Opinion
Case Nos. 98-7164-CIV-JORDAN 00-7057-CIV-JORDAN
March 24, 2003
Steven J. Peretz, Kluger, Peretz, Kaplan Berlin, P.A., Miami, FL, and Liam O'Grady, Finnegan, Henderson, Farabow, Garrett Dunner, LLP, Washington, DC; Attorneys for Plaintiff.
Gerald Houlihan, Esq., Houlihan Partners, P.A., Miami, FL, and James Costigan, Esq., and Martin Endres, Esq., New York, NY; Attorneys for Defendant.
ORDER ON POST TRIAL MOTIONS
Elan Corporation sued Andrx Pharmaceuticals for patent infringement under 35 U.S.C. § 271 (e) and 281-283. Andrx answered and interposed affirmative defenses and counterclaims, including a claim that Elan's patent was invalid. After a bench trial, I found that Elan's patent for a once-daily naproxen sodium tablet was invalid because Elan violated the on-sale bar. See 35 U.S.C. § 102 (b). Following entry of judgment in favor of Andrx, Elan filed a motion for reconsideration and a motion to amend and supplement the findings of fact. Andrx filed a motion to amend the judgment. For the reasons set forth below, Elan's motion for reconsideration [D.E. 240-1] and motion to supplement [D.E. 240-2] are DENIED. Andrx's motion to amend the judgment [D.E. 239] is DENIED.
I. BACKGROUND
The relevant facts of this case are set out in full detail in the prior findings of fact and conclusions of law [D.E. 237]. Elan is an Irish corporation engaged in the business of researching and developing new pharmaceutical products which it sells throughout the world. Andrx is a Florida corporation engaged in the business of developing generic equivalents to brand-name pharmaceutical products.
On March 29, 1994, Elan filed a New Drug Application with the Food and Drug Administration for its once-daily naproxen sodium tablet Naprelan® Prior to that filing, on August 7, 1987, Kenneth B. McVey, Executive Vice-President for Business Planning and Commercial Development at Elan, sent a letter to K. Michael Forrest, Vice President of Lederle Laboratories. I found that this letter constituted an offer for sale of the once-daily naproxen sodium tablet, and that Elan's patent was, therefore, invalid under the on-sale bar as codified in 35 U.S.C. § 102 (b).
II. ANALYSIS A. ELAN'S MOTION FOR RECONSIDERATION
Elan raises several arguments in its motion for reconsideration. First, Elan argues that the Lederle letter was not in dispute with respect to the on-sale bar, and the my ruling that it constituted an offer for sale was, therefore, erroneous. Second, Elan suggests that its post-trial submission of Kenneth McVey's declaration establishes that the Lederle letter was not an offer for sale. Third, it contends that Andrx failed to establish by clear and convincing evidence that the subject of the Lederle letter embodied each of the claims of the patent. Fourth, Elan argues that the finding that the product was "ready for patenting" at the time of the letter is erroneous. Finally, Elan argues that I incorrectly applied the defunct "totality of the circumstances" test in finding that Elan had offered the product for sale. I will discuss each of these arguments in turn.
Some of Elan's contentions stem from the fact that there was a change in the relevant law after trial, but prior to the issuance of the findings of fact and conclusions of law. The Federal Circuit, in Group One, Ltd. v. Hallmark Cards, Inc., 254 F.3d 1041, 1046-47 (Fed. Cir. 2001) — a decision issued after the trial in this case — ruled that application of the on-sale bar requires a formal offer under contract law principles. At trial, the parties had geared their strategy toward the then existing Federal Circuit precedent. At the December 19, 2002, hearing, I offered the parties the option of reopening the record and presenting evidence specifically related to the Lederle letter under the Group One test. Counsel for both Elan and Andrx declined this option. Based on counsels' representations at that hearing, Elan's motion to supplement [D.E. 240-2] is DENIED except as to Mr. McVey's declaration.
1. THE LEDERLE LETTER WAS IN DISPUTE
Elan argues that I erred in finding that the Lederle letter constituted an offer for sale because the letter was not in dispute. This argument is not well taken. The parties generally stated that an issue to be litigated at trial was whether the product was on-sale in the United States before January 14, 1990. See Joint Pretrial Stipulation, Exh. 4 at 5 [D.E. 79]. This statement of the issue did not limit the analysis to any specific documents, and certainly did not exclude consideration of the Lederle letter. Additionally, the parties' actions indicated that the letter was in dispute. First, the letter was listed on the parties' pretrial exhibit list. Second, Elan's proposed findings argued, in detail, that the letter did not constitute an offer for sale. See Elan's Proposed Findings at ¶¶ 180-191 [D.E. 213]. Third, both parties' experts testified regarding the letter and its effect. See Trial Transcript at 1237-39, 1770-72.
Despite this wealth of information in the record, Elan contends that the letter's status as an offer for sale was not in dispute because both parties' experts testified that it merely involved licensing possibilities and did not deal with any sort of offer. I am not, however, bound by the parties' characterization of the evidence. See, e.g., Murphy v. City of Flagler Beach, 846 F.2d 1306, 1310 (11th Cir. 1988) (holding that a factfinder is free to reject even non-controverted evidence); Burston v. Caldwell, 506 F.2d 24, 26 (5th Cir. 1975) (court is not required to accept testimony, even if uncontested); Goodwin v. Smith, 439 F.2d 1180, 1182 (5th Cir. 1971) (same).
I note also that the experts' characterizations of the letter were not rendered under the now applicable Group One standard.
