s) incorporated within the pores . . .” The inventors of
the ‘542 patent included several photographs and drawings of their claimed invention in the
‘414 application. According to Hopfenberg, Plaintiffs’ expert, figures 7-9 of the ‘414
application are consistent with the construed limitation that 90% of the drug is located within a
network of interconnecting channels.

Applicants filed their ‘513 application with the following statement:

Claim 13 was cancelled and reference to evaporation was deleted from Claims 1
and 9 since Applicants have determined that it is not possible to obtain a
microporous polymeric network of interconnecting channels containing a pore
incorporated agent therein by removing the solvent in their process via
evaporation. The reason for this inoperability is not understood, however, it is
possible that evaporation is just too slow to allow adequate information of a
polymeric network of interconnecting channels.

In an amendment dated April 18, 1988, Applicants made changes to the ‘513
application’s specification. In this amendment, all reference to the evaporation method was

deleted, with the following explanation:
Applicants’ representative indicated during the interview that all reference to the
evaporation method would be deleted from the specification by Amendment in
this response. The Examiner briefly questioned the propriety of deleting such
information. The deletion in the current case is proper since the file wrapper
clearly shows the progression of events in the application. Initially, Applicants
i believed that the evaporation method would indeed produce a relatively
{h homogenous essentially spherical microporous polymeric network of
interconnecting channels; however, experiments conducted subsequently have
shown that the belief of the inventors was incorrect.



Minute Order Farm (06/97)

United States District Court, Northern District of Illinois

Name of Assigned Judge i, Sitting Judge if Other
or Magistrate Judge David H. Coar than Assigned Judge
CASE NUMBER 01 C 7631 DATE 10/21/2003
CASE Oakwood Laboratories, et. al. vs. TAP Pharmaceutical Products, Inc., et. al.
TITLE
{in the following box (a) indicate the party filing the motion, © plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the
MOTION: ‘nature of the motion being Presented.}
Parties’ Cross Motions for Summary Judgment: [126-1], [125-1], [127-1], [128-1], {130-1}, [129-1],
[112-1], [124-1], and (115-1)
DOCKET ENTRY:
(1) a Filed motion of [ use listing in “Motion” box above.]
(2) Oo Brief in support of motion due
(3) a Answer brief to motion due . Reply to answer brief due .
(4) a Ruling/Hearing on set for at
(5) Q Status hearing{held/continued to] [set for/re-set for] on set for at
(6) o Pretrial conferencefheld/continued to] [set for/re-set for] on set for at :
(7) a Trial[set for/re-set for] on at
(8) Q [Bench/Jury trial] [Hearing] held/continued to at
(9) a This case is dismissed (with/without) prejudice and without costs[by/agreement/pursuant to}
OFRCP4(m) 1 Local Rule 41.1 O FRCP41(a\(1) FRCP41(a)(2).
(10) a [Other docket entry] For the reasons set forth in attached Memorandum Opinion and Order, Defendants’ Motion for Summary
Judgment of Unenforceability Due to Inequitable Conduct (126-1] is DENIED; Defendants’ Motion for Partial Summary Judgment. Setting
the ‘542 Patent File Date to March 31 + 1986 [125-1] is DENIED; Defendants’ Motion for Summary Judgment for Invalidity of the ‘542
Patent under 35 U.S.C. § 1112 [127-1] is DENIED; Defendants’ Motion for Summary Judgment for Invalidity of the ‘542 Patent under
35 U.S.C. § 102 (e) [128-1] is DENIED; Defendants’ Motion for Summary Judgment for Invalidity of the ‘542 Patent under 35 U.S.C,
§ 102 (B) [130-1] is DENIED; Defendants’ Motion for Summary Judgment of | Non-Infringement{129-1] is DENIED; Plaintiffs’ Motion
for Summary Judgment of. Infringement [112-1] is DENIED; Defendants’ Motion for Partial Summary Judgment of Laches and Equitable
Estoppel [124-1] is DENIED; and Plaintiffs’ Motion for Summary Judgment of No tal toppel or [145-1] js GRANTED.
(11) i | (For further detail see order attached to the original minute order.] {
No notices required, advised in open
court.
No notices required. umber of notices
Notices mailed by judge's staff. 1
Notified counsel by telephone. (OCT2 1 20083
X_ | Docketing to mail notices. 7
Mail AO 450 form. ty inal
Copy to judge/magistrate judge.
due mailed notice
courtroom
slf (Ic) deputy’s
initials
Date/time received in
central Clerk's Office trailing deputy inkats



As with the Stoy patent, the Plaintiffs have presented ample expert evidence and
findings to demonstrate that there is a general issue of material fact on the issue of whether the
‘542 patent is invalid under §102 (B), because of the Croswell article. Again, the Defendants’
own expert opinions and calculations are not sufficient to find that the Croswell article clearly
and convincingly described the ‘542 patent. The Defendants’ Motion for Summary Judgment of

Invalidity Under § 102 (B) is DENIED.

F._Cross Motions for Summary Judgment on Issue of Infringement

As previously stated, Claim 15 was interpreted by this Court as follows on May 2,

2003 in its Claim Construction Opinion:
A system for the administration of drugs, wherein said system comprises a
globe-like polymeric object having extremely fine pores and containing a system
of tubular enclosed passages and canals, in which the tubular passages contain a
drug, in which most of the passages connect with each other and are open to the
surface, wherein at least 90% of the drug lines the wall of said passageways.
These cross motions for summary judgment on the issue of infringement reach the
essence of what is in dispute among the parties. The Plaintiffs’ allege that according to the
Court’s May 2, 2003 Claim Construction Opinion, the Defendants’ leuprolide acetate products
infringe the Plaintiffs’ ‘542 patent, and there no longer remains a genuine issue of material fact
as to whether the Defendant’s products infringe the ‘542 patent. Conversely, the Defendants
allege that based on this Court’s Claims Construction Opinion, no reasonable jury could find
that the Defendants’ infringed the Plaintiff's ‘542 patent, and as a matter of law, the Court

should rule in the Defendant’s favor. Each motion will be addressed in turn.


The ‘542 patent as issued does not claim a method of making microspheres that uses an
evaporation solvent removal technique. The ‘542 patent, among other things, claims a method
for producing the microspheres of the invention by dissolving an agent (drug) and a polymer in
a solvent to form a first “phase”, dispersing that first phase in a continuous solvent second
phase to obtain a suspension, and removing the solvent by freeze drying or dilution-extraction-
precipitation.

d. The Elfert Reference

German Patent Application DE 29 30 248 to Elfert (“the Elfert reference”), discloses a
“process for the production of micro capsules.” The parties disagree over the characterization
of the claim in this patent. The actual claim language is: “Process for the production of micro
capsules, wherein a solution of a film-forming polymer, which also contains the substance to
be encapsulated, is emulsified in a liquid medium immiscible with it, and said emulsion treated
with a liquid that does not dissolve the polymer but is miscible with the solvent, characterized
in that the liquid that does not dissolve the polymer but which is miscible with the solvent is
prepared and the emulsion is added slowly to it, with a volume ratio of the liquid to the
emulsion of 1:1 to 10:1.” Defendants provide a chart that compares the process steps
disclosed in Elfert to those described in claim 1 of the ‘542 patent. According to that chart,
and according to report of Defendants’ expert Dr. Lee R. Beck (“Beck”), Elfert discloses the
dilution-extraction-precipitation solvent removal procedure described in the ‘542 patent.
Plaintiffs’ expert, Dr. Hopfenberg (“Hopfenberg”), does not dispute that Elfert teaches
dilution-extraction-precipitation; Hopfenberg does not discuss Elfert’s distraction method at
all.

