[00:00:17] Speaker 03:
Okay, the last case before the court, Shire Development LLC versus Mylan Pharmaceuticals, case number 172268.

[00:00:25] Speaker 03:
This is an appeal from a decision from the Middle District of Florida.

[00:00:32] Speaker 03:
District Court, you want Ms.

[00:00:37] Speaker 03:
Murphy four minutes for rebuttal?

[00:00:40] Speaker 03:
Okay, you may proceed.

[00:00:45] Speaker 02:
May it please the court, Elizabeth Murphy, for plaintiff's appellants.

[00:00:49] Speaker 02:
After a four-day bench trial, after presiding over a four-day bench trial, making findings of infringement and entering judgment on that basis, the district court here vacated those findings, reversed the judgment of infringement, and entered a judgment of non-infringement based solely on this court's decision in Watson 2.

[00:01:13] Speaker 03:
But she did have the benefit of this court's decision in Watson 2, right?

[00:01:19] Speaker 02:
That's correct.

[00:01:20] Speaker 02:
However, this court's decision in Watson 2 was not a change in controlling law that justified her reconsideration, her original judgment of infringement.

[00:01:29] Speaker 04:
Maybe the court sort of thought that in the long run it was going to be a loser?

[00:01:36] Speaker 02:
She may have thought that.

[00:01:38] Speaker 02:
It was not proper for her to vacate her own findings and reach a judgment of non-infringement without making findings to support that judgment.

[00:01:46] Speaker 03:
I don't understand that.

[00:01:48] Speaker 03:
She certainly can vacate her own findings if she concludes that they're wrong under the law, right?

[00:01:53] Speaker 02:
She may if she actually does conclude that her factual findings were clearly erroneous.

[00:01:57] Speaker 02:
That didn't happen here.

[00:01:58] Speaker 02:
What happened here was that she found infringement of each element of claims one and three.

[00:02:03] Speaker 02:
She found every limitation met by Milam's tablet.

[00:02:07] Speaker 02:
She based her reversal on the findings of fact that led to the conclusion of non-infringement in a different case.

[00:02:15] Speaker 01:
I'm a little confused while you're talking about findings of fact.

[00:02:18] Speaker 01:
I thought the previous cases were about claimed instruction and concluding as a matter of law what the matrixes should be.

[00:02:27] Speaker 01:
And the findings of infringement here were based upon, at least

[00:02:33] Speaker 01:
I don't know if it was an inferred claim construction or an actual claim construction that's inconsistent with Watson 2.

[00:02:40] Speaker 02:
Well, it's our position that she reversed based on a construction that has no basis in Watson 1 or Watson 2.

[00:02:45] Speaker 02:
Watson 1 holds the correct constructions of interlipophilic matrix and outer hydrophilic matrix.

[00:02:52] Speaker 02:
She applied those constructions to Milam's tablet, and she found claim element 1A literally infringed.

[00:02:57] Speaker 01:
Well, sure, but I mean, then we took up again after the non-infringement finding

[00:03:03] Speaker 01:
post Watson 1 and said, no, that's not a correct reading of our claim construction.

[00:03:08] Speaker 01:
Our claim construction means something different in Watson 2.

[00:03:13] Speaker 01:
It means no lipophilic elements in the hydrophilic matrix and vice versa.

[00:03:19] Speaker 01:
Isn't that what we said in Watson 2?

[00:03:22] Speaker 02:
I don't believe so, Your Honor.

[00:03:23] Speaker 02:
I believe that Watson 2 concluded non-infringement based on findings made by the district court in that case, that an outer hydrophilic matrix

[00:03:31] Speaker 02:
Applying the Watson 1 construction of outer hydrophilic matrix to Watson.

[00:03:35] Speaker 01:
I thought that our findings in Watson 2 rested on the Marcouche limitation and that we then concluded exactly what I said, that there was no, that the different matrices would have no elements of the opposing ingredient.

