[00:00:00] Speaker 00:
The first sergeant case this morning is number 14, 1434, Dale P. against several parenteral medicines incorporated.

[00:00:09] Speaker 00:
Mr. Goodall.

[00:00:11] Speaker 05:
Thank you, your honor.

[00:00:12] Speaker 05:
May it please the court.

[00:00:14] Speaker 05:
The district court decision is based on three critical and fundamental errors.

[00:00:19] Speaker 05:
The first is that the claims were manipulated like a nose of wax, twisted one way to for infringement and twisted another way for validity.

[00:00:27] Speaker 05:
This skewed the invalidity analysis that the district court made.

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The second problem is the court reached the wrong conclusion with respect to the separate core lots for two reasons.

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One, the separate core lots were on sale, and that impacts the obviousness and the anticipation of the asserted claims.

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The second is, even if the lots were not on sale, the lots constitute evidence of obviousness.

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to one of ordinary skill in the art and shows the obviousness of the claim.

[00:01:01] Speaker 00:
Mr. Galloway, would you speak up a little, please?

[00:01:02] Speaker 05:
Yes.

[00:01:03] Speaker 05:
I'm sorry, Your Honor.

[00:01:04] Speaker 05:
The third is that the court overlooked the inherency or disregarded, discounted the inherency argument as part of the obviousness analysis.

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And recent decision by this court clearly indicates that this is the Parler versus Twee case clearly indicates that inherency is to be considered in the obviousness analysis.

[00:01:24] Speaker 01:
Counsel, if you had to pick

[00:01:26] Speaker 01:
one issue that you'd like to win on.

[00:01:28] Speaker 01:
Would you tell us which one it is?

[00:01:31] Speaker 01:
Yes, sir.

[00:01:32] Speaker 01:
I would like to win on the question of invalidity.

[00:01:35] Speaker 05:
Of question of?

[00:01:35] Speaker 05:
The question of invalidity.

[00:01:37] Speaker 05:
Invalidity.

[00:01:37] Speaker 05:
Yes.

[00:01:38] Speaker 05:
I believe that if the claims are construed consistently and if this court determines that the question of the photo stability is not part of the claims or is not a claim element or that the composition per se

[00:01:53] Speaker 05:
and we've explained this in our briefs, that the composition without packaging is, in fact, not part of the claims.

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That the stability of that composition is not part of the claims.

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Then we think it's very clear that the claims are invalid under 102 and 103.

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And the reason I say that is we'd like it's a clear, consistent construction that allows us to apply that construction

[00:02:23] Speaker 05:
either in the infringement context or in the invalidity context.

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And the reason I say that is because we had argued on summary judgment that the claims should be construed such that pharmaceutical composition relates to the composition per se and that the composition per se must be stable.

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We also argued that the composition per se, if it is stable, that one way to measure that stability is the photo stability.

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So photo stability at summary judgment, we argued and still contend is an important component of the claims.

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However, the district court rejected that.

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Having rejected that, then we were confronted with the validity of the claims.

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The validity of the claims then becomes, has to be looked at then in the context that there's no photo stability requirement at the end of the composition without packaging or without light protective packaging.

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itself need not be stable.

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If all of that is true, then our argument on inherency clearly follows.

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And our argument on inherency, succinctly put, is that the compositions are fundamentally the same as the prior art.

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We have the key ingredients are from motorol dissolved in water at a pH of five with a buffer or a tonicity agent.

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The buffer or tonicity agent has been demonstrated as not to be critical.

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The formoderal concentration is also demonstrated not to be critical.

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And we know that when we look at the claims that are asserted, not all of which have any of those limitations as critical limitations in terms of their ranges, their numerical ranges, for example.

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And I can point the court to

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For instance, if we look at the 344 patents and we look at claim one, claim one requires the composition to be stable under long-term storage.

[00:04:32] Speaker 05:
Claim one, however, does not have a motorol, does not have a pH, does not have a motorol concentration range limitation, does not have a pH range limitation, does not have a buffer concentration limitation, and does not have a tonicity range limitation.

[00:04:48] Speaker 05:
and yet that composition is stable.

[00:04:52] Speaker 05:
The Assertive Claim 3 of the 344 patent likewise does not have any of those concentrations that are identified as being critical to the stability that is claimed.