-11-



In their April 1988 Reply to Office Action, the Applicants cited to a 1986 article by
Fong, which contains release profiles of the Fong patent’s products. The article is entitled
“Evaluation of Biodegradable Microspheres Prepared by a Solvent Evaporation Process Using
Sodium Oleate as Emulsifier,” Journal of Controlled Release, 3, 119-130 (1986). Figures 2
through 11 of the Fong article provide release profiles for microspheres loaded with
thioridazine, ketotifen, and hydrocortisone under various conditions; none of these figures
shows release from microspheres loaded with prednisolone. Defendants assert that data from
the Fong article actually shows that the Fong microspheres release faster than the ‘542 patent
microspheres, not slower as Applicants contend. Plaintiffs dispute that assertion.

c. The Issued ‘542 Patent

Responding to the Examiner’s concerns regarding the evaporation method, in their
April 18, 1988 Reply to Office Action, the Applicants indicated that all reference to the
evaporation method would be deleted from the specification. The Applicants stated that
subsequent experiments showed that the evaporation method would not “produce a relatively
homogenous essentially spherical microporous polymeric network of interconnecting channels”
as they had initially believed.

In their patent description and during prosecution, the Applicants repeatedly stated that
the freeze-drying and dilution-extraction-precipitation methods were critical in producing
microspheres of high porosity with the claimed “interconnecting channel” structure. The ‘542
patent stressed that the porous and interconnecting channel structure of the microspheres is

created by the design of the specific claimed microsphere manufacturing methods.


the alleged infringer relies on that conduct of the patentee and (c) due to that Teliance, the
alleged infringer will be materially prejudiced if the patentee is allowed to proceed with its
claim.

Defendants’ cannot prove that DeLuca engaged in misleading conduct that would cause
the Defendants to reasonably infer that he would not enforce the ‘542 patent against them.
Therefore, Defendants’ Motion for Partial Summary Judgment for reasons of Equitable Estoppel
is DENIED. Finally, because Plaintiffs’ have affirmatively demonstrated that DeLuca did not
engage in misleading conduct that would cause the Defendants’ to reasonably infer that he would
not enforce the ‘542 patent against them, Plaintiffs Motion for Summary Judgment of No
Equitable Estoppel is GRANTED.

For the foregoing reasons, Defendants’ Motion for Partial Summary Judgment on
Laches and Equitable Estoppel is DENIED. Plaintiffs’ Motion for Summary Judgment of No
Equitable Estoppel or Laches is GRANTED.

Conclusion

For the foregoing reasons, Defendants’ Motion for Summary Judgment of Unenforceability
Due to Inequitable Conduct [126-1] is DENIED; Defendants’ Motion for Partial Summary
Judgment Setting the ‘542 Patent File Date to March 31, 1986 [125-1] is DENIED; Defendants’
Motion for Summary Judgment for Invalidity of the ‘542 Patent under 35 U.S.C. § 112 [127-1]
is DENIED; Defendants’ Motion for Summary Judgment for Invalidity of the ‘542 Patent under
35 U.S.C. § 102(e) [128-1] is DENIED; Defendants’ Motion for Summary Judgment for
Invalidity of the ‘542 Patent under 35 U.S.C. § 102(B) [130-1] is DENIED; Defendants’ Motion
for Summary Judgment of Non-Infringement [129-1] is DENIED; Plaintiffs’ Motion for

-60-


such as polyacetals, polyamides, polyestrs, polyurethanes, polysiloxanes, polyoxiranes,
polydines, etc. since no polymer which is physically soluble as such can be excluded.

Both parties agree that there is no polymer bioerosion data disclosed in the Stoy patent,
and that there is no drug release data disclosed in the Stoy patent. However, the parties dispute
the porosity of the Stoy microspheres, and whether that porosity was similar to the microspheres
of the ‘542 patent. The parties also dispute whether the Stoy patent contains a disclosure of
interconnecting channels.

b, The Croswell Article

Two researchers, Croswell and Becker, wrote a paper in 1974 which disclosed spherical
polymeric drug delivery systems (“the Croswell article”). The Croswell article describes both
expanded and nonexpanded beads and states:

Expansion of the polyestrene beads produced particles that were distorted; however,

they still possessed spheroidal characteristics...Examination of tablets compressed from

the expanded beads revealed that most individual beads retained their original shape,
but some were deformed to various degrees.
The Croswell Article also states that:

Tablets compressed from expanded beads, containing a channeling agent, released 86%

of the drugs during the first 30 min [sic] and released an additional 12% of available

acetaminophen over 12 hr. The expanded polystyrene beads employed were found to
exhibit two distinct phases of drug release. The first phase occurs very rapidly and is
believed to be due to dissolution of the drug from the surface of the bead. The second
phase occurs at a much slower rate and is attributed to the leaching of the drug through
the channels present in the plastic matrix of expanded beads.

The parties do not dispute that the Croswell article contains no SEM micrographs of
beads prepared by their methods, and the parties do not dispute that the Croswell article does

not disclose the use of their system using biodegradable polymers. However, the parties dispute

-43-


with at least 2 years of experience in research or development related to controlled or
sustained release formulations.”

DeLuca has not yet sold a commercial product according to the ‘542 patent. The
University of Kentucky Research Foundation has not yet received royalty payments under the
‘542 patent. Ben Venue Laboratories, which is Plaintiff Oakwood Labs’ predecessor, claims
to have discovered a new method of making microspheres during the course of developing
Plaintiffs’ product under the license for the ‘542 patent. In February 1997, Plaintiffs”
inventors applied for their own patent, which was granted in August 1999.

According to Defendants’ expert, Beck, the prior art publication to Nuwayser, at page
209, describes release which is “very rapid, especially for particles in the 100 micron size
range.”® Nuwayser describes a “fast release rate” as approximately 10% per week, and also
describes 100-micron microspheres containing 2% progesterone as releasing 2% per week.
Page 217 of Nuwayser indicates that a release of 2% per week will give a one-year delivery
system.

2. ANALYSIS

Defendants move for summary judgment in their favor, arguing that the ‘542 patent is
invalid for lack of enablement and lack of a written description under 35 U.S.C. § 112 411.
Defendants also argue that the ‘542 patent is invalid as indefinite under 35 U.S.C. § 112 2.

The Court addresses each argument in turn.

5 Defendants do not dispute Nuwayser’s quotes, but argues that “fast” and “slow” are
only relevant when used in context.

-31-


2. ANALYSIS

a. Legal Standard of Infringement

Determining whether a patent claim is infringed is a two step process: (1) The Court
construes the patent claims to determine scope and meaning; and (2) the Court determine
whether the accused device falls within the scope of the properly construed claims. Vitronics
Corp. v. Conceptronic, Inc,, 90 F. 3d 1576, 1581-82 (Fed. Cir. 1996).

Infringement is properly decided in a motion for summary judgment when no
reasonable jury could find that every limitation recited in the properly construed claim either is
or is not found in the accused device-either literally or under the doctrine of equivalents. Gary _
vy. Logitech, Inc., 254 F.3d 1334 (Fed. Cir. 2001) (citing Bai v. L & L Wings, Inc. , 160 F.3d
1350, 1353 (Fed. Cir. 1998)). Infringement-whether it is determined literally or under the
doctrine of equivalents-is a question of fact. Id_.