[00:03:54] Speaker 02:
In reaching that conclusion, I believe that there were still predicate findings in order to

[00:03:58] Speaker 02:
examine whether an unrecited component is unrelated to the invention, you first have to find that the outer hydrophilic matrix consists of unrecited components.

[00:04:07] Speaker 01:
That sounds like the argument where you rejected in Watson, too.

[00:04:11] Speaker 02:
Well, to the extent there is a construction now that the claims state an inner lipophilic volume consisting of substances recited from the same element, 1A list, and an outer hydrophilic volume

[00:04:27] Speaker 02:
consisting of the claim B, claim 1B compounds, we believe that construction is incorrect and a plain misreading of the actual claim.

[00:04:38] Speaker 01:
Sure, I mean that's what you told us in Watson too.

[00:04:40] Speaker 01:
I don't remember if you sought rehearing or certain that, but we disagreed with you.

[00:04:45] Speaker 01:
What are we supposed to do with that?

[00:04:48] Speaker 01:
I mean, we're bound.

[00:04:49] Speaker 01:
I don't understand why the district court did anything wrong here, because I think she saw the writing on the wall, and that even if she didn't reconsider, she was going to get reversed.

[00:05:01] Speaker 02:
Well, I don't think Mylan can test that she applied the Watson 1 constructions of interlipophilic matrix and outer hydrophilic matrix to Mylan's product.

[00:05:11] Speaker 01:
Yes, but then she saw Watson 2, and at least the clarification there, and saw that

[00:05:16] Speaker 01:
The way she had applied Watson 1 was not going to be upheld by this court.

[00:05:20] Speaker 01:
And it's the same exact argument that we heard in Watson 2.

[00:05:26] Speaker 03:
The point of Watson 2 was to say, you're misinterpreting Watson 1.

[00:05:32] Speaker 03:
And Watson 1, we need to clarify that that loophole or that different analysis was not available.

[00:05:40] Speaker 02:
Well, the extent wants to is a clarification.

[00:05:42] Speaker 02:
I believe it's a precedential opinion.

[00:05:44] Speaker 02:
It's a clarification that unrecited components in the context of consisting of language must be unrelated to the invention.

[00:05:54] Speaker 02:
Predicate to that would be a finding of literal violation of either claim element 1A or 1B, which was not found here.

[00:06:01] Speaker 02:
That's the difference in the findings between the two district courts.

[00:06:05] Speaker 02:
In Watson 2, it was found that the outer hydrophilic matrix in Watson's product consisted of unrecited components.

[00:06:12] Speaker 02:
The district court here did not make that finding, and there was no need to consider whether unrecited components would be unrelated to the invention.

[00:06:19] Speaker 03:
But the district court specifically found that whatever findings of fact she had made don't change the analysis.

[00:06:27] Speaker 03:
In fact, that even with those findings of facts that she made before, that after Watson 2, she now realized that the result had to be different.

[00:06:35] Speaker 02:
She relies on the result being different based on a construction that means, and I'm quoting from Appendix 7 of her reconsideration order, that the inner volume cannot contain substances not listed in the claim 1A Marcoosh group.

[00:06:47] Speaker 02:
And the outer volume cannot consist of compounds other than those listed in 1B.

[00:06:56] Speaker 04:
But isn't it... Sorry, go ahead.

[00:06:58] Speaker 04:
Isn't the core purpose of a motion for rehearing to give a

[00:07:03] Speaker 04:
a court an opportunity to deal with, at least one court purpose, to deal with intervening authority so that they don't go ahead and perpetuate a legal error?

[00:07:20] Speaker 02:
Yes, Your Honor, that's correct.

[00:07:21] Speaker 02:
But here, we disagree that Watson 2 affected a change in intervening authority, even assuming that it did.

[00:07:27] Speaker 02:
I'll assume for purposes of argument.

[00:07:29] Speaker 02:
We sort of seem to think so.

[00:07:31] Speaker 02:
Assuming that it did affect a change in law,

[00:07:34] Speaker 02:
It's unclear which factual findings support her ultimate judgment of non-infringement.

