[00:00:02] Speaker 00: Before I begin, I want to take a moment to welcome some members of the Air Force Judge Advocate General's Corps. [00:00:10] Speaker 00: Major Jeff Lorick, who is here with them, used to be an intern for me, or extern. [00:00:15] Speaker 00: I never know the difference. [00:00:16] Speaker 00: We called them externs in district court, and now we call them interns in the Court of Appeals. [00:00:21] Speaker 00: But it's good to see you again, and thank you for bringing all of your friends with you. [00:00:26] Speaker 00: And thank you all for your service. [00:00:30] Speaker 00: OK. [00:00:31] Speaker 00: several cases before the court this morning, four argued cases, as a matter of fact, three of which are patent cases, and one of which is an appeal from the Court of Federal Claims. [00:00:45] Speaker 00: The one issue that I want to address, and I'd like counsel to address when they stand up respectively, is that in many of these patent cases, there are a lot of confidential markings in the briefs. [00:01:00] Speaker 00: And so to the extent that you are concerned about something we might say, we're not going to go through and necessarily make sure that we are censoring ourselves in every place. [00:01:14] Speaker 00: So if there's something particular that you are concerned about, I think you need to let us know that. [00:01:21] Speaker 00: When we have that many confidential markings in cases, and they're not all the same, but when we have that many, it's almost impossible to [00:01:30] Speaker 00: fared out the issues without stepping on some of those toes. [00:01:34] Speaker 00: So the first case before the court is Altair Pharma versus Paragon Biotech. [00:01:42] Speaker 00: It is an appeal from the Patent Trial and Appeal Board. [00:01:46] Speaker 00: It is case number 171487. [00:01:48] Speaker 00: I understand, Mr. Countryman, that you want three minutes for rebuttal? [00:01:55] Speaker 00: Yes. [00:01:56] Speaker 00: Okay. [00:01:56] Speaker 00: You may begin. [00:02:00] Speaker 01: Thank you Judge O'Malley and may it please the court. [00:02:03] Speaker 01: Paragon's patent is invalid because it covers a method that patients using Altair's Prior Art products had been performing for over a decade before the filing date. [00:02:14] Speaker 01: The only disputed claim limitations dealt with the chiral purity of Altair's Prior Art products and Altair presented two independent types of testing, HPLC testing [00:02:25] Speaker 01: and optical rotation testing, which showed that the prior art products had the required... Let's move from the effects to the law for a little bit, okay? [00:02:33] Speaker 04: Sure. [00:02:33] Speaker 04: This is the core hangup, and that's that Altair's claim is contingent upon certain events. [00:02:43] Speaker 04: Paragon's termination of the contract, Altair's resumption of production of the product, and Paragon's suing Altair for infringement, right? [00:02:53] Speaker 04: Yes. [00:02:54] Speaker 04: What about Texas v. United States? [00:02:58] Speaker 01: Well, Your Honor, in this case, the injury is imminent because the 623 patent is blocking Altair, if Altair were to want to sell its own phenylephrine product. [00:03:09] Speaker 01: And Paragon is seeking to terminate the contract any day. [00:03:13] Speaker 01: They've moved in the district court breach of contract action for summary judgment on that. [00:03:17] Speaker 00: But if the contract's not terminated, then the patent doesn't block, correct? [00:03:21] Speaker 01: Well, it would still block us, Shojo Mali. [00:03:23] Speaker 01: It would still be one barrier to us making our product. [00:03:27] Speaker 01: The contract also terminates by its own terms in 2021. [00:03:30] Speaker 01: And so even if Paragon isn't successful and immediately terminating the contract, it certainly will terminate in 2021. [00:03:38] Speaker 01: And Altair certainly intends to keep selling Fenleffrin. [00:03:41] Speaker 01: I think here, the context is important because this is a product that Altair was selling for over a decade before. [00:03:48] Speaker 01: Beforehand, yeah. [00:03:48] Speaker 01: Right. [00:03:49] Speaker 01: And so I think that- As I say, [00:03:52] Speaker 04: I'm not so interested in the facts. [00:03:53] Speaker 04: I think the facts are on your side. [00:03:55] Speaker 01: Yeah, but I think that context is important because it shows that this is a real imminent injury. [00:04:00] Speaker 01: I mean, we have manufacturing facilities. [00:04:03] Speaker 01: We had distributor networks before the relationship with Paragon. [00:04:07] Speaker 01: And so it's a different case than when you would have a challenger coming in and saying, well, hypothetically, I have all these intentions, but there's not facts in there. [00:04:14] Speaker 00: But what is the status of the two district court cases? [00:04:16] Speaker 01: So with respect to the breach of contract case, motions for summary judgment have been filed. [00:04:21] Speaker 01: And there's a trial date set for May of 2018. [00:04:25] Speaker 01: And then with respect to the declaratory judgment patent... They're cross motions for summer judgment? [00:04:30] Speaker 