“Summary judgment is appropriate when it is apparent that only one conclusion as to

infringement could be reached by a reasonable jury.” Telemac Cellular Corp. v. Topp

Telecom, Inc,, 247 F.3d 1316, 1323 (Fed. Cir. 2001) (citing ATD Corp. v. Lydall, Inc., 159
F.3d 534, 540 (Fed. Cir. 2001)). When deciding whether summary judgment for non-
infringement is appropriate, the court will look to whether the patent’s owner proof is deficient
in meeting an essential part of the legal standard for infringement, as such failure will, “render
all other facts immaterial.” Telemac, 247 F.3d at 136 (citing London v. Carson Pirie Scott &

Co., 946 F.2d 1534, 1527 (Fed. Cir. 1991)).

-48-


most of the passages connect mutually with each other and are open to the surface, wherein at
least 90% of the drug lines the walls of said passages. Defendants’ expert, Beck, testified that
electron microscopy (or cross-section SEMs), drug release profiles, and specific surface area
measurements can be used to ascertain the internal microsphere morphology and drug location.

The parties dispute whether the ‘542 patent discloses how to make a microcapsule
capable of near linear drug delivery or that would continue to deliver drug for more than seven
days. Defendants cite to portions of the patent that give examples of release rates of 72 hours,
120 hours, and 7 days, Plaintiffs, however, cite to larger portions of the patent that disclose
how to make a microcapsule of the claimed structure generally and to some non-limiting
examples.

The parties dispute whether DeLuca actually has succeeded in producing a microsphere

with a maximum release greater than approximately 15 days. The salmon calcitonin product
DeLuca was developing prior to 1993 was intended to provide release over a 14-day period.
DeLuca had obtained sustained release in excess of thirty days with salmon calcitonin.
DeLuca was not engaged to develop a 30-day leuprolide acetate product until December 1993.
According to Plaintiffs, by August 26, 1994, DeLuca had obtained leuprolide acetate
microspheres releasing in excess of 30 days, including a formulation with a release profile
nearly matching that of the accused Lupron Depot 30-day product over three weeks.
Defendants dispute this contention, arguing that according to Mr. James Craddock, of Ben
Venue Laboratories, DeLuca was unable to develop a generic version of Lupron Depot.

Plaintiffs argue that “a person of ordinary skill in the art in 1983 would have a B.S.

degree in Chemical Engineering, Chemistry, Polymer Science, or Pharmaceutical Sciences

-30-


In their August 1987 Reply to the Examiner's rejections, the Applicants continued to
stress that the Fong patent was not pertinent to patentability because it did not make porous
microspheres and because it removed solvent by evaporation. They stated: “There are two

important points to consider when reading Fong . . . Fong does not prepare porous

microspheres. Fong never discusses the presence of pores anywhere in his specification. This
is not surprising since Fong advocates the removal of organic solvent in the last step of his
process by evaporation, . . . It is not possible to make porous microspheres by removing the
organic solvent by evaporation. Further, paragraph 8 of DeLuca’s declaration states “[t]hat, it
is not possible to prepare highly porous microspheres using an evaporation technique to
remove the organic solvent.”

Figure 1 identified in paragraph 10 of DeLuca’s declaration, which shows the
procedures used to make the microspheres, is substantially identical to the Figure 4 in the
original specification filed in the ‘542 patent application. Those Figures schematically
illustrate making microspheres using the evaporation, dilution-extraction-precipitation, and
freeze-dry methods described in the original ‘542 patent specification.

In an October 1987 Office Action, the Examiner continued to reject the Applicants’
claims over the Fong patent, again on the basis that the Fong patent’s microspheres
presumably would be microporous and that solvent removal would be expected to create pores.
Also in that Office Action, the Examiner rejected the DeLuca declaration as insufficient to
overcome the rejections based on the Fong patent because the “comparisons presented are not

with the disclosure identical with that of the reference.”

-7-



c. The Elfert Reference

Finally, Defendants allege that Plaintiffs committed inequitable conduct because the
Applicants withheld from the PTO a material prior art--the Effert reference. The Elfert
application involved a method of encapsulating materials in a polymeric film and was listed as
an “X” reference in a Search Report issued in conjunction with the International Patent
Application corresponding to the ‘542 application. Dr. Hahn translated the Elfert patent and
sent a letter to DeLuca stating his conclusion that the Elfert microspheres and the microspheres
described by DeLuca were “two distinct processes. One has a porous matrix for the retention
of drugs. The other is an incapsutation of materials.”

According to Defendants, the Elfert patent application describes a process substantially
identical to the dilution-extraction-precipitation method described in the ‘542 patent. In fact,
Beck, Defendants’ expert, states that Elfert discloses the dilution-extraction-precipitation
solvent removal procedure described in the ‘542 patent. Plaintiffs counter that the Elfert
reference is not material because Claim 1 of the ‘542 patent does not merely claim a solvent
removal technique, like dilution-extraction-precipitation; rather, it also claims a method of
making microspheres that have “interconnecting channels containing pore incorporated agent.”
Elfert says nothing about creating microspheres with interconnecting channels containing pore-
incorporated agent. Plaintiffs further argue that the Elfert reference is cumulative at best
because the Examiner already had made clear that he viewed the dilution-extraction-
precipitation technique as having been disclosed already in three primary references that he

considered: Fong, Schnoring, and Morishita. Thus, Plaintiffs claim, there was no point in

-21-


b. Parties’ Cross Motions for Summary Judgment of the Issue of Equitable
Estoppel
2. Non-infringement Based Upon Equitable Estoppel
Three elements must be established to bar a patentee’s suit by reason of equitable
estoppel:

a. The patentee, through misleading conduct, leads the alleged infringer to reasonably
infer that the patentee does not intend to enforce its patent against the alleged infringer.
“Conduct may include specific statements, action, inaction, or silence where there was
an obligation to speak.

b, The alleged infringer relies on that conduct.

c. Due to its reliance, the alleged infringer will be materially prejudiced if the patentee
is allowed to proceed with its claim.

A.C. Aukerman Co, v. R.L. Chaides Construction Co., 960 F.2d 1020, 1028 (Fed. Cir. 1992)

2. Analysis of Parties’ Equitable Estoppel Claims

The Defendants argue that their Motion for Partial Summary Judgment for reasons of
equitable estoppel should be granted, as DeLuca’s silence in his dealings with the Defendants
caused them to believe that DeLuca would not enforce his ‘542 patent against them.
Conversely, the Plaintiffs argue that the Defendants should not be allowed to present an
argument that Plaintiffs are equitably estopped from bringing this suit against Defendants, as
Defendants cannot prove the three elements needed for an equitable estoppel defense by a
preponderance of the evidence.

a. Issue of Misleading Conduct
Defendants argue that although DeLuca interacted with the Defendants numerous times

before and after the issuance of the ‘542 patent, he never accused the Defendants of patent

~58-



D._ Defendants’ Motion for Summary Judgment for Invalidity of the 542 Patent_under 35
U.S.C. § 102(e)
1, FACTS

The court herein incorporates the facts previously set forth, only including here
additional facts.