[00:07:42] Speaker 02:
In her reconsideration order, she purports to vacate all of her findings and her factual.

[00:07:47] Speaker 01:
Is there any real dispute that the components in Mylan's product are exactly the same components that made Watson's product not infringing?

[00:08:00] Speaker 01:
It's the fact that there are

[00:08:02] Speaker 01:
hydrophilic elements in the lipophilic matrix and vice versa.

[00:08:07] Speaker 01:
I mean, her own opinion when she found infringement said, recognize that that was the case, but that that wasn't sufficient to avoid an infringement finding.

[00:08:19] Speaker 01:
That's the argument

[00:08:21] Speaker 01:
that was made to us in Watson 2, that's the argument we rejected and said that if it was a lipophilic element in the hydrophilic matrix, it was naturally related to the invention and therefore caused it to be non-infringing.

[00:08:36] Speaker 01:
Are you suggesting that there's some other kind of findings she can make that would make these still infringing when it's clear that their product has

[00:08:46] Speaker 01:
lipophilic ingredients in the hydrophilic matrix, which should make it non-infringing.

[00:08:53] Speaker 02:
Well, I think I disagree that her findings show that the outer hydrophilic matrix found to infringe in myelin's product contains lipophilic ingredients.

[00:09:03] Speaker 02:
I believe the outer volume contains lipophilic ingredients.

[00:09:07] Speaker 01:
But the question of whether... Well, if you're trying to argue a difference between the volume and the matrix, I think that's an argument that we drafted in Watson 1.

[00:09:18] Speaker 02:
Well, I think in Watson 1, it was stated that the presence at the end of the opinion was stated that the presence of a hydrophilic excipient that may be by itself considered hydrophilic in an inner volume, for example, is a question for the fact finder.

[00:09:34] Speaker 02:
We think based on Watson 1 that that fact was a factual determination that was resolved differently by the court here.

[00:09:47] Speaker 02:
It was resolved in finding that claim element 1A was literally met.

[00:09:51] Speaker 02:
All the limitations in a claim element 1A were literally met.

[00:09:55] Speaker 02:
And I'm referring to specifically the requirements under the correct construction of interlipophilic matrix, as helped by this court.

[00:10:02] Speaker 02:
We're not re-arguing that a distribution of excipients that may be classified as hydrophilic forms a hydrophilic matrix.

[00:10:10] Speaker 02:
We're incorporating this court's requirement in Watson 1 that the matrix itself exhibits those properties.

[00:10:17] Speaker 02:
There's no dispute that Milam's tablet exhibits the properties that are described in the patent at column 3, line 57 to column 4, line 5.

[00:10:28] Speaker 02:
And those are the inner and outer matrix properties.

[00:10:32] Speaker 02:
The factual issue that the district court resolved below was what was responsible for those lipophilic and hydrophilic properties.

[00:10:38] Speaker 02:
She found that the lipophilic properties were due to the presence of a matrix consisting of stearic acid and palmitic acid.

[00:10:45] Speaker 02:
Separately, she found

[00:10:46] Speaker 02:
that the hydrophilic properties were due to a matrix consisting of claim 1B compounds.

[00:10:54] Speaker 02:
We think where that is found, infringement has been established.

[00:10:58] Speaker 02:
And there's no basis to rely on other excipients in the composition to preclude a finding of infringement.

[00:11:09] Speaker 03:
OK, you've got about four and a half minutes left.

[00:11:11] Speaker 03:
Do you want to save it?

[00:11:12] Speaker 02:
I would like to save that for a bottle, please.

[00:11:13] Speaker 03:
Thank you.

[00:11:19] Speaker 00:
Good morning, Your Honors.

[00:11:20] Speaker 00:
May it please the Court.

[00:11:21] Speaker 00:
Deepa Mukherjee for Mylan.

[00:11:22] Speaker 00:
Your Honors, obviously, I take some issue with some of what was presented here today.

[00:11:29] Speaker 00:
And most notably is this notion that in some way, the district court abused its discretion in reconsidering its decision.