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So what we have in this situation, perhaps different from many others, is we have the fundamental concept that the solution per se is

[00:05:18] Speaker 05:
Stability is inherent.

[00:05:20] Speaker 05:
It is dependent upon the idea that we have promoter-all-in solution, for sure, but the idea is that the pH of that promoter-all solution really dictates what the stability will be.

[00:05:34] Speaker 05:
And that pH was a pH that was known in the prior art.

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It was known by the Gao reference.

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It was known from the Murakami reference.

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It was known from the separate core lots, if they're on sale.

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It was known to one skilled in the art,

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from the separate court lots as from the doctrine of simultaneous invention.

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What they did in order to create a stable composition is they merely took that composition and refrigerated it.

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They did the same thing as described in the prior art.

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The Gowell reference, for example, and the Redmond reference acknowledged the refrigeration.

[00:06:10] Speaker 03:
Could I just turn you to the on-sell bar issue before you run out of your time?

[00:06:14] Speaker 03:
Sure.

[00:06:14] Speaker 03:
Do you think the on-sell bar applies to

[00:06:17] Speaker 03:
private third party sales?

[00:06:21] Speaker 05:
Well, I don't, in terms of private versus public, I think there's potentially an option for that, but I don't think that we have a private sale here.

[00:06:32] Speaker 03:
Well, that's not really what I ask you though.

[00:06:35] Speaker 03:
Let's assume we do have a private sale.

[00:06:37] Speaker 03:
Do you think that the

[00:06:40] Speaker 03:
on sale bar can still apply, even if it's a sale between, a private sale between third parties.

[00:06:45] Speaker 04:
Yes, I do.

[00:06:46] Speaker 04:
And I think the in-rate Caveny case.

[00:06:48] Speaker 04:
The which case?

[00:06:48] Speaker 04:
The in-rate Caveny case.

[00:06:50] Speaker 03:
Well, doesn't that almost suggest the opposite, that when you're looking at third party sales, the on-sale bar isn't really applicable, it's the public use doctrine that's applicable?

[00:07:02] Speaker 05:
No, I don't believe so.

[00:07:03] Speaker 05:
I believe the Caveny case is focused on

[00:07:07] Speaker 05:
on 102B as a sale and not as a public use.

[00:07:12] Speaker 05:
Certainly public use has an element of public to it, but I think from 102B for an on sale, I don't believe there's any case law that says we need to have a public sale.

[00:07:26] Speaker 05:
So I think if we had a sale between two companies, as long as they're not related, and I think that's also what the Brasser case suggests,

[00:07:36] Speaker 05:
that that would constitute a sale under 102B.

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As to the evidence of inherency, we have, as I indicated, the court discounted the evidence.

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I think that the court did so because the court concluded as a matter of law that inherency does not apply to the obviousness inquiry.

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And I believe that error of law is an error that needs to be reversed.

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As to the sale between Sephora Corps and ALP, we think the evidence is strong and points directly to the sale.

[00:08:35] Speaker 05:
We had ALP purchasing, excuse me, manufacturing four separate core actual commercial products to be used for a clinical trial.

[00:08:49] Speaker 05:
There were hundreds of lots that were made and there were hundreds of gallons that were made for the tens of thousands of dollars that were exchanged between the two parties.

[00:09:01] Speaker 05:
I think that evidence is in our record.

[00:09:04] Speaker 05:
and we've demonstrated that there are two different lots that are in question.

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The earlier lots invalidate the, are relevant to the first set of family, first family patents.

[00:09:16] Speaker 03:
I take it that it's not disputed that Lot 3 anticipates the second family patents.

[00:09:24] Speaker 05:
I guess that is correct.

[00:09:25] Speaker 03:
But the district court found that the earlier lots didn't anticipate, right, because they're different in some way.

[00:09:34] Speaker 05:
She found that the earlier lots do not anticipate the first family of patents.

[00:09:41] Speaker 05:
That is correct.

[00:09:42] Speaker 05:
What we're suggesting is that the court was erroneous in that view, also because of the nature of the claims.

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The claims, as I indicated before, don't necessarily have a limitation with respect to promoter or concentration, for instance.

[00:10:01] Speaker 05:
And that was one of the distinguished

[00:10:03] Speaker 05:
the distinguishing factor.

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The same is true with respect to the buffer.

[00:10:08] Speaker 03:
That's a clear AR standard on that question.