During prosecution, in order to overcome rejection based upon anticipation of the ‘542
patent by the Fong patent, the Applicants had to distinguish the Fong patent. The Applicants
provided the Examiner with the following distinction: “[T]he Fong micropsheres require
degradation of the polymer for the release of the drug. The drug in the Fong microspheres is
not located in the inside lining of the pores. ..Since Fong has a very different drug delivery
system, Fong’s microspheres have a very different release rate from Applicants’
microspheres.” The Applicants argued that the Fong microspheres indicated that the drug did
not reside in the pores, but was encapsulated in the polymer matrix. The Plaintiffs’ experts,
Dr. Hickey and Dr. Redmon, stated that the difficulty in extracting drug from the Fong
microspheres indicates that the drug does not reside in the pores but rather in the polymer
matrix.

The Applicants also sought to distinguish the Fong patent based on release rates. The
Applicants argued that in accelerated release tests, the ‘542 patent microspheres released the
drug completely in 30 minutes while the Fong patent released 80% of the drug in two hours.
In non-accelerated release test, the Applicants argued to the PTO that the ‘542 patent
microspheres released 90% of prednisolone acetate in seven days, while the Fong

microspheres released 40% of prednisolone in 11 days. The Applicants stated that the

-38-


differences between release rates provided direct evidence that the Fong patent did not produce
a product with the same release characteristics nor with the same potential applications as the
‘542 patent.

The Applicants also testified to the PTO that they thought it was relevant that the
accessibility of the drug in the ‘542 patent is not dependent upon chemical erosion of the
polymer for release. In further distinguishing the ‘542 patent, the Applicants stated,

However, Declarants further determined that any porosity attributed to the Fong

microsphere was misleading since the drug did not reside in the pores. As noted at the

end of paragraph [13], only 0.6% w/w prednisolone acetate was essentially
encapsulated within the polymer since only 80% of the prednisolone acetate was
released after two hours of sonification in a buffer. In contract, the microspheres of
the present invention [the ‘542 patent] indicated that 100% of the prednisolone was
removed within less than 30 minutes of sonication. Thus, the Fong microspheres ©
require degradation of the polymer for release of the drug. The drug in the Fong
micropheres is not located in the inside lining of the pores.

Dr. DeLuca testified that the existence of whether the drug was essentially confined within the

channels was based on release data indicating that release was by diffusion and not by erosion

of the polymer, and through scanning electron microscopy (“SEM”).

2. ANALYSIS

Defendants argue that summary judgment should be granted in their favor because the
‘542 patent is invalid under 35 U.S.C. § 102(e). Namely, Defendants argue that Claim 15, as
construed by this Court on May 2, 2003 in its Claim Construction opinion, is invalid as
anticipated by the Fong patent. The Defendants allege that the Fong Patent discloses a drug
delivery system having each of the elements of claims 15, and claims 16-21. The Court

addresses each argument in turn.

-39-


of laches. (See Aukerman, 960 F.2d at 1020). Two elements underlie the defense of laches: (a)
the patentee’s delay in filing suit was unreasonable and inexcusable, and (b) the alleged infringer

suffered no material prejudice attributable to the delay. A.C. Aukerman Co. y. R.L. Chaides

Construction Co,, 960 F.2d 1020, 1028 (Fed. Cir. 1992).
The length of time for unreasonable delay is not set, but depends on the

circumstances surrounding delay. Id. (citing Costello v. Galliher v. Caldwell, 145 U.S. 368

(1892)). Delay is measured from the time the plaintiff knew or should have known of the
defendant’s alleged infringing activities to the date of suit. However, this period does not begin
Prior to the issuance of the patent. Auckerman, 960 F.2d at 1032.

Material prejudice may be either economic or evidentiary. Id. at 1033. Evidentiary
prejudice, “May arise by reason of a defendants’ inability to present a full and fair defense on
the merits due to the loss of records, the death of a witness, or the unreliability of memories of
long past events, thereby undermining the court’s ability to judge the facts.” Id. (citing Barrois
v. Nelda Faye, Inc., 597 F.2d 881, 885 (Sth Cir. 1979); Smith v. Sinclair Ref. Co., 257 F. 2d
328, 330 (2d Cir. 1958); Gillons v. Shell Co., 86 F.2d 600, 608-09 (9th Cir. 1936) (cert
denied, 302 U.S. 689 (1937); VI Restatement Law of Torts § 939 (1936)).

Economic prejudice may result where the defendant will suffer the loss of damages that
could have been prevented by earlier suit of the plaintiff. Auckerman, 960 F.2d at 1033 (citing
A.C. Aukerman Co. v, Miller Formless Co., 693 F.2d at 701 (6th Cir. 1913) (cert denied, 414

U.S. 1158 (1978)); Yates v, Smith, 271 F.27, 31 (D.N.J. 1920)). A finding of economic

damages is not enough. Auckerman, 960 F.2d at 1033 (citing Jenn-Air Corp. v, Penn

Ventilator Co,, 464 F.2d 48, 49-50 (3d Cir. 1972)). The court must find evidence of change in

-54-


forth the claimed invention.” Lockwood v. American Airlines, Inc., 107 F.3d 1565, 1572

(1997).

Claim 15 of the ‘542 patent is at issue in this motion. Claim 15 is a product claim and

this Court held that it is not limited to any particular method of making it. See Oakwood

Labs, 2003 WL 21011785, at *5. The proper filing date for the ‘542 patent will depend on

whether the ‘414 application adequately specifies the claim according to the written description

requirement. The following table compares the language in Claim 15 of the ‘542 patent and

Claim 15 of the ‘414 application, with emphasis added to the linguistic changes:

Claim 15 of the ‘542 Patent

Claim 15 of the ‘414 Application

15. A drug delivery system comprising a
spherical microporous polymeric network of
interconnecting channels containing a drug
wherein said drug is distributed essentially
within the channels of said microporous
polymeric network.

15. A drug delivery system comprising a
spherical microporous polymeric structure
containing a drug wherein said drug is
distributed within the pores of said
microporous polymeric structure.

Plaintiffs argue that, as there is only a slight difference between the wording in the two claims,

and because the photographs and drawing submitted with the ‘414 application show an actual

reduction of the ultimately claimed invention, they have proved that they possessed the

invention as of the ‘414 application's filing date. Defendants counter that the linguistic

changes are significant. Namely, they argue that “structure” is broader than the “network of

interconnecting channels,” and “distributed within the pores” is far broader than “distributed

essentially within the channels” (because “pores” is broader than “channels” and “distributed”

is broader than “distributed essentially”). Defendants further argue that, because the ‘414

application includes a method that later was determined to not result in the claimed product,

-27-



claim material economic prejudice. See Meyers v. Asics Corp., 974 F. 2d 1304, 1308 (Fed.
Cir. 1992)."*

The Court finds that the Defendants have not proven that they were materially
prejudiced from delay in suit. Defendants admit that they had no alternative scheme or plan
for changing the structure of their product. Furthermore, the Defendants have testified that
they did not know that the ‘542 patent existed until this lawsuit was filed. Therefore,
Defendants have not provided sufficient evidence for summary judgment based on a laches
defense.

For the foregoing reasons, Defendants’ Motion for Summary Judgment on Laches is
DENIED. For that reason, Defendants are barred from presenting a laches defense, as there is
sufficient evidence in the record to show that Defendants’ were not materially prejudiced from
Plaintiffs’ delay in bring suit. For that reason, Plaintiffs’ Motion to Bar a Laches Defense is

GRANTED.