[00:11:39] Speaker 00:
The fundamental precept that I think that plaintiffs are still trying to advocate is that the distribution of a singular excipient

[00:11:48] Speaker 00:
is in fact the matrix.

[00:11:50] Speaker 04:
I think your opposing counsel conceded that the core nature of a motion for rehearing for correcting an intervening, an error demonstrated by an intervening legal authority.

[00:12:03] Speaker 00:
Yeah, that's exactly right.

[00:12:06] Speaker 03:
But her point was that she didn't really think it changed the law.

[00:12:10] Speaker 00:
Well, so Judge Honeywell admittedly, even in her reconsideration decision,

[00:12:15] Speaker 00:
said that the posture that she took was similar to that of Judge Middlebrooks' decision in the Watson case.

[00:12:22] Speaker 00:
She outright, I think, stated that.

[00:12:24] Speaker 00:
And so when Judge Middlebrooks' decision was overturned by this court, then that, of course, informed her.

[00:12:33] Speaker 00:
And so the only two pertinent facts that really that the court considered, and I know Shire advocates that the district court borrowed from facts in the Watson case, but that frankly is just not true.

[00:12:46] Speaker 00:
The two facts that she relied upon were one, Judge Hughes, as you noted, that Mylands-ANDA product has stearic and palmitic acid and a undisputably lipophilic excipient in its outer volume and hydrophilic excipients like CMC and SSG in its inner volume.

[00:13:05] Speaker 00:
She took those two facts and she applied them to

[00:13:08] Speaker 00:
And I find it interesting that we're still debating inner volume versus matrix, but she applied that to the holdings of Watson one and two, the compositions of the inner volume and outer volume, i.e.

[00:13:20] Speaker 00:
inner matrix and outer matrix respectively, are further limited by the Marcuse groups.

[00:13:26] Speaker 00:
And so when she found that there was the presence of these violative excipients in the respective matrices, that was the basis of the reconsideration, to conform her decision

[00:13:37] Speaker 00:
more in line with this court's prior precedents.

[00:13:44] Speaker 00:
Your Honor, unless you have any other questions for me.

[00:13:47] Speaker 03:
OK.

[00:13:48] Speaker 03:
Thank you.

[00:13:53] Speaker 02:
Thank you, Your Honor.

[00:13:56] Speaker 02:
So I think this all comes down to whether or not the presence of a lipophilic excipient in an outer volume is by itself preclusive of infringement, whether that's a matter of fact or law.

[00:14:06] Speaker 02:
I would submit based on Watson 1 and the statement that the presence of a hydrophilic excipient in inner volume by itself, whether that precludes infringement is a question for the fact finder.

[00:14:19] Speaker 02:
So I think it's a question of fact, and I think that question of fact was resolved here.

[00:14:24] Speaker 02:
I would just like to quote also from the district court's reconsideration order at Appendix 7, where she characterizes this court's decision in Watson 2.

[00:14:34] Speaker 02:
The Federal Circuit clarified in Watson 2 that the correct construction of the Marcouche group limitations and claim elements 1A and B requires that each volume said to contain the components that satisfy the inner and outer matrix limitations be closed to unrecited elements.

[00:14:50] Speaker 02:
In our view, if you're satisfying each of the inner and outer matrix limitations, which we believe was found here, you don't need to further satisfy anything with respect to a volume, because the claims do not recite a volume.

[00:15:05] Speaker 02:
Claims recite an inner lipophilic matrix consisting of substances selected from a group.

[00:15:09] Speaker 02:
The Marcoosh group, the claim 1A Marcoosh group substances are the matrix by operation of the claim language.

[00:15:17] Speaker 02:
The claim 1B Marcoosh group compounds are the outer hydrophilic matrix.

[00:15:22] Speaker 02:
That's what the claim language says.

[00:15:23] Speaker 01:
If we agree with this argument, wouldn't we have affirmed the District Court's decision in Watson 2 instead of reversed it?