[00:10:11] Speaker 05:
Yes, it is on that question of fact.

[00:10:13] Speaker 05:
That is correct.

[00:10:14] Speaker 05:
But on the question of obviousness, Your Honor, I believe it's a question of law and I think that the District Court still did not contend that the claims were, she did not address the question of obviousness of the first family offense in view of the first separate core lots.

[00:10:29] Speaker 05:
And Day in its briefs did not either.

[00:10:32] Speaker 05:
So

[00:10:33] Speaker 05:
inference would be that if the separate core lots are considered to be prior art to the first family, that there's a recognition even by Day that those patents would be invalid as obvious.

[00:10:46] Speaker 03:
We would have to agree with you on your obviousness argument apart from the own sale bar for the first family and the first two lots.

[00:10:56] Speaker 05:
I think the way Day has briefed the case, I think they've conceded that.

[00:11:01] Speaker 05:
But we still have to agree with you on obviousness.

[00:11:04] Speaker 05:
Yes, you would.

[00:11:04] Speaker 05:
You'd have to agree that obviousness, that the separate core lots are relevant from the standpoint of obviousness, either as an on-sale or as separate.

[00:11:14] Speaker 03:
If we don't agree with you on that, and we don't find the district court's anticipation findings clearly erroneous on the first two lots, about no anticipation, then the on-sale bar would just apply to render the second family invalid.

[00:11:30] Speaker 03:
Is that right?

[00:11:30] Speaker 03:
There's a lot going on.

[00:11:32] Speaker 03:
I'm just trying to get it sorted out.

[00:11:34] Speaker 05:
I understand it.

[00:11:35] Speaker 05:
What I'm understanding the question is if the court agrees with us that the first lots are on sale and if the court agrees with us that the on sale event can relate to obviousness and if the court agrees with us that the claims are obvious, that our contentions with respect to obvious are

[00:12:00] Speaker 05:
correct, then the consequence is invalidity.

[00:12:04] Speaker 05:
The converse is also true.

[00:12:07] Speaker 00:
Let's hear from the other side and you have your little time left.

[00:12:15] Speaker 00:
Mr. Chesler.

[00:12:16] Speaker 02:
Good morning, Your Honors.

[00:12:17] Speaker 02:
May it please the Court.

[00:12:17] Speaker 02:
My name is Evan Chesler.

[00:12:19] Speaker 02:
I represent Day.

[00:12:21] Speaker 02:
I would like to address the issues that Council raised, if I may.

[00:12:26] Speaker 02:
First, with respect to the claim issue,

[00:12:30] Speaker 02:
There is nothing, Your Honors, in this patent that refers in any way to photo stability.

[00:12:36] Speaker 02:
It's not a patent about photo stability.

[00:12:39] Speaker 02:
The word light doesn't appear anywhere in the patent.

[00:12:43] Speaker 02:
Photo stability doesn't appear anywhere in the patent.

[00:12:47] Speaker 02:
In fact, when you look at the stability testing portion of the specification, which appears at 182 of the record, it is entirely about

[00:13:00] Speaker 02:
stability ovens and testing the material or heating the material at accelerated temperatures, then taking it out and testing to see how much chemical degradation, using chromatography technology, to see how much of the four motor oil is still left in the compound.

[00:13:19] Speaker 02:
It's nothing to do with light.

[00:13:21] Speaker 02:
That was simply a made up argument which the court properly below rejected because there's nothing in the patent to support the notion that that has anything to do with the stability

[00:13:30] Speaker 02:
that's defined.

[00:13:32] Speaker 02:
And with respect to the validity issues that Council has raised, we turn first to the on-sale bar, if I may.

[00:13:40] Speaker 02:
Our position, quite simply, is there was no sale here.

[00:13:44] Speaker 01:
Sepracor... Because the product was owned all along by Sepracor.

[00:13:50] Speaker 02:
Was owned all along by Sepracor.

[00:13:52] Speaker 02:
Sepracor provided its own compound to a contractor, ALP,

[00:13:58] Speaker 02:
Contract is in evidence.

[00:14:00] Speaker 02:
It says it was for services rendered to simply mix it and package it.

[00:14:05] Speaker 02:
The senior executive of Sepracor, who was involved in negotiating the contract and procured the service, testified as a live witness at trial.

[00:14:12] Speaker 02:
He said, we never paid for a product because we owned the product.