01: Cross motions for summer judgment, yes, Your Honor, that are still pending. [00:04:33] Speaker 01: They've been fully brief. [00:04:35] Speaker 01: And then with respect to the patent infringement case, it's currently stayed by agreement of the parties. [00:04:40] Speaker 01: Paragraphs filed some motions to dismiss for various things, and they've also moved to stay. [00:04:45] Speaker 00: And it's basically stayed... Well, the 256 case, that one stayed by agreement of the parties? [00:04:52] Speaker 00: I don't really understand that, because what possible impact could a PGR have upon inventorship? [00:04:59] Speaker 01: Well, if the PGR were to invalidate the patent outright, then there wouldn't be any patent left to add Altair to. [00:05:07] Speaker 01: And so our position has always been that the patent is invalid, first and foremost, but that to the extent it is valid, our client should at least be added as a co-inventor or the sole inventor. [00:05:17] Speaker 00: Assume that we don't believe your reputational injury argument [00:05:22] Speaker 00: gives you standing, particularly because there is a right to the 256 correction of inventorship action. [00:05:30] Speaker 00: What is your strongest argument for standing? [00:05:34] Speaker 01: It's the fact that the patent is blocking us from selling our own product. [00:05:39] Speaker 01: And some of the case law we cited in the reply belief says that even if it's one barrier to us selling the product, so even if the contract is a separate barrier, the patent still stands as a barrier. [00:05:50] Speaker 01: And a favorable decision in this PGR appeal would remove that barrier. [00:05:56] Speaker 01: And so we're suffering an injury. [00:05:58] Speaker 01: Of course, if the patent blocks us, we can't sell it on our own. [00:06:00] Speaker 01: That's an economic injury. [00:06:02] Speaker 01: And that's something that would be redressed in this appeal if we were successful. [00:06:05] Speaker 00: A friend on the other side would say that the patent isn't blocking you. [00:06:11] Speaker 00: The contract is really blocking you. [00:06:13] Speaker 00: If the contract goes away, then the patent starts blocking you. [00:06:16] Speaker 01: I think the answer is both are blocking us. [00:06:19] Speaker 01: The contract is one barrier, but the patent is another barrier. [00:06:25] Speaker 01: I mean, if we were to file an ANDA tomorrow, they may or may not have an action for breach of contract. [00:06:31] Speaker 01: I think we disagree about that. [00:06:33] Speaker 01: And I actually don't think we think the contract blocks us. [00:06:36] Speaker 01: But even assuming if we did, the patent would still block us. [00:06:40] Speaker 01: So if we were to file an ANDA tomorrow, they would still be able to file an infringement suit on the patent. [00:06:45] Speaker 00: Have you filed an ANDA yet? [00:06:48] Speaker 02: Mr. Countryman, let me ask you, let's assume that this unfortunate squabble between Altair and Paragon hadn't erupted, and all we had was this contractual relationship based on the May 2011 contract. [00:07:01] Speaker 02: I assume you would agree, under those circumstances, there would be no standing. [00:07:07] Speaker 01: I don't, Your Honor, actually, because I think this is a bit unique, because of the estoppel effect that the PGR... You would be saying there'd be standing simply because of the fact of [00:07:18] Speaker 02: the existence of the patent and the fact that the contract ends in 2021, is it? [00:07:25] Speaker 01: Yes, Your Honor. [00:07:26] Speaker 01: Yes. [00:07:27] Speaker 01: So the patent doesn't expire until 2033. [00:07:30] Speaker 01: And so there's definitely going to be a window, even where the contract expires by its own terms, where the patent is going to block us. [00:07:36] Speaker 01: And here, this is different than the run of the mill declaratory judgment action, because in those cases, if you dismiss something for lack of standing, it's without prejudice. [00:07:44] Speaker 01: The person can always come back. [00:07:46] Speaker 01: when the injury is more imminent. [00:07:49] Speaker 01: But here, this is our only shot to appeal to the PR. [00:07:55] Speaker 01: And if we don't have that shot, we've got statutory estoppel attaching. [00:07:59] Speaker 01: Paragon's made a bunch of arguments in the district court that there's collateral estoppel and all these other things. [00:08:04] Speaker 01: And so I think when you combine the fact that the patent is blocking us with the estoppel. [00:08:10] Speaker 04: Paragon says, this is all speculative. [00:08:13] Speaker 04: Nothing's happened. [00:08:14] Speaker 04: No determination has been made. [00:08:17] Speaker 04: If they were to stipulate that if the contract was terminated, that they would not sue Altair for infringement of the pet, would that resolve your problems? [00:08:37] Speaker 01: I think it probably would, Your Honor. [00:08:40] Speaker 01: I mean, there are some continuations pending. [00:08:42] Speaker 01: And so we'd be a little bit concerned about that, but I think for the most part it would if there were some... They're telling us they're briefs. [00:08:48] Speaker 04: They're