' Defendants counter that this argument should not be applicable with their leuprolide
acetate products, because of their life-saving qualities. However, the life-saving qualities of
Defendants’ products still does not prevent Defendants from ar least attempting to construct
alternative structures for their drugs in the face of an infringement suit. Without some
evidence of an attempt to restructure their products as to avoid infringement, Defendants
cannot prove material economic prejudice.

-57-



1998); see also Met. Life Ins. Co, v. Johnson, 297 F.3d 558, 561-62 (7th Cir. 2002) (stating that

Rule 56 summary judgment standard is the same for cross motions for summary judgment).

It is the moving party’s burden to demonstrate the absence of genuine issues of material
fact for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Hedberg v. Indiana Bell Tel.
Co., 47 F.3d 928, 931 (7th Cir. 1995). If the moving party meets this burden, the non-moving
party must set forth specific facts that demonstrate the existence of a genuine issue for trial. Rule
56(e); Celotex, 477 U.S. at 324. To successfully oppose the motion for summary judgment, the
non-moving party cannot rest on the pleadings alone, but must designate specific facts in
affidavits, depositions, answers to interrogatories or admissions that establish that there is a
genuine triable issue. Selan v, Kiley, 969 F.2d 560, 564 (7th Cir. 1992). A mere scintilla of
evidence in support of the non-movant's position is insufficient. See Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 252 (1986).

Il. Discussion

Defendants move for summary judgment on the following seven separate grounds: (1)
Unenforceability of patent due to inequitable conduct; (2) partial summary judgment setting the
542 patent file date to March 31, 1986; (3) partial summary judgment of laches and equitable
estoppel; (4) invalidity of the 542 patent under 35 U.S.C. § 112; (5) invalidity of the 542
patent under 35 U.S.C. § 102(e); (6) invalidity of the 542 patent under 35 U.S.C. § 102(B);
and (7) non-infringement. Plaintiffs filed two cross motions for summary judgment on
grounds of (1) no equitable estoppel or laches and (2) infringement. For efficiency purposes,

the Court addresses each motion in turn, and includes a separate section of undisputed facts for

3-


anticipated by the ‘542 patent. The Plaintiffs argue that Stoy does not reveal a disclosure of
interconnecting channels or passageways. The Plaintiffs also argue that the Stoy patent does not
release the drug in the same way as the ‘542 patent.

The Defendants do not produce sufficient evidence to clearly and convincingly indicate
that the ‘542 patent is anticipated by the Stoy patent. The Plaintiffs provide ample evidence to
show that there is a genuine issue of fact as to whether the ‘542 patent is invalid due to
anticipation by the Stoy patent. For example, Plaintiffs present evidence from their expert Dr.
Thies which alleges that the reproductions of the Stoy patent by Defendants were flawed; this
contention alone is enough to present a genuine issue of material fact on whether the Stoy patent
is anticipated by the ‘542 patent. The Defendants cannot merely rely upon their own expert
reports and interpretation of data to meet the rigorous standard of anticipation. Therefore,
Defendant Motion fo Summary Judgment is denied on this ground.

c. The Croswell Article

The Defendants argue that Croswell disclosed polystyrene microspheres having a
network of interconnecting channels’, which are comparable to the ‘542 patent. The Plaintiffs
refute this contention. Plaintiffs also contend that the Defendants have failed to show that the
Croswell microspheres have an inherent diameter range between 0.5 to 150 microns or between
0.5 to 50 microns as required in Claims 20 and 21, or that Croswell microspheres are suitable

for parenteral administration as claimed in Claim 19.

" Defendants state that the Croswell& Becker describe their drug delivery systems as,
“spherical polystyrene beads.” Polystyrene is a polymer. Some beads had “many internal
interconnecting channels and external pore openings.” Some beads had “an average porosity
of 92.4% and contained an average of 20.4% acetaminophen.”

-46-


whether 90% of the drug described in the Croswell article is located in the interconnecting
channels or passageways as required in claims 15-21 of the ‘542 patent.
2. ANALYSIS

a. Standard for Anticipation Under 35 U.S.C. 102 (b)

Defendants argue that the Stoy patent and Croswell article are prior art references that
anticipate one or more of the claims of the ‘542 patent under 35 U.S.C. § 102 (b) (“§ 102 (b)”).
$102 (b) states:

A person shall be entitied a patent unless-... The invention was patented or described

in printed publication in this or a foreign country or in public use or for sale in this

country more than one year prior to the date of the application for the patent in the

United States.

35 U.S.C. 102 (b). Courts determine invalidity under §102 (b) using an anticipation standard.

“To anticipate a claim, a prior art reference must disclose every limitation of the
claimed limitation of the claimed invention, either explicitly or inherently.” MEHL/Biophile
International v. Milgraum, M.D., 192 F.3d 1362 (Fed. Cir. 1999). “A prior art reference may

anticipate without disclosing a feature of the claimed invention if that missing characteristic is

necessarily present, or inherent, in the single anticipating reference.” Scherng Corp. v. Geneva

Pharmaceuticals, 339 F.3d 1373 (Fed. Cir. 2003) (citing Continental Can Co. v. Monsanto Co.

948 F.2d 1264, 1268 (Fed. Cir. 1991)). However:

Inherency...may not be established by probabilities or possibilities. The mere fact that
a certain thing may result from a given set of circumstances is not sufficient. If,
however, the disclosure is sufficient to show that the natural result flowing from the
operation as taught would result in the performance of the questioned function, it seems
to be well settled that the disclosure should be regarded as sufficient.

-44-


1359, 1366 (Fed. Cir. 2001)). Further, “both intent and materiality are questions of fact that
must be proven by clear and convincing evidence.” Id.

As the ‘542 patent at issue in this case was prosecuted before the Patent Office
amended its rules in 1992,° the “reasonable examiner” materiality standard applies in this
case. Information is material for the purposes of inequitable conduct if clear and convincing
evidence demonstrates that a reasonable examiner would have considered the information
important in deciding whether to allow the application to issue as a patent. See Bristol-Myers,
326 F.3d 1233 (citing GF, Inc. v, Franklin Corp., 265 F.3d 1268, 1274 (Fed. Cir. 2001);
Dayco Prods., 329 F.3d at 1362-64. Information is not material, however, if the information
allegedly withheld is not as pertinent as that considered by the examiner, or is merely
cumulative to that considered by the examiner. See Baxter Int'l v. McGaw, Inc., 149
F.3d 1321, 1327 (Fed. Cir. 1998); Molins, PLC v. Textron, Inc., 48 F.3d 1172, 1179 (Fed.
Cir. 1995).

The second element Defendants must establish in order to prove inequitable conduct is
intent to deceive. This intent rarely includes direct evidence of admitted deceitful conduct,
and is instead typically inferred where the withheld information or misrepresentation is

material and the patentee knew or should have known of that materiality. GFI, Inc. , 265 F.3d

at 1274; Brasseler, U.S.A.1., L.P. v, Striker Sales Corp., 267 F.3d 1370, 1375-76 (Fed. Cir.
2001). However, “intent to deceive cannot be inferred solely from the fact that the

information was not disclosed; there must be a factual basis for a finding of deceptive intent.”