[00:14:15] Speaker 02:
We simply paid.

[00:14:16] Speaker 02:
We outsourced some services to ALP, and they gave us back our own material.

[00:14:22] Speaker 02:
The material was never sold.

[00:14:23] Speaker 02:
It's not like in the Brassler case, which involved these saw blades.

[00:14:28] Speaker 02:
The court explicitly found that they were sold to the inventor for the purpose of resales by the inventor.

[00:14:34] Speaker 02:
And in fact, in that case, this court distinguished what it called fabrication services, said this is not a fabrication services case, which would not implicate a non-sale bar.

[00:14:44] Speaker 02:
It was an actual sale for the purpose of resales, which were then made.

[00:14:49] Speaker 02:
So this is simply not a case in which there was a sale.

[00:14:52] Speaker 02:
And if there was not a sale, then the entire hierarchy of multiple hurdles, which

[00:14:57] Speaker 02:
counsel has put forth in the court that they must overcome simply falls apart.

[00:15:03] Speaker 02:
With respect to Judge Hughes' question, our view of the law is that if it were deemed a sale, and it's not, a private sale between one third party and another third party may well be an on-sale bar as to those third parties, but it is not an on-sale bar with respect to the inveter.

[00:15:21] Speaker 02:
As this court has said over and over again,

[00:15:24] Speaker 02:
It said it in the Gore case.

[00:15:26] Speaker 02:
It said it in the La Porte case.

[00:15:27] Speaker 03:
It said it in... Yeah, the Gore is talking about a secret method and not the sale of the product itself.

[00:15:33] Speaker 03:
Those two seem to be distinguishable to me.

[00:15:36] Speaker 03:
Well, Your Honor... That's not what we said in La Porte.

[00:15:38] Speaker 03:
I mean, in La Porte, we seem to clearly recognize that third-party sales can constitute an on-sale bar, even if they're not connected to the inventor.

[00:15:47] Speaker 02:
Well, I believe, Your Honor, what the court said in La Porte was, this is toward the end of the opinion at 1583,

[00:15:54] Speaker 02:
that the inventor in that case cannot be viewed as a wholly innocent victim.

[00:15:59] Speaker 02:
He placed the means of commercializing his invention in the hands of the third party, Janssen, expressed no objection to Janssen's sale of the device embodying the invention to La Porte, the other third party, and shortly after that sale entered into an arrangement with the two third parties to patent the invention.

[00:16:16] Speaker 02:
And this is the court's words.

[00:16:17] Speaker 02:
His conduct violates one of the principle policies of 102B, which is to encourage early filing.

[00:16:24] Speaker 02:
If the inventor is unaware of those activities, the inventor can't be faulted for not early filing.

[00:16:29] Speaker 02:
The idea is you cannot attempt to commercialize and then sit back on your rights and then file late and still get a patent.

[00:16:37] Speaker 02:
That's not the circumstance that's here, Your Honor.

[00:16:40] Speaker 02:
There's no question that this inventor knew nothing about what Sepracor and ALT were doing.

[00:16:45] Speaker 03:
So you're saying as long as the inventor doesn't know anything about the sale, whether it's

[00:16:50] Speaker 03:
completely public and widespread, it's still not an on sale bar?

[00:16:54] Speaker 02:
No, Your Honor.

[00:16:54] Speaker 02:
If it were completely public and widespread, his knowledge would be imputed.

[00:16:58] Speaker 02:
He can't say, I didn't read the newspaper, so I don't know about it.

[00:17:01] Speaker 02:
I'm talking about a situation where it was a private transaction, a non-public transaction, in which the inventor was not involved, and there's no evidence that the inventor knew about the non-public transaction.

[00:17:12] Speaker 02:
Those are the facts in the court.

[00:17:13] Speaker 02:
It was a non-public transaction about which the inventor knew, and the court took pains to point that out.

[00:17:19] Speaker 03:
And I would also point out- But where would you get this kind of exception for private sales front?

[00:17:25] Speaker 03:
The statute doesn't say anything about that.

[00:17:27] Speaker 03:
It would seem that our precedent suggests that when we're talking about private sales and the like, we're talking about the public use bar and not the on sale bar.

[00:17:35] Speaker 02:
I would get it, Your Honor, not only from the policy, as I said, of timely filing and not sitting on your rights that you know are otherwise being made available to the public, either constructively or in fact.