nice guys. [00:08:49] Speaker 04: I'm going to ask that question. [00:08:50] Speaker 04: Right. [00:08:50] Speaker 01: I mean, basically, if there were a SuperSAC type covenant, I mean, I think it probably would remove jurisdiction. [00:08:55] Speaker 02: Mr. Countryman, what if, say, two days from now, or Friday of this week, the judge comes down with a ruling on the summary judgment motions, and the ruling contains, among other things, the holding that [00:09:11] Speaker 02: Paragon does not have the right to terminate the contract, leaving aside what else it may say. [00:09:18] Speaker 02: How would that change things? [00:09:20] Speaker 01: I think we would still have standing because it would go back to your first question. [00:09:24] Speaker 01: We wouldn't have as strong a case though, certainly. [00:09:26] Speaker 01: I think it would remove one of our arguments for standing, but I think we still would have standing given the fact the contract expires in 2021, which is [00:09:35] Speaker 01: years away, but not that far away, and the estoppel effect of this decision. [00:09:39] Speaker 02: It would seem, it would seem that given, when did you say the trial date was again? [00:09:43] Speaker 01: May of 2018. [00:09:45] Speaker 02: One would think, we're, you know, say maybe two months away from that, that the judge is going to rule on the summary judgment issue probably before too long because he's, he has, like the parties, is facing a trial date. [00:10:00] Speaker 02: I would assume so, Your Honor. [00:10:01] Speaker 01: We don't know for sure one way or the other, but I assume we'd see that ruling before the trial. [00:10:08] Speaker 00: But to get back to the point you were trying to make about the estoppel, so what you're saying is that this context is different because you didn't have to have standing to file the PGR, so there was no testing of your standing at that point in time, and now you're in a different circumstance where if we say you don't have standing to appeal, then there is this [00:10:31] Speaker 00: bar of this decision that would last forever, presumably. [00:10:34] Speaker 01: I think that's right, Your Honor. [00:10:35] Speaker 01: I mean, the statute gives us a right to file the PGR without having to show the typical Article III things. [00:10:43] Speaker 01: And so, yeah, now we're in this position where if we're not allowed to appeal, we have this estoppel, we can't get rid of it, and we've lost our only chance. [00:10:50] Speaker 01: And that's very different than the district court going to file a declaratory judgment in a district court [00:10:56] Speaker 01: where when they say you don't have standing, it's a dismissal without prejudice and come back later once there is a more immediate dispute between parties. [00:11:04] Speaker 00: Getting to the merits, the PTAB really ruled against you because they said you kept making mistakes. [00:11:13] Speaker 00: You didn't submit enough data with respect to one of the testings up front. [00:11:18] Speaker 00: And then when you really did submit data that they could rely on, it wasn't until you replied. [00:11:24] Speaker 00: Those are pretty discretionary decisions. [00:11:26] Speaker 00: How do we say that they abuse their discretion? [00:11:29] Speaker 01: So a couple things. [00:11:30] Speaker 01: I think with respect to both types of testing, there was a key argument or key fact that the PTAB didn't address. [00:11:36] Speaker 01: So with respect to the HPLC testing, we put in, with the petition, the control experiment, where a sample included both of these two enantiomers, R and S, and lefren. [00:11:47] Speaker 01: And we showed that Altair's testing method separated successfully the two enantiomers. [00:11:53] Speaker 01: That was submitted with our petition. [00:11:55] Speaker 01: It showed the way the testing was conducted. [00:11:57] Speaker 01: And it showed, most critically, that the testing worked for its intended purpose, that it actually did separate the two enantiomers, which was the whole dispute between the parties. [00:12:06] Speaker 01: The PTAP didn't address that at all. [00:12:09] Speaker 01: And so we would say that that control experiment establishes beyond doubt the reliability of the testing. [00:12:14] Speaker 01: But at a minimum, that was critical evidence showing how the testing was conducted. [00:12:19] Speaker 01: and showing that it did actually work for its intended purpose, and the PTAB didn't address it. [00:12:24] Speaker 01: And so at a minimum, I think the court would need to remand for the PTAB to actually address that control experiment. [00:12:31] Speaker 01: I would also say, just with respect to reply evidence, I mean, the APA does give us a right to respond to Paragon's arguments. [00:12:39] Speaker 01: And we were genuinely surprised that Paragon pretended not to know what types of test parameters we had used. [00:12:46] Speaker 01: This is information we had given them in advance. [00:12:48] Speaker 01: They had used it. [00:12:49] Speaker 01: to submit to the FDA to show that the products were chirally pure. [00:12:55] Speaker 01: And so it came as a surprise to us that they contested it. [00:12:58] Speaker 