5 See Dayco Prods., 329 F.3d at 1363-65 (discussing the applicable materiality
standards pre- and post- 1992).

-14-


Defendants argue is compromised due to the passing of time is readily available. The Court will
address whether Defendants were materially prejudiced from Plaintiffs’ failure to bring suit in a
more timely fashion.

Defendants have failed to demonstrate that they suffered material evidentiary and
economic prejudice. Defendants’ argue that crucial evidence-in particular, evidence from
DeLuca, one of the ‘542 patent's founders-compromises their ability to present a defense to
infringement. However, Defendants have not shown that the evidence that they allege is
compromised or missing due to the passage of time affects their ability to have a full and fair
trial on the merits. Plaintiffs are correct in their assertion that much of the evidence that
Defendants’ argue is missing and necessary for a defense of infringement is readily available to
the Defendants. Furthermore, the evidentiary record is in no way so compromised based on the
passing of time that Defendants’ will not have the ability to provide a full defense. The record
in this case contains an abundance of evidence on the issues in dispute, and it can hardly be
argued that much of the highly technical evidence in this case is less reliable due to any delay in
Plaintiffs’ bringing suit. Therefore, the Defendants’ have failed to show evidentiary prejudice.

Similarly, Defendants have failed to show economic prejudice. Defendants have not
provided the Court with sufficient evidence to prove that their economic position would have
been different if Plaintiffs brought suit earlier. The Defendants admit that even in the face of
possible infringement, they have not produced an alternative design of their product. The
Defendants’ testimony amply illustrates that they would not have altered their leuprolide acetate
products based on knowledge of infringement at an earlier date. When defendants provide no

evidence that they would have acted differently had Plaintiffs sued earlier, defendants cannot

-56-


Applicants misrepresented the porosity information provided in the Hickey and Redmon
declaration as well as withheld a material article from the Examiner.
1. Withholding Information Regarding Porosity of Fong Patent Microspheres

Defendants first argue that the Applicants withheld material information that
contradicted their representations concerning porosity of the Fong patent microspheres. This
information is the earlier data the Applicants compiled regarding porosity of microspheres
created through the evaporation method. Namely, Defendants point to documents from the
early 1980s that contradict the Applicants’ assertions. These documents are a 1982 abstract of
his invention submitted for a conference of the American Pharmaceutical Association, data in a
lab notebook prepared sometime before July or August 1983, and a 1984 article by inventors
DeLuca, Kane, and Sato that states evaporation produced more porous spheres than the freeze-
dry method. Defendants, however, cannot establish that this information was material. As the
record shows, the Applicants initially believed that the evaporation method would produce the
desired microspheres. Indeed, they included the evaporation method in their original patent
application. There is evidence that after further testing, they came to the conclusion that the
evaporation method did not achieve the desired porosity level after all.

It appears that Defendants would have this Court find that Applicants committed
inequitable conduct merely because they came to this conclusion only after the Examiner
rejected their patent based on the Fong patent. Yet, the record does not clearly and
convincingly establish that the Applicants misled the Examiner. None of these earlier
documents proves that the Applicants misrepresented material facts to the Examiner. Rather,
these documents indicate the relative porosity of the microspheres as they were observed

-16-



to Inequitable Conduct [126-1] is DENIED; Defendants’ Motion for Partial Summary
Judgment Setting the ‘542 Patent File Date to March 31, 1986 [125-1] is DENIED;
Defendants’ Motion for Summary Judgment for Invalidity of the ‘542 Patent under 35 U.S.C.
§ 112 [127-1] is DENIED; Defendants’ Motion for Summary Judgment for Invalidity of the
‘542 Patent under 35 U.S.C. § 102(e) [128-1] is DENIED; Defendants’ Motion for Summary
Judgment for Invalidity of the ‘542 Patent under 35 U.S.C. § 102(B) [130-1] is DENIED;
Defendants’ Motion for Summary Judgment of Non-Infringement [129-1] is DENIED;
Plaintiffs’ Motion for Summary Judgment of Infringement is DENIED [112-1]; Defendants’
Motion for Partial Summary Judgment of Laches and Equitable Estoppel [124-1] is DENIED
and Plaintiffs’ Motion for Summary Judgment of No Equitable Estoppel or Laches [115-1] is
GRANTED.
I. Summary Judgment Standard
The Court applies the same summary judgment standard to patent cases as it does to other

types of cases. See, e.g., Becton Dickinson & Co. v. C.R. Bard, Inc., 922 F.2d 792, 795-96 (Fed.

Cir. 1990). Summary judgment is appropriate only “if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to a judgment as a
matter of law.” Fed. R. Civ. Pro. 56(c); see also Schmidt v. Ottawa Medical Center, P.C., 322
F.3d 461, 463 (7th Cir. 2003). On cross-motions for summary judgment, to determine whether
there is a genuine issue of material fact, the Court views the evidence in the light most favorable

to the non-moving party and makes all reasonable inferences in that party’s favor. See
Chiuminatta Concrete Concepts, Inc. v. Cardinal Indus., Inc., 145 F.3d 1303, 1307 (Fed. Cir.

-2-


Engineering Corp., 299 F.3d at 1348. Plaintiffs argue that experts on both sides agree that
there are multiple tests, known to those of ordinary skill in the art, to determine whether the
drug is located within the channels and whether the channels interconnect to eventually
communicate with the surface. For example, in the context of attempting to show that the
prior art has such a structure, Defendants’ expert, Beck, opined that tests such as scanning
electron microscopy (SEM), drug release, and specific surface area measurements can be used.
Thus, Plaintiffs have identified a genuine issue of material fact as to whether one skilled in the
art already was aware of methods to determine the internal microsphere morphology and drug
location.

Defendants’ counter argument that, if the ‘542 patent written description is adequate,
the prior art (i.e., the Fong patent) teaches that description is irrelevant as to the ‘542 patent’s
definiteness; rather, that goes to the validity of the ‘542 patent under 35 U.S.C. § 102(e). As
this Court finds that Defendants have not clearly and convincingly established that one skilled
in the art would be unable to ascertain the bounds of the claims when read in light of the
specification, it DENIES their motion for summary judgment for invalidity of the ‘542 patent

for indefiniteness.

37+


In a 1984, publication the Applicants stated:
[U)niform microspheres were prepared by three methods--(a)
freeze drying, (b) evaporation and (c) dilution-precipitation.
Smaller, more porous spheres were obtained by the precipitation
method; the freeze-dry method yielded spheres with the lowest
porosity.

2. ANALYSIS

At issue is which filing date applies to the ‘542 patent--the November 14, 1983 filing
date of the ‘414 application, or the March 31, 1986 filing date of the ‘513 application.
Defendants move for partial summary judgment, asking this Court to set the filing date of the
‘542 patent to March 31, 1986. Defendants argue that, because the Applicants did not
discover that evaporation could not produce the drug delivery systems in claim 15 until long
after the ‘414 application was filed, they did not possess the subject matter claimed in the ‘513
application, which led to the ‘542 patent. Plaintiffs counter that they are entitled to the earlier
filing date, arguing that claim 15 is fully described in the ‘414 application and the fact that one
of the methods (evaporation) turned out to be non-enabling does not negate the sufficiency of
the description.

For a claim in a later-filed application to be entitled to a filing date of an earlier
application under 35 U.S.C. § 120 (1994), the earlier application must comply with the written
description requirement of 35 U.S.C. § 112, { 1 (1994). Tronzo v. Biomet, Inc., 156 F.3d
1154, 1158 (Fed. Cir. 1998). Thus, in this case, for the filing date of the ‘414 application to

apply, the Court must determine whether the ‘414 application provides a proper written

description for the ‘542 patent’s claims.