[00:17:45] Speaker 02:
I'd also take it, Your Honor, from the Gore case, in which this court said, and I quote,

[00:17:49] Speaker 02:
There is no reason or statutory basis on which buds or croppers, those were the third parties, secret commercialization of a process, if established, could be held a bar to the grant of a patent to Gore on that process.

[00:18:03] Speaker 02:
Gore being the inventor.

[00:18:04] Speaker 01:
Yeah, but there's a difference, isn't there, between a secret transaction and a public transaction which doesn't require announcement in the New York Times.

[00:18:19] Speaker 01:
In fact, under our on-sale bar law, I don't remember that we have a big distinction between something called a private sale and a public sale, do we?

[00:18:31] Speaker 01:
Your Honor, I don't know that there is.

[00:18:33] Speaker 01:
You can clearly see the difference in a secret transaction.

[00:18:38] Speaker 01:
Right.

[00:18:38] Speaker 01:
But this was not a secret transaction.

[00:18:42] Speaker 02:
Well, it was a confidential transaction as between Sepracor and ALT.

[00:18:46] Speaker 02:
There's no question about that.

[00:18:47] Speaker 02:
The contract is in evidence.

[00:18:49] Speaker 02:
As I said, the person who did the transaction testified.

[00:18:52] Speaker 02:
He said this was a confidential transaction between those two parties.

[00:18:57] Speaker 03:
I don't know whether this... It's not confidential with the investor, though.

[00:18:59] Speaker 03:
I mean, these two parties are completely separated.

[00:19:02] Speaker 03:
So if one, assuming we agree, we disagree with you that it's, and find that it's a sale, they're two members of the public.

[00:19:09] Speaker 03:
One is selling it to the other.

[00:19:10] Speaker 03:
The fact that they've only sold it to each other and decided not to

[00:19:14] Speaker 03:
sell it to anybody else and to keep it between themselves.

[00:19:17] Speaker 03:
I don't see how that renders it, even if we agree that there's a secret exception here.

[00:19:22] Speaker 02:
Well, Your Honor, I don't know.

[00:19:23] Speaker 02:
I can't think of a case, maybe there is one, I can't think of a case where on those facts, that is a confidential transaction between those two third parties for which there's neither constructive nor actual knowledge by the inventor, where it was held to be an on-sale bar vis-a-vis the inventor.

[00:19:40] Speaker 02:
Those are not the facts in the report.

[00:19:42] Speaker 03:
You seem to place a lot of weight on the knowledge by the inventor, but I don't see how that's really relevant to the question of whether a secret sale between third parties is useful.

[00:19:52] Speaker 03:
I mean, if knowledge of the inventor is required, then it doesn't matter whether the sale is public or private.

[00:19:57] Speaker 03:
We could deem the sale public, and if knowledge of the inventor is required, then there's clearly no knowledge here.

[00:20:06] Speaker 02:
But I'm saying it doesn't have to know it if it's in fact

[00:20:10] Speaker 02:
public transaction.

[00:20:11] Speaker 02:
We all are charged with knowledge of the public.

[00:20:13] Speaker 03:
That seems to put us down a big rabbit hole of looking at documents and determining that this clause made it confidential, this clause didn't.

[00:20:19] Speaker 03:
It was only between two parties and not mentioned to the public, so therefore it's private.

[00:20:24] Speaker 03:
I mean, a sale is a sale.

[00:20:27] Speaker 02:
Well, Your Honor, all right.

[00:20:28] Speaker 02:
Let me come back to basic principles here.

[00:20:30] Speaker 02:
Number one, as I said before, our position is there was no sale.

[00:20:34] Speaker 01:
You could avoid all of this line drawing.

[00:20:37] Speaker 01:
on this issue that we were drawing by simply refusing to treat it as a sale.

[00:20:43] Speaker 02:
We do.

[00:20:44] Speaker 02:
And that was our first point in our brief.

[00:20:46] Speaker 02:
It was the first point I made today.

[00:20:48] Speaker 02:
It is our principal point.

[00:20:49] Speaker 02:
I do not believe that this court should find, could frankly find, that the court's findings with respect to the non-sale were clearly erroneous findings.

[00:20:57] Speaker 02:
Where the contract involved says it's not a sale, where the person who did it says it's not a sale, I don't see how that could be clearly erroneous.