01: And then once we did, we immediately submitted the additional evidence with our reply brief. [00:13:02] Speaker 01: And so I think in that circumstance, it was an abusive discretion for the PTAB to not consider the reply evidence. [00:13:08] Speaker 01: But at a minimum, the evidence we submitted about our petition and the control evidence did show that the test was reliable. [00:13:15] Speaker 01: With respect to the optical rotation testing, [00:13:19] Speaker 01: Here the problem really was that the position Paragon has taken in this proceeding is flatly inconsistent with what it told the Patent Office. [00:13:27] Speaker 01: The Patent Office, in order to approve the party's product, asked Paragon for testing showing the chiral purity of the compound. [00:13:35] Speaker 00: The Patent Office did or the? [00:13:37] Speaker 01: Excuse me, the FDA did. [00:13:38] Speaker 01: The FDA did. [00:13:39] Speaker 01: And the FDA said, in order for us to continue our evaluation of your NDA, we need either chiral purity testing, [00:13:46] Speaker 01: or we need an explanation of why you're not providing it. [00:13:50] Speaker 01: Paragon then came to us, asked us for that optical rotation testing. [00:13:53] Speaker 01: We gave it to them. [00:13:54] Speaker 01: They gave it to the FDA. [00:13:56] Speaker 01: And the FDA approved their product. [00:13:57] Speaker 01: And so in doing that, Paragon was certifying to the FDA, this is reliable. [00:14:03] Speaker 01: This shows chiral purity. [00:14:04] Speaker 01: And they got a benefit from that because they got their FDA application approved. [00:14:09] Speaker 01: Then they come back in this proceeding and take the complete opposite position and say it's not reliable. [00:14:14] Speaker 01: And that's just flatly inconsistent. [00:14:16] Speaker 01: PTAB shouldn't have allowed that. [00:14:18] Speaker 01: Judicial estoppel should have blocked that. [00:14:20] Speaker 00: Was there anything short of judicial estoppel that they should have at least, indicating that they should have at least considered it as an admission of a party? [00:14:32] Speaker 01: Absolutely, Your Honor. [00:14:33] Speaker 01: I mean, at a minimum. [00:14:34] Speaker 01: And this was argued to the PTAB. [00:14:37] Speaker 01: In our briefing, we pointed out it was raised at oral argument. [00:14:40] Speaker 01: And it's nowhere in the PTAB's opinion. [00:14:41] Speaker 01: So again, we think it's either an admission of a party or a judicial estoppel as a matter of law. [00:14:47] Speaker 01: But at a minimum, there should be a remand for the P tab to actually address that. [00:14:50] Speaker 01: Because again, this was the critical argument showing the reliability of that optical rotation testing. [00:14:56] Speaker 01: And it's nowhere addressed by the board. [00:14:58] Speaker 01: And that's an abusive discretion. [00:14:59] Speaker 01: All right. [00:15:00] Speaker 02: Yeah, go ahead. [00:15:01] Speaker 02: Senator, just to get back for a moment just to this standing issue, is there any merit to the court considering waiting, meaning this court waiting, until the district court acts on the summary judgment motion, or it gets resolved at trial? [00:15:17] Speaker 02: Because certainly that could make the standing issue different depending how the district court goes. [00:15:26] Speaker 01: That's certainly an option for the court. [00:15:28] Speaker 01: I mean, getting back to our earlier exchange, we think they're standing regardless. [00:15:32] Speaker 01: But at a minimum, certainly we'd prefer you to wait rather than to dismiss us. [00:15:38] Speaker 02: I can only speak for myself, but it seems to me it'd be a lot different case on the standing issue if [00:15:44] Speaker 02: say the court were to rule that Paragon does not have the right to terminate the contract. [00:15:53] Speaker 02: That may or may not be the case. [00:15:54] Speaker 02: I'm not saying what the merits are on that issue, but it would have an impact on the standing question. [00:16:00] Speaker 01: Right. [00:16:00] Speaker 01: I mean, certainly we think there's standing either way, but yes, I agree. [00:16:03] Speaker 01: I mean, if the court thinks it would be worthwhile to wait, that's certainly an option available to you. [00:16:09] Speaker 01: I'll save one. [00:16:11] Speaker 01: We'll give you three minutes back. [00:16:12] Speaker 01: Thank you. [00:16:20] Speaker 03: May I please support? [00:16:23] Speaker 03: As you observed, their whole theory depends on the board having made at least two abuses of discretion and lacking even a mere scintilla of evidence for the factual finding. [00:16:36] Speaker 04: Let me answer my question I raised with your opposing counsel. [00:16:44] Speaker 04: The kindest way I can describe your [00:16:50] Speaker 04: client's position is slalom skiing, slalom skiing through gates. [00:16:56] Speaker 04: I mean, frankly, I look at it as at best, to borrow a phrase, predatory gotcha. [00:17:05] Speaker 04: But is Paragon willing to stipulate that if the agreement is terminated, Paragon won't sue Altair for infringement of the 623 patent? [00:17:15] Speaker 03: It's an assumption. [00:17:17] Speaker 03: One of