[00:15:34] Speaker 01:
I don't believe so.

[00:15:36] Speaker 01:
You keep talking about differing factual determinations, but the facts aren't different in these two cases.

[00:15:41] Speaker 01:
It's the conclusions to be drawn from those facts.

[00:15:46] Speaker 02:
Well, the fact... Yeah, that's correct, but I don't think that the factual... I mean, there's no doubt.

[00:15:53] Speaker 01:
Your friend on the other side just stood up and said, I think, asserted that their product has, in the

[00:16:02] Speaker 01:
I get mixed up the outer and inner, forgive me, but whatever one is supposed to be lipophilic, it has hydrophilic substances and vice versa for the other one.

[00:16:13] Speaker 01:
He said that, I think that's true.

[00:16:15] Speaker 01:
Reading the district court's opinion here, she relied on that or she noted that in her original opinion.

[00:16:23] Speaker 01:
That's not a disputed fact, is it?

[00:16:25] Speaker 02:
It's not disputed that there is.

[00:16:29] Speaker 01:
And those are the same facts that we had in Watson too, aren't they?

[00:16:35] Speaker 01:
And from that, we found that the presence of hydrophilic excipient and the like philic matrix violated the Marcouche limitation, and therefore we reversed.

[00:16:49] Speaker 02:
Even assuming that's correct, even assuming that was your construction, I believe that the district court's reconsideration order and judgment of non-infringement reached thereupon

[00:16:59] Speaker 02:
is not supported by findings made in her own that she found.

[00:17:03] Speaker 01:
So you think she should have just let it go and have Mylan appeal and us reverse on the same reasoning again?

[00:17:10] Speaker 02:
Well, assume if there was a change in law, then I think she was obligated to make new findings after that change in law to support her judgment of non-imprisonment.

[00:17:18] Speaker 02:
That didn't happen here.

[00:17:19] Speaker 02:
What happened here was she made findings.

[00:17:21] Speaker 01:
But Watson, too, didn't rely on specific factual findings.

[00:17:27] Speaker 01:
The facts are the same in your case as in Watson 2.

[00:17:32] Speaker 02:
Assuming Watson 2 is a new construction, I still think that it's unclear which portions of her findings she's relying on.

[00:17:38] Speaker 01:
If you take her reconsideration order at face value... Let's just set her reconsideration order aside.

[00:17:45] Speaker 01:
Suppose she hadn't and we were here on a direct appeal from you prevailing.

[00:17:50] Speaker 01:
What logic would you have us to distinguish this case from Watson 2?

[00:17:56] Speaker 02:
The fact that I don't think the findings in this case support a literal violation of either claim.

[00:18:02] Speaker 01:
Even though you agree that there are hydrophilic excipients in the lipophilic matrix and vice versa.

[00:18:09] Speaker 02:
I disagree that that was found here.

[00:18:11] Speaker 02:
I think that what was found here is that there is an... How do you disagree?

[00:18:15] Speaker 01:
They either are there or they aren't there.

[00:18:17] Speaker 01:
Well, I think it requires a decision.

[00:18:19] Speaker 01:
They may not.

[00:18:21] Speaker 01:
They may not ultimately detract from the lipophilic.

[00:18:25] Speaker 01:
The hydrophilic excipients may not detract from the lipophilic nature, but they're there.

[00:18:31] Speaker 02:
They're there, but whether or not they detract and whether is a question of fact, according to this court's opinion in Watson 1.

[00:18:38] Speaker 01:
I think that if you have... But not in Watson 2.

[00:18:42] Speaker 02:
Well, I think that there it was found that the outer hydrophilic matrix consisted of unrecited components.

[00:18:47] Speaker 02:
I disagree that that was found here.

[00:18:49] Speaker 02:
the district court and on that basis I would we request reinstatement of the original judgment of infringement.

[00:18:55] Speaker 02:
Thank you.

[00:18:56] Speaker 03:
Okay case will be submitted.

[00:18:59] Speaker 03:
Court is adjourned.