[00:21:05] Speaker 02:
And the line drawing that we're talking about, I agree, is never reached by this court if, in fact, the court determines that it's not a sale.

[00:21:12] Speaker 02:
The other thing, I believe, just on this point, then I'm going to go to the obviousness point.

[00:21:16] Speaker 02:
The other point is if, in fact, there had been

[00:21:28] Speaker 02:
I'm sorry.

[00:21:29] Speaker 02:
The fact is that there was no sale with respect to the two parties involved, and there's nothing about the transaction, and I said this before, I just want to close on this point, with respect to the ownership of the product involved.

[00:21:41] Speaker 02:
It never left Sepracor.

[00:21:42] Speaker 02:
It stayed with Sepracor throughout.

[00:21:44] Speaker 02:
The impact on the industry

[00:21:46] Speaker 02:
of saying you cannot outsource that kind of service without triggering the sale would be profound because that's commonly what happens in this industry.

[00:21:54] Speaker 02:
Everybody doesn't have all of the manufacturing machinery and technology in-house.

[00:21:58] Speaker 02:
They outsource all the time.

[00:21:59] Speaker 02:
And that's what happens.

[00:22:00] Speaker 03:
Why is it that big of an impact if you're going to make that kind of sale and you know that the on-sale bar applies and you just file for your patent?

[00:22:07] Speaker 02:
Well, Your Honor, there are lots of people who in this industry believe, as my client does, that it was not a sale.

[00:22:12] Speaker 02:
And therefore, there's no, there wouldn't be an on-sale bar if you, in fact, hired somebody to mix.

[00:22:17] Speaker 03:
Sure, but you talked about impact on the industry.

[00:22:19] Speaker 03:
It may be that there's some impact looking back, but if we make it clear, there's no impact going forward.

[00:22:24] Speaker 02:
Going forward, if you said what the rules are, people would presume.

[00:22:26] Speaker 03:
Can I ask you just one thing?

[00:22:29] Speaker 03:
This arrangement, was this for the use, the production was for the use of clinical trials?

[00:22:34] Speaker 02:
I believe so.

[00:22:35] Speaker 03:
Why wasn't, why didn't anybody argue that this was for experimental uses?

[00:22:41] Speaker 03:
I mean, that seems like it would have been the argument about why this is not covered by the on-sale bar if it was produced.

[00:22:49] Speaker 03:
And that's where it seems to me you might have some impact if you have a small drug manufacturer that invents something but doesn't have the capacity to manufacture it for clinical trials.

[00:22:59] Speaker 03:
But that would be covered by the experimental use.

[00:23:02] Speaker 02:
I agree with that, Your Honor.

[00:23:03] Speaker 02:
We didn't make that, right?

[00:23:04] Speaker 02:
No.

[00:23:04] Speaker 02:
The way it played out at trial was this was not a sale transaction.

[00:23:07] Speaker 02:
That was virtually the entire attention that was paid to it at trial.

[00:23:11] Speaker 02:
But I may turn to obviousness before I sit down.

[00:23:14] Speaker 02:
So counsel talked about inherency.

[00:23:16] Speaker 02:
And I want to turn to inherency.

[00:23:17] Speaker 02:
First of all, counsel said that the court said as a matter of law, inherency doesn't apply to obviousness.

[00:23:22] Speaker 02:
And I respectfully say to this court, that's not so.

[00:23:25] Speaker 02:
As Appendix Page 63, the court plainly dealt with the question of inherency on a factual basis.

[00:23:32] Speaker 02:
The district court made a series of fact findings about the prior art, which this court, again, would have to find her clearly erroneous in order to overturn it.

[00:23:39] Speaker 02:
She did not make a finding of law than inherency.

[00:23:41] Speaker 02:
does not apply.

[00:23:43] Speaker 02:
And in fact, what the evidence showed here is that there were two prior art samples, which Teva hired an expert to test.

[00:23:56] Speaker 02:
And the expert, another expert came and testified about the separate experts testing and said, well, he tested these two samples and found that they had the same stability capability, same stability characteristics as the invention.

[00:24:09] Speaker 02:
In fact, what the district court found

[00:24:12] Speaker 02:
was that in each instance, the prior art samples had been modified by the expert who did the testing, modified in ways that their own expert at trial conceded could well affect stability.