-25-


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
OAKWOOD LABORATORIES, L.L.C., _)
and UNIVERSITY OF KENTUCKY ) DOCKETED
RESEARCH FOUNDATION, )
) OCT 2 1 2009
Plaintiffs, )
) No, 01 C 7631
v. )
) HONORABLE DAVED H. COAR
TAP PHARMACEUTICAL PRODUCTS, _)
INC., TAP HOLDINGS, INC., TAKEDA _)
CHEMICAL INDUSTRIES, LTD., and )
ABBOT LABORATORIES, )
)
Defendants. )
RAND NI RD)

Oakwood Laboratories, LLC and University of Kentucky Research Foundation
(“Plaintiffs”) filed suit against TAP Pharmaceutical Products, Inc., Takeda Chemical
Industries, Ltd., and Abbott Laboratories (“Defendants”) alleging that they infringed U.S.
Patent No. 4,818,542 (the “542 patent”) by manufacturing and selling sustained release
leuprolide acetate products (“leuprolide acetate products”). On April 4, 2003, this Court held

a hearing in accordance with Markman v, Westview Instruments, Inc. , 52 F.3d 967, 979-81

(Fed. Cir.1995), and subsequently construed the claims at issue in this case on May 2, 2003.

See Oakwood Labs, LLC v. TAP Pharmaceutical Prods., Inc., et al., No. 01 C 7631, 2003

WL 21011785, at *1 (N.D. Ill. May 5, 2003). Before this Court are nine motions for
summary judgment; seven motions filed by Defendants and two filed by Plaintiffs. For the
reasons set forth below, Defendants’ Motion for Summary Judgment of Unenforceability Due

20

ol-


b. Defendants’ Motion for Summary Judgment on the Issue of Infringement

The Defendants argue that based on this Court’s May 22, 2003 Claim Construction
Opinion, the Plaintiffs cannot prove all of the elements necessary for a claim of infringement.
The Defendants argue that there is insufficient evidence to allege that Defendants’ leuprolide
acetate products have passageways, most of which connect mutually with each other and open to
the surface. Plaintiffs rebut this assertion, and allege that reports from both parties’ experts lead
to the conclusion that Defendants’ product microspheres do have passageways, and that most of
those passageways connect with each other and open to the surface.

Subsequently, the Defendants argue that the Plaintiffs provide no evidence that any
interior openings in Lupron Depot are tubular passages. The Defendants argue that their
leuprolide acetate products contain bubble-like spores, which no reasonable fact-finder could
interpret as tubular-shaped passages. The Plaintiffs rebut this assertion by the Defendants,
arguing that there is sufficient evidence to determine that Defendants product’s passageways are
tubular. Furthermore, the Plaintiffs argue that the amendment of the claim language, changing
“pores” to “channels” has no bearing on the meaning of “tubular”, contrary to the Defendants’
assertion that it does.

Defendants have not proven that there is no genuine issue of material fact concerning
whether most of Lupron Depot’s passages mutually connect with each other and open to the
surface, and whether the interior openings in Lupron Depot are tubular passageways.
Defendants’ assertions of a lack of genuine issue of material fact on this subject are merely their
own interpretations and conclusion of both parties’ expert reports on this subject. The Plaintiffs’

have presented ample evidence to illustrate a genuine factual issue as to whether Lupron Depot’s

-49-


‘542 patent must enable one of ordinary skill in the art in November 1983 to make the full
scope of the claimed invention, without undue experimentation.”

Factors to consider in determining enablement are: (1) the quantity of experimentation
necessary; (2) the amount of direction or guidance presented; (3) the presence or absence of
working examples; (4) the nature of the invention; (5) the state of the prior art; (6) the relative
skill of those in the art; (7) the predictability or unpredictability of the art; and (8) the breadth
of the claims. In re Wands, 858 F.2d 731, 737 (Fed. Cir. 1988). However, these Wands
factors are “illustrative, not mandatory,” Amgen, 927 F.2d at 1213, and what is relevant
depends on the facts of each case.

The logical starting point in this case would be to determine what the ‘542 patent does
and does not claim. Defendants, however, do not break down the claim language and
demonstrate how it is not enabling. Rather, they apply the Wands factors to their own
conclusions about the scope of the patent. For example, without discussing to which language
in the claims they are referring, Defendants state that “[c}laims 15-21 of the ‘542 patent are
extraordinarily broad.” (Def.’s § 112 Mem, at 5). They then go on to argue that the ‘542
patent does not disclose a drug such as the accused Lupron Depot drug. Similarly, Defendants
argue that the specification does not provide working examples of a slow release microsphere,
(Def.’s § 112 Mem. at 8). Yet, as Defendants themselves point out several times in their

Response to Plaintiffs’ Additional Facts, “fast” and “slow” are only relevant when used in

* In their briefs, the parties assume the effective filing date of the ‘542 patent is
November 14, 1983. Though this Court denied summary judgment as to the proper effective
filing date, holding there are material issues of fact on this issue, for the purposes of this
motion, it will assume the November 1983 filing date.

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sufficient evidence to indicate genuine issues of material fact concerning whether the ‘542 patent
is invalid due to anticipation by the Fong patent. For example, the evidence that the Plaintiffs
provide alleging that DeLuca did not argue that the ‘542 patent and the Fong patent were
distinguishable because of drug release rates, but rather were distinguishable based on drug
location and whether bioerosion was required for release of the drug for the Fong patent
provides a genuine issue of material fact. The Defendants’ Summary Judgment Motion is not
sufficient to resolve the issue of whether the Fong patent anticipates every claim of the ‘542
patent. Defendants’ Motion for Summary Judgment for Invalidity of the ‘542 Patent Under

U.S.C. § 102 (e) is DENIED.

E. Defendants’ Motion for Summary Judgment for Invalidity of the 542 Patent under 35
U.S.C, § 102(B)
1. FACTS

The Court herein incorporates the facts previously set forth, only including here

additional facts.

a. The Stoy Patent

U.S. Patent Number 4,110,529 (the “Stoy patent”) was issued on August 29, 1978.
The Stoy patent states that its area of concern is, “spherical polymeric particles with high
porosity and large inner surfaces.” The Stoy patent states that it made microspheres where, “the
volume of pores amounted to 98% and that of the polymer 2% only.” Furthermore, the Stoy
patent states that its microspheres could be made from a variety of polymers, including:

any soluble polymer or copolymer.., provided that the dissolution as well as the

coagulation necessitates no chemical transformation of the polymer. Thus, it would be

superfluous to list all usable addition-and condensation polymers made, e.g., from
vinyl and acrylic esters and esthers, or other esters of unsaturated acids and alcohols

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the ‘414 application does not adequately describe the invention. This impasse is a factual
dispute not ripe for summary judgment.