the many assumptions that go into that question is the paragon would even terminate the contract. [00:17:23] Speaker 03: It's suing for the right to do so. [00:17:25] Speaker 03: But remember... Why? [00:17:26] Speaker 04: You can stipulate that it won't terminate. [00:17:32] Speaker 03: We still have a whole trial to go through on that, Your Honor. [00:17:36] Speaker 03: Why? [00:17:37] Speaker 03: Why? [00:17:38] Speaker 03: Why? [00:17:40] Speaker 03: Your client could do that today in court. [00:17:43] Speaker 03: If we stipulate that we're not going to terminate, then we could end up in exactly the same position that we've ended up before. [00:17:52] Speaker 03: The whole reason we sue for breach of contract is because they don't deliver the supply. [00:17:58] Speaker 03: We depend on Altair. [00:18:00] Speaker 03: We did not choose this fight. [00:18:01] Speaker 03: We depend on Altair. [00:18:02] Speaker 03: We don't need the product. [00:18:04] Speaker 03: You didn't choose the fight. [00:18:04] Speaker 03: You got a patent on their product. [00:18:07] Speaker 03: Your Honor, with respect, that misstates the facts. [00:18:13] Speaker 04: Sure doesn't look like that. [00:18:14] Speaker 04: It exactly states the facts. [00:18:17] Speaker 03: Okay, so if we assume that this case is about a product, you know, our phenol efferent has been out on the market for a long time, but that's not what this claim is directed to. [00:18:29] Speaker 03: This claim is directed to a method, a method of use, and the method of use requires [00:18:35] Speaker 03: a chiral purity at the time of administration. [00:18:39] Speaker 03: And that's a key difference. [00:18:40] Speaker 04: And that is... Did the client use their testing methods before the FDA? [00:18:45] Speaker 03: The client did pass through methods that they gave to the FDA, yes. [00:18:50] Speaker 04: So they relied on those methods. [00:18:52] Speaker 04: Is that true? [00:18:55] Speaker 03: It is true that they relied on their data to provide to the FDA. [00:19:00] Speaker 03: But remember, two very important differences go with that. [00:19:06] Speaker 03: In passing it through, we had no reason to question it because they were the ones doing the test. [00:19:11] Speaker 03: It's actually represented to the FDA that they're tasked. [00:19:15] Speaker 03: The second thing is what they were given to the FDA to prove was identity. [00:19:20] Speaker 03: If you look at the report, it says it's an identity report, not a purity report. [00:19:26] Speaker 03: And so yes, if you do the test the way they said they did it, it identifies that our phenylephrine is present. [00:19:33] Speaker 03: No argument on that. [00:19:34] Speaker 03: but it doesn't meet the protocol for purity. [00:19:38] Speaker 03: And in fact, I'd love to talk about the judicial estoppel, because I actually think it works directly against them. [00:19:45] Speaker 03: But it is important to remember, we're not saying these tests don't work. [00:19:50] Speaker 03: You can do these tests correctly. [00:19:52] Speaker 03: The problem is they have to prove that they did these tests correctly. [00:19:56] Speaker 03: They did all of these tests in-house. [00:20:01] Speaker 03: An example would be a bathroom scale. [00:20:02] Speaker 03: You step on the bathroom scale. [00:20:06] Speaker 03: You asked the FDA to rely on. [00:20:09] Speaker 03: When the FDA asked us for data, we went to the people who are actually producing the data and said, give us the data. [00:20:15] Speaker 03: We passed it through. [00:20:17] Speaker 03: OK. [00:20:18] Speaker 03: If you want to talk about judicial estoppel, typically judicial estoppel. [00:20:22] Speaker 04: No, I don't want to talk about judicial estoppel. [00:20:24] Speaker 04: I want to talk about the facts of the case. [00:20:27] Speaker 04: And the facts of the case cut your throat, not just against you. [00:20:32] Speaker 03: I'm sorry you feel that way. [00:20:34] Speaker 03: I do. [00:20:34] Speaker 03: OK. [00:20:35] Speaker 03: So think about what they told the FDA. [00:20:38] Speaker 03: The FDA said, give us some data. [00:20:41] Speaker 03: We provided pass-through data. [00:20:43] Speaker 03: Here, they're trying to use the test for a different purpose. [00:20:48] Speaker 03: They are trying to use it to prove purity, whereas the test itself, if you look at the document, says it's an identity test. [00:20:55] Speaker 00: But don't you think it's true that they would be surprised by the fact that the very people who asked them for the test data and who submitted the test data to the FDA would then turn around and say that test data is unreliable? [00:21:10] Speaker 03: Again, this is different from a typical judicial estoppel where we take a position and then we change our position. [00:21:16] Speaker 00: I'm not talking about judicial estoppel right now. [00:21:18] Speaker 00: I'm talking about whether or not it's fair to say that they were really surprised by the position that you took. [00:21:25] Speaker 00: in the PGR? [00:21:26] Speaker 03: No, no. [00:21:27] Speaker 03: And the board, again, let's focus. [00:21:29] Speaker 03: What's before the court is whether the board