[00:24:23] Speaker 02:
So there was, as the district court analyzed it, there was absolutely no evidence here that samples that actually corresponded to what was in the prior art had ever been tested for their stability, because the prior art samples that had been tested did not, in fact, correspond to what was disclosed in those two prior art references.

[00:24:42] Speaker 02:
And with respect to the doctrine of inherency, it plainly does apply.

[00:24:46] Speaker 02:
The court said in part that it applies in the obviousness context, said it's a very high standard and it necessarily must be present or the natural result of the combination of elements explicitly disclosed in the prior art.

[00:24:58] Speaker 02:
In fact, several things about the prior art report.

[00:25:01] Speaker 02:
First, the prior art taught explicitly away from this invention.

[00:25:05] Speaker 02:
It said if you put this substance in water, it will immediately degrade.

[00:25:10] Speaker 02:
And prior art reference after prior art reference said keep them separate, keep your powder dry.

[00:25:15] Speaker 02:
If you put the powder in the water, it will degrade.

[00:25:18] Speaker 02:
And one of the prior art references, Redmond said, refrigeration will not solve this problem.

[00:25:23] Speaker 02:
It recognizes refrigeration as a factor to consider and says it will not solve the problem.

[00:25:29] Speaker 02:
And in fact goes on to say the way to solve the problem is to create a device with two columns, put the powder in one, put the water in the other, combine them right before inhalation use.

[00:25:38] Speaker 02:
And that's the way to avoid degradation.

[00:25:40] Speaker 02:
So the prior art explicitly taught it would degrade in water, and refrigeration would not solve the problem.

[00:25:47] Speaker 02:
Now, the respondent says, well, it was inherent that this stability would be there.

[00:25:54] Speaker 02:
And in fact, when you look at the prior art, there's nothing that says that if you did what the prior art elements were and you combined them, you would get the natural result of the stability that's claimed in the patent.

[00:26:05] Speaker 02:
In fact, the stability that's claimed in the patent is quite specific.

[00:26:08] Speaker 02:
And it talks about a certain percentage of formal degradation at the end of one year when it's refrigerated at five degrees centigrade and a certain percentage of degradation at one month when it's kept at room temperature.

[00:26:20] Speaker 02:
There's nothing in the prior art that suggests anything like that.

[00:26:24] Speaker 02:
And the testimony by one of the principal inventors was,

[00:26:27] Speaker 02:
that they didn't believe it would work when they tried it, that there was no reason why they believed that it would actually perform as it ultimately did perform, that they were surprised by the result, and that's absolutely consistent with all of the prior art.

[00:26:40] Speaker 02:
In fact, the last piece of prior art that was written prior to the time of the invention said that this is unstable in water, just like the prior art for years before that had set.

[00:26:49] Speaker 02:
So while inherency as a matter, as a legal matter, does apply in the obviousness context, as this court said in par, high standard, but it applies.

[00:26:57] Speaker 02:
There was nothing, in fact, here that renders the district court's factual findings about inherency clearly erroneous.

[00:27:04] Speaker 02:
On this record, what the district court found was not only not clearly erroneous, it was the clear result of the evidence that was presented to the district court.

[00:27:11] Speaker 01:
Keeping your powder dry has been a longstanding practice in this country.

[00:27:16] Speaker 01:
Yes, Your Honor, it is.

[00:27:17] Speaker 01:
And apparently, it was the prior art of this case as well.

[00:27:22] Speaker 02:
Unless the court has any questions, I think I've addressed the issues which counsel has raised.

[00:27:26] Speaker 00:
If there's any questions, thank you, Mr. Chaston.

[00:27:28] Speaker 02:
Thank you.

[00:27:33] Speaker 00:
Mr. Gargato.

[00:27:35] Speaker 05:
Yes, Your Honor.

[00:27:37] Speaker 05:
With respect to inherency, I think the district court made it very clear at A63, the court said,

[00:27:45] Speaker 05:
With respect to inherency, such data is not relevant to an assessment of whether the asserted claims were obvious.

[00:27:52] Speaker 05:
I don't think it could be clearer.

[00:27:54] Speaker 05:
I think the questions that were raised in the context of the argument here were the question of was there anticipation, and I also think that the court clearly erred in light of the testimony of record in this case from the inventor who testified that

[00:28:12] Speaker 05:
that the stability of the Fumotor-Altons aqueous solutions is inherent.