Admittedly, the mere fact that the ‘414 application’s terms are broader does not by
itself prove the Plaintiffs did not possess the invention. Indeed, it is well established that a
prior application need not describe exactly the subject matter claimed. See Purdue, 230 F.3d
at 1323 (“In order to satisfy the written description requirement, the disclosure as originally
filed need not provide in haec verba support for the claimed subject matter at issue.”);
Lockwood, 107 F.3d at 1572 (stating that “the exact terms need not be used in haec verba”).
Rather, the specification must contain “an equivalent description of the claimed subject
matter.” Lockwood, 107 F.3d at 1572. Whether the ‘414 specification clearly does just that,
however, is a factual determination for the jury. Although the underlying facts surrounding
this claim are not in dispute, i.e., the claim language in the ‘414 application and in the
subsequent ‘542 patent, the interpretation and inferences arising from those facts are in
dispute. Thus, at this stage in the proceedings, this Court cannot conclude as a matter of law
that the ‘414 application did or did not meet the written description requirement in 35 U.S.C.
§ 112. Defendants’ motion for partial summary judgment setting the patent filing date to

March 31, 1986 is DENIED.

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The Applicants filed an International Patent Application corresponding to the ‘542
patent application with the European Patent Office in December 1987. On September 29,
1988, the University of Kentucky and DeLuca received the results of a Search Report for the
Applicants’ International Patent Application. This European search report analyzed the
Applicants’ International Patent Application, and it identified Elfert as an “X” reference. As
printed directly on the Search Report sent to the Applicants, a reference is designated as an
“X” reference when the International Searching Authority regards the document to be a:
“document of particular relevance; the claimed invention cannot be considered novel or cannot
be considered to involve an inventive step.” Sometime thereafter, Dr. Ottfried J. Hahn
(“Hahn”), a professor in the University of Kentucky’s Mechanical Engineering Department,
reviewed the Elfert reference along with a 1988 paper by DeLuca that provided disclosure
similar to the ‘542 patent. Hahn concluded that there were differences between the Elfert
teference and DeLuca’s 1988 paper. Specifically, he stated: “I have read [DeLuca’s] research
paper describing the porous biodegradable Microspheres and the German patent describing a
process for the production of microcapsule. These are two distinct processes. One has a
porous matrix for the retention of the drugs. The other is an incapsulation of material.”
Defendants contend that the Applicants never filed an Informational Disclosure Statement
(“IDS”) identifying prior art to the PTO during the prosecution of the application leading to
the ‘542 patent. Plaintiffs dispute this contention and cite to the first three pages of their
original patent application in which they discuss the “State of the Art” prior to describing their

invention.

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infringes Plaintiffs’ 542 patent. Therefore, Defendants’ Motion for Summary Judgment for
literal Non-Infringement is DENIED.

c. Plaintiffs’ Motion for Summary Judgment of Infringement

The Plaintiffs argue that Defendants’ leuprolide acetate products: (1) comprise a globe-
like polymer object used in drug administration; (2) bave extremely fine pores; (3) microspheres
have a system of tubular enclosed passages; (4) the drug is contained in the pore and channel
passageways; (5) have passages that connect mutually with each other and which are open to the
surface; (6) at least 90% of the drug lines the walls of the passageways; (7) have microspheres
made with polylactic acid or glycolide-L-(-) lactic copolymer as defined in claims 16 and 17;
and (9) infringe Claims’ 18-21 of the Plaintiffs’ product. The Defendants’ provide their expert
reports and evaluations in asserting that the Plaintiffs’ have not provided sufficient evidence for
a finding of summary judgment in their favor on the issue of infringement.

As with Defendants’ Motion for Summary Judgment for a finding of Non-Infringement,
the Plaintiffs’ have not met the evidentiary standard for a finding of summary judgment in their
favor. The Plaintiffs’ have not proven that every limitation construed in this Court’s Claim
Construction Opinion are infringed by the Defendants’ products. The evidence provided to this

Court by both parties demonstrates that infringement is still an issue of material fact-neither the

“Finally, the Defendants argue that the Plaintiffs are precluded from showing
infringement under the doctrine of equivalents. The Plaintiffs assert that they have not relied
upon the doctrine of equivalents for their motion for summary judgment of infringement and
have not asked their experts to opine on that issue. Because there is no genuine issue of
material fact as to whether the Plaintiffs can present evidence showing infringement under the
doctrine of equivalents, the Plaintiffs’ may not present evidence showing infringement under
the doctrine of equivalents. (Although the Court notes that Defendants have raised a defense
under the reverse doctrine of equivalents).

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hormone-releasing hormone (“LHRH”) agonist, leuprolide acetate. In a 1987 letter to Mr.
Hajime Toguchi at Takeda, Dr. DeLuca wrote that, “it would be interesting to compare the
telease of LHRH in our systems to that in yours.”
3. DeLuca’s Research With University of Kentucky

From 1985 until at least 1989, the University of Kentucky and Dr. DeLuca made
efforts to discuss licensing the ideas embodied in the ‘542 patent. Beginning in 1987, DeLuca
served as acting director of the University of Kentucky’s Center for Pharmaceutical Science and
Technology.

b. Defendants’ Leuprolide Acetate Products Become Commercially Available in
the United States

In March 1989, leuprolide acetate products became commercially available in the
United States, in a one-month formulation. Upon launch, Defendants’ leuprolide acetate
products were widely distributed and resulted in significant revenues for Defendants.

c. The ‘542 Patent is Issued

The ‘542 patent was issued in April 1989. The ‘542 patent was assigned to the
University of Kentucky Research Foundation, which licenses intellectual property for the
University of Kentucky. Plaintiffs filed suit in this action on October 3, 2001. In November
1993, Oakwood’s predecessor, Ben Venue Laboratories, licensed the ‘542 patent from the
University of Kentucky Research Foundation.

The parties dispute the dates, but somewhere between 1994 and 1996, during the
course of his research at Ben Venue Laboratories, DeLuca used SEMs to view the outside of

Defendants’ leuprolide acetate products. These observations led him to believe that those

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Upjohn Co, v. Mova Pharm. Co., 225 F.3d 1306, 1312 (Fed. Cir. 2000) (citations omitted).
Mere gross negligence is not sufficient for a holding of inequitable conduct, see Kingsdown
Med. Consultants, Ltd. v, Hollister, Inc., 863 F.2d 867, 876 (Fed. Cir. 1988) (“[A] finding
that particular conduct amounts to gross negligence does not of itself justify an inference of
intent to deceive; the involved conduct, viewed in light of all the evidence, including evidence
indicative of good faith, must indicate sufficient culpability to require a finding of intent to
deceive.”). If both materiality and intent are established clearly and convincingly, the court
then balances the two elements in light of all the circumstances and determines whether the
plaintiffs’ conduct was so culpable that the patent should be held unenforceable. GEIL, Inc.,
265 F.3d at 623. If, however, either materiality or intent is lacking, then no further analysis
is necessary and Defendants’ motion for summary judgment on inequitable conduct must be

denied. See Critikon, Inc, v. Becton Dickinson Vascular Access, Inc., 120 F.3d 1253, 1256

(Fed. Cir. 1997).

This Court finds that Defendants’ motion for summary judgment must be denied
because Defendants have not proved by clear and convincing evidence that the information the
Applicants withheld was material, and/or they have not proved that the Applicants acted with
intent to deceive the PTO. The Court addresses each alleged misrepresentation in turn.

a. The Applicants’ Alleged Misrepresentations Regarding Porosity

Defendants allege that Plaintiffs committed inequitable conduct because the Applicants
misrepresented data regarding porosity to overcome the Fong patent. First, Defendants allege
that the Applicants withheld material information that contradicted their representations
concerning porosity of the Fong patent microspheres. Second, Defendants allege that the

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