made a mistake. [00:21:32] Speaker 03: The board specifically addressed this point, very specifically addressed this point. [00:21:36] Speaker 00: Well, the board said it's not judicial estoppel, but they didn't look at the bigger picture. [00:21:41] Speaker 03: The board actually looked at exactly the question in front of them. [00:21:44] Speaker 03: They basically said, even if the patent owner does nothing, which is the same. [00:21:50] Speaker 03: Remember, the burden's all on them. [00:21:52] Speaker 03: If the patent owner does nothing, [00:21:56] Speaker 03: They still have to prove their prima facie case. [00:21:58] Speaker 03: And they said, you didn't do that. [00:22:00] Speaker 00: But what I'm saying is that when then you look to see whether or not it was an abuse of discretion not to allow a reply, the APA allows replies. [00:22:11] Speaker 00: The patent office, yes, often rejects replies. [00:22:15] Speaker 00: But just because you have discretion to reject a reply doesn't mean you can't abuse that discretion in appropriate circumstances. [00:22:22] Speaker 03: I agree, Your Honor. [00:22:24] Speaker 03: What the APA requires is the opportunity to put in a rebuttal evidence. [00:22:28] Speaker 03: It doesn't say that the board has to accept it at any time. [00:22:32] Speaker 03: And it doesn't say that it has to accept evidence that's outside the scope. [00:22:35] Speaker 00: This is outside the scope. [00:22:36] Speaker 00: But the right to exercise discretion goes hand in hand with the notion that that discretion can be abused, right? [00:22:43] Speaker 03: Right. [00:22:44] Speaker 03: The problem on all of these stems from the petition. [00:22:47] Speaker 03: In fact, I thought it was startling in their opening brief that they say, [00:22:51] Speaker 03: We know that the institution decision was wrong, and yet we let it go until the end. [00:22:59] Speaker 03: They even recognized that they had an opportunity to put in supplemental evidence to fix that problem. [00:23:07] Speaker 03: So first of all, you have to assume. [00:23:09] Speaker 03: They don't give you evidence. [00:23:10] Speaker 03: You have to assume some sort of evil state of mind that we actually knew what their case was. [00:23:16] Speaker 03: And I'll never have to assume that. [00:23:20] Speaker 03: Well, because they put in a case where they tell the board, they give several disconnected statements about what they're doing on the HPLC data. [00:23:31] Speaker 03: They themselves tell the board that validation is important, but the only time they say their method is validated is in an unsupported attorney's statement in the petition. [00:23:42] Speaker 03: The only time they talk about validation, they point to the USP standards. [00:23:47] Speaker 03: So the board made the generous assumption, piecing all of this together, that the USP standards were being used. [00:23:53] Speaker 03: They tried to say we misled the board. [00:23:56] Speaker 03: We were reading the same thing the board was. [00:23:59] Speaker 00: When you sought the patent and you claimed that chiral purity, what testing methods did you use to make sure that you properly had the invention? [00:24:14] Speaker 03: Again, we have no [00:24:15] Speaker 03: problem with the test that it's possible to do the test correctly. [00:24:19] Speaker 03: Yes, we use very similar tests because that's how you prove it. [00:24:22] Speaker 03: You use the same test, right? [00:24:24] Speaker 03: Well, that's an issue in dispute because they don't give the protocols in the petition. [00:24:31] Speaker 00: So no, it's not... You did testing separate and independent from the testing that they had given you? [00:24:39] Speaker 00: And what you're saying, but you did the same test methodology. [00:24:43] Speaker 03: Same general methodology, yes. [00:24:45] Speaker 03: Because again, it's not that the test doesn't work. [00:24:47] Speaker 03: It's just like a bathroom scale will work. [00:24:49] Speaker 03: But if you don't zero it, you'll get the wrong result. [00:24:53] Speaker 03: And you know, scales can fail, so it's good to test it against the known weight periodically. [00:24:58] Speaker 03: They have the burden of proof. [00:25:00] Speaker 03: They're the ones. [00:25:01] Speaker 03: In their opening in Mr. Sawaya's declaration, his first declaration, [00:25:09] Speaker 03: even though he didn't qualify as an expert, he makes a big point that validation is important. [00:25:14] Speaker 03: If you don't validate it, it doesn't count. [00:25:17] Speaker 03: The only thing they say about validation has no evidentiary support in the petition. [00:25:23] Speaker 03: Am I pronouncing it right? [00:25:26] Speaker 03: Torzhan? [00:25:27] Speaker 03: I say Torzhan, Your Honor. [00:25:28] Speaker 03: How do you say it? [00:25:30] Speaker 02: The CZ is a TS, Torzhan. [00:25:32] Speaker 02: OK, Torzhan. [00:25:33] Speaker 02: All right. [00:25:33] Speaker 02: I want to make sure I had that right. [00:25:35] Speaker 02: Two questions. [00:25:38] Speaker 02: What is your response to the question that I asked Mr. Countryman about a waiting or suspension of proceedings, waiting to see what the district court in