[00:28:17] Speaker 05:
The expert, Dr. Myrtle, on behalf of Teva, who so testified, and similarly, the testimony of Dr. Hasteth, which was the expert for Day.

[00:28:28] Speaker 05:
There is no doubt, it's like a carton of milk.

[00:28:31] Speaker 05:
If I put a carton of milk on the table, or if I put a carton of milk in the refrigerator, that carton of milk has the same stability.

[00:28:39] Speaker 05:
It's the conditions under which you look at stability

[00:28:42] Speaker 05:
that cause you to determine how it's stable.

[00:28:45] Speaker 05:
For example, if you put the milk on the counter, it's not likely to last as long, but it will not last as long as when you put the same milk in the refrigerator.

[00:28:53] Speaker 05:
The reason is because the conditions define stability.

[00:28:57] Speaker 05:
Days patents define stability in several different ways, one of which is simply long-term storage.

[00:29:04] Speaker 05:
That has nothing to do with the time and temperature limitations we've talked about.

[00:29:08] Speaker 05:
The other thing is

[00:29:10] Speaker 05:
the refrigeration concept was well known.

[00:29:12] Speaker 05:
People have been refrigerating for years just as they've been keeping their powder dry.

[00:29:17] Speaker 05:
So I think we have to look at the context of the obviousness from the standpoint of inherency and I think the record shows that the court was clearly erroneous in terms of its factual findings and that it aired as a matter of law in concluding that inherency is not part of the obviousness inquiry.

[00:29:34] Speaker 05:
With respect to the on sale, we did not have

[00:29:39] Speaker 05:
They did not argue experimental use during the case, and rightfully so.

[00:29:46] Speaker 05:
In this case, the for-moral solution that ALP made for Cepricor was pursuant to a contract.

[00:29:54] Speaker 05:
The product was ready for patenting under the Pfaff v. Wells analysis.

[00:29:59] Speaker 05:
The product was complete.

[00:30:01] Speaker 05:
It was ready to be taken into clinical trials.

[00:30:03] Speaker 01:
I do agree it was Cepricor's product.

[00:30:06] Speaker 05:
No, I do not, Your Honor.

[00:30:08] Speaker 05:
What I agree with is that Sepracor supplied the dry powder.

[00:30:14] Speaker 05:
ALP then converted that dry powder to something that was useful for Sepracor.

[00:30:18] Speaker 05:
That is an inhalation solution product that was then going to be used for the clinical trials and ultimately for commercial sale.

[00:30:30] Speaker 05:
So I do not agree with the ownership interest in this case that Sepracor held in the promoter

[00:30:37] Speaker 05:
had anything to do with the question of sale.

[00:30:44] Speaker 05:
The Gore case that's cited by plaintiffs was distinguished by Laporte.

[00:30:52] Speaker 05:
In the Gore case, we're looking at the secret commercialization of an invention where the invention was a process and the process was not apparent from the process that was put into the public domain.

[00:31:06] Speaker 05:
As the Laporte Court said, the question is not whether the sale, even the third party sale, discloses the invention at the time of the sale, but whether the sale relates to a device that embodies the invention.

[00:31:18] Speaker 05:
The device, the product that Sepracor bought from ALP was a product that embodied the invention in all ways.

[00:31:29] Speaker 05:
With respect to the actual sale,

[00:31:32] Speaker 05:
Mr. Wald, who testified at trial, also had testified in his deposition, and this is in the record as well.

[00:31:39] Speaker 05:
And he testified, and I'll read it, quote, was there a written contract between ALP and Sepracor with regard to the manufacturing of the clinical trial batches for ARFA motor oil?

[00:31:51] Speaker 05:
Answer, prior to each batch, Sepracor negotiated terms and conditions for the manufacture of the batch and created a purchase order.

[00:32:00] Speaker 05:
All of the documents that we've submitted into evidence reflect a purchase order between ALP and Sepracor for the purchase of a product, not for the purchase of services, not for the purchase of mere packaging.

[00:32:13] Speaker 05:
We have ALP being an active member or party to a transaction, a commercial transaction for the sale of product between ALP and Sepracor.

[00:32:26] Speaker 00:
Okay.

[00:32:26] Speaker 00:
Thank you, Mr. Garland.

[00:32:28] Speaker 00:
Thank you.

[00:32:29] Speaker 00:
So the case is taken under submission.