Brooklyn does on this contract case? [00:25:54] Speaker 02: Because that would, I think we can agree, without saying which way it would go, affect how one looks, possibly affect how one looks at the standing issue. [00:26:04] Speaker 03: I think it could. [00:26:05] Speaker 03: There's still assumptions that get built in, but it could affect that. [00:26:09] Speaker 03: I guess my concern would be that they would sort of be putting the thumb on the scale at that point, right? [00:26:13] Speaker 03: Because they had an obligation to establish jurisdiction at the time they filed. [00:26:20] Speaker 03: If that is the only way they have jurisdiction, essentially that conceits that they didn't at the time. [00:26:26] Speaker 03: So while I suspect that the court has the discretion to do that, I [00:26:33] Speaker 03: I'm not even sure about that, but it certainly seems like the court would be actively taking a position. [00:26:40] Speaker 02: Second question I have is this. [00:26:45] Speaker 02: Leaving aside the fact that the patent is out there, what is it in the contract that's in dispute that bars Altair from selling its product that it manufactures to anybody else? [00:27:03] Speaker 03: There are exclusivity provisions, is my understanding of the contract. [00:27:07] Speaker 02: I saw exclusivity provisions, but I didn't necessarily, maybe I'm not reading it correctly, but I didn't see anything in there. [00:27:16] Speaker 02: There is exclusivity, so you'll sell, you have the exclusive contract with us, Paragon, but you're saying the provisions in the contract operate to bar [00:27:30] Speaker 02: alter from selling to anyone else besides Paragon, leaving aside a possible patent infringement issue. [00:27:38] Speaker 03: Yes, Your Honor, that's our understanding. [00:27:40] Speaker 02: That's your contention? [00:27:43] Speaker 00: Yes. [00:27:46] Speaker 00: I understand the 256 issue is not before us, but assuming that your patent would read on their product, a product that they had been distributing and the details of which they gave to you, [00:27:59] Speaker 00: How could you possibly be listed as the sole inventors? [00:28:04] Speaker 03: Let me unpack that question a little bit. [00:28:06] Speaker 03: I do actually think the 256 question is an interesting one. [00:28:10] Speaker 03: But the claim is not to a product. [00:28:15] Speaker 03: It is to a method of administering. [00:28:21] Speaker 03: And the administration has to have chiral purity at a certain point. [00:28:25] Speaker 03: They have argued very, very clearly [00:28:28] Speaker 03: they don't even think a problem exists, much less that we solved it. [00:28:33] Speaker 03: So one of the things an inventor has to do is have conception of the invention. [00:28:39] Speaker 03: They deny that an invention even exists. [00:28:41] Speaker 03: It's hard to see how they could see an inventor, even as they say no invention exists. [00:28:50] Speaker 03: Patent Office clearly disagreed with them. [00:28:52] Speaker 03: The invention is taking the steps to make sure that at [00:28:57] Speaker 03: point of administration you get chiral purity. [00:29:00] Speaker 03: The reason for this is because we were the first ones to realize that a degradation product is not simply just an inactive ingredient, but is actually a problem in the system. [00:29:13] Speaker 03: So we're the ones who identified that at the time of administration, not at the time of manufacturing, not at some indeterminate point in between, but at the time of administration, you have to have a chiral purity level. [00:29:26] Speaker 03: And that's the basis of the patent. [00:29:28] Speaker 03: That's what the clinch say. [00:29:31] Speaker 03: If you have chiral purity below that level, you're not infringing. [00:29:35] Speaker 04: It's a different... It was just serendipitous that they had to keep it refrigerated on their box. [00:29:41] Speaker 03: No, there are lots of reasons why you might want to keep it refrigerated. [00:29:44] Speaker 03: However, I will point out this is another glaring inconsistency throughout their case. [00:29:50] Speaker 03: One of the problems with a lot of their data is they rely on samples that were never refrigerated. [00:29:56] Speaker 03: So their position throughout has been, from the petition all the way through the oral argument at the board, has been temperature doesn't matter. [00:30:03] Speaker 03: So if temperature doesn't matter, there's no guarantee that any of the handling on the product has been correct. [00:30:12] Speaker 03: So the whole point of their case is essentially an inherency case, that you will necessarily and always have this purity level. [00:30:21] Speaker 03: And yet they've simultaneously told you that there's absolutely no reason, in their opinion, [00:30:26] Speaker 03: why you have to handle it that way. [00:30:28] Speaker 03: So what the patent says is, we've shown you that if you keep it cold, you can maintain this purity level. [00:30:35] Speaker 03: They've told you that temperature is absolutely not even an issue. [00:30:39] Speaker 03: And that's why you can rely on some of their test data. [00:30:41] Speaker 03: That's why they don't have to tell you whether their standard was properly handled. [00:30:47] Speaker 03: They want you to give them both sides of the assumption. [00:30:51] Speaker 03: And that's just not possible. [00:30:53] Speaker 03: I mean, technically, either temperature matters or it doesn't. [00:30:56] Speaker 03: And they still aren't making a decision. [00:30:59] Speaker 03: Frankly, an appeals court argument is not the time to be pleading in the alternative. [00:31:04] Speaker 03: And that's exactly what you're getting here. [00:31:07] Speaker 03: I would also point out, though, just in terms of the standing issue, one of the issues in the declaratory judgment action also is whether they have an inventorship. [00:31:15] Speaker 03: And of course, if they prevail on that point, that would also give them rice, regardless of whether or not [00:31:23] Speaker 03: even if the patent is valid. [00:31:26] Speaker 03: So that's an additional consideration. [00:31:30] Speaker 00: Anything else? [00:31:32] Speaker 00: All right, thank you. [00:31:36] Speaker 00: You have three minutes. [00:31:40] Speaker 02: Thank you. [00:31:41] Speaker 02: Mr. Countryman, sorry to jump right on you like this, but as we know, time is fleeting here. [00:31:47] Speaker 02: I have two questions, please. [00:31:50] Speaker 02: Posing counsel has said that the [00:31:54] Speaker 02: the contract bars Altair from selling its product to anyone else. [00:32:02] Speaker 02: Is that correct? [00:32:04] Speaker 01: I think we agree with that, Your Honor. [00:32:06] Speaker 01: Second question. [00:32:09] Speaker 01: We don't agree that it would bar us from filing an ANDA, and so that's a distinction of support. [00:32:15] Speaker 02: The other question that I have is, do you agree that if [00:32:23] Speaker 02: Assume for the moment the 623 patent is valid. [00:32:29] Speaker 02: You go out and sell your product. [00:32:34] Speaker 02: Is it your position that you are then infringing, your client is then infringing the patent? [00:32:38] Speaker 01: Yes, that's our position, because it's the same product we've always sold. [00:32:42] Speaker 00: We say the prior art was covered by the patent, and so if we were to sell it... What's your response to the fact that they claim that this is a method patent and not a product? [00:32:51] Speaker 01: So it is a method, but [00:32:53] Speaker 01: Well, our prior products practiced that method, because they were labeled to, say, refrigerate them, and they had the chiral purity limitations. [00:33:02] Speaker 01: As the data, the HPLC data and the optical rotation data that Paragon submitted to the FDA to get approval showed. [00:33:10] Speaker 01: So yes, it's a method claim. [00:33:11] Speaker 01: But our prior products practiced that method, because all the method was was the product plus chiral purity, which the data showed, plus refrigeration, which our product was labeled to have. [00:33:21] Speaker 00: Meaning the products you sold [00:33:24] Speaker 00: necessarily resulted in your customers practicing the method. [00:33:29] Speaker 00: Correct, Your Honor. [00:33:29] Speaker 00: Or you practicing the method during testing. [00:33:31] Speaker 02: Correct. [00:33:33] Speaker 02: So you would be on the hook, in your view, I guess, for, say, contributory infringement or induced infringement. [00:33:39] Speaker 01: Correct. [00:33:40] Speaker 02: Not direct infringement. [00:33:41] Speaker 01: Correct, Your Honor. [00:33:43] Speaker 01: Correct. [00:33:44] Speaker 01: And certainly, I think the filing of the Ando would trigger a lawsuit. [00:33:48] Speaker 01: Oh, yeah, leaving that aside for the moment. [00:33:50] Speaker 01: Because we would have to file the Ando if we wanted to keep selling the product. [00:33:53] Speaker 01: Just a couple of points. [00:33:55] Speaker 01: First, the distinction Council is making on purity and identity. [00:33:59] Speaker 01: The FDA, at Appendix 773, asked them to consider adding a chiral purity test to the specification, and they responded by submitting the optical rotation data we gave them. [00:34:12] Speaker 01: So this purity versus identity distinction has no basis, because they told the FDA that the test measured purity. [00:34:21] Speaker 01: institution, the board thought the optical rotation data was sufficient in institution, and it was only after Paragon argued against it, contrary to what they told the FDA, the board rejected it. [00:34:33] Speaker 01: And so here, they should have been prevented from doing that, and had they done that, the board necessarily would have... But at the least, you wanted to meet your affidavit. [00:34:42] Speaker 01: Agreed, Your Honor. [00:34:43] Speaker 01: And finally, if I could just say one thing. [00:34:46] Speaker 01: One brief thing, you're out of time. [00:34:49] Speaker 01: Testing that we did use, it is exactly the same as what was in their patent. [00:34:53] Speaker 01: And you can see that by comparing column 11, where it shows the HPLC conditions, with appendix 1509, and column 4, where it talks about the exact same type of optical rotation testing we did here. [00:35:03] Speaker 01: Okay. [00:35:04] Speaker 01: Thank you. [00:35:04] Speaker 01: Thank you.