As a factfinder, I found that the Lederle letter, viewed objectively, was an offer for sale. This finding need not be in line with the characterization of the letter by the parties or their experts. Accordingly, I reject Elan's argument that the letter was not in dispute.
2. THE LED ERLE LETTER WAS AN OFFER FOR SALE
Elan attached the declaration of Mr. McVey to its post-trial motion. Mr. McVey was an Executive Vice-President of Elan in 1987, and he authored the disputed letter to Michael Forrest at Lederle Laboratories. In his declaration, Mr. McVey discusses at length his view that the letter was not, and was not intended to be, an offer for sale. He characterizes the letter as a solicitation for Lederle to become Elan's partner in the development of the naproxen tablet. See Motion for Reconsideration, Exh. A at ¶ 23 [D.E. 240].
Mr. McVey's declaration is certainly relevant. He authored the letter and his intentions in writing it relate to the proper interpretation of its contents. His testimony, however, is not dispositive. As discussed at length in the prior order, the determination of whether an offer has been made is an objective one under Group One. Although Mr. McVey's testimony is relevant to this determination, his characterization of the letter does not mandate a finding that it was not an offer, and I do not agree with that characterization.
Elan also pointed to the deposition testimony of K. Michael Forrest, the recipient of the letter from Mr. McVey. Mr. Forrest testified that, although he did not remember receiving the letter, see Deposition of K. Michael Forrest at 14 [D.E. 267], he would have forwarded it to the product assessment/licensing department of Lederle. See id. at 17. While Mr. Forrest's reaction to the letter may be relevant to a determination of whether the letter constituted an offer, his testimony that he does not recall receiving the letter indicates that he is merely offering a speculative opinion.
In short, I have considered Mr. McVey's declaration and Mr. Forrest's testimony. This evidence does not, however, change my finding that the Lederle letter constituted an offer for sale under Group One and its progeny.
I have also considered Federal Circuit cases decided after entry of the findings of fact and conclusions of law. I find that those cases applying the Group One test, and holding that there was no commercial offer for sale, are distinguishable. See Minnesota Mining Mfg. Co. v. Chemque, Inc., 303 F.3d 1294, 1308 (Fed. Cir. 2002) (no offer for sale where holder of patent sent samples of the product to various companies, without providing any other terms); In re Kollar, 286 F.3d 1326, 1330-31 (Fed. Cir. 2002) (no offer for sale where the parties' agreement dealt with research and development and right under a patent). Although I understand that Elan disagrees with my view, I do not think the Lederle letter is merely "the offer of a license under a patent and a description of the invention, without more." Id. at 1332.
3. ELAN WAIVED ITS ARGUMENT THAT THE SUBJECT OF THE LEDERLE LETTER DID NOT EMBODY THE PATENT CLAIMS
Elan contends that Andrx failed to show by clear and convincing evidence that the subject of the Lederle letter embodied each of the claims of the completed product. In order to show that a patent is invalid under the on-sale bar, the party asserting invalidity must demonstrate by clear and convincing evidence that (1) there was a definite sale or offer to sell more than one year before the application for the subject patent, and (2) that the subject matter of the sale or offer to sell fully anticipated the claimed invention. See Group One, 254 F.3d at 1045-46.Elan argues that Andrx failed to introduce any evidence relating to the second prong of this test, and therefore failed to carry its substantial burden. Elan, however, through its actions before, during, and after trial, waived any such argument.
Where the matter is in dispute, a district court has an obligation to determine whether the claims of the patent are met by the product whose sale or offer for sale triggers § 102(b)'s on-sale bar. See Allen Engineering Corp. v. Bartell Indus., Inc., 299 F.3d 1336, 1345-46 (Fed. Cir. 2002); Dana Corp. v. American Axle Mfg., Inc., 279 F.3d 1372, 1375 (Fed. Cir. 2002). In the present case, however, the matter was not in dispute.
I acknowledge that the parties believed that claim construction relating to the on-sale bar was generally an issue. See Joint Pretrial Stipulation, Exh. 4 at 5 (stating that an issue to be litigated was "[w]hether Andrx has proved by clear and convincing evidence that a formulation meeting each and every limitation of claims 1, 3, 5, 6, 8, and 11-17 of the `320 patent was on sale in the United States before January 14, 1990"). This fact alone, however, does not overcome Elan's other actions showing that it waived this argument. Indeed, while Elan strongly argued that the Lederle letter did not constitute an offer for sale, it never contested that the subject of that letter fully anticipated the claimed invention.
To the extent that the pretrial stipulation indicated that claim construction was an issue to be litigated as to the Lederle letter, I hold that Elan's subsequent actions operated as an implied consent to amend the stipulation to conform to the proceedings at trial. Cf Trans-World Mfg. Corp. v. Al Nyman Sons, Inc., 750 F.2d 1552, 1565-66 (Fed. Cir. 1984) (trial court has discretion to allow an amendment of pleadings to conform to actual issues litigated at trial); Sun-Fun Products, Inc. v. Suntan Research Dev., Inc., 656 F.2d 186, 192 n. 7 (5th Cir. 1981) (holding that "defendant's agreement to the stipulation and failure to object to evidence or the issues contained therein is an implied consent to an amendment to conform to the evidence"); Nat G. Harrison Overseas Corp. v. American Tug Titan, 516 F.2d 89, 95-96 (5th Cir. 1975) (party's actions at trial may constitute explicit consent to informal amendment of pleadings).
In their joint pretrial stipulation, the parties stated that "[a]lthough the Elan formulation referenced in the SCRIP announcement fell within the scope of each of claims 1-17 of the `320 patent, the announcement did not itself provide or suggest any information regarding the composition of the Elan formulation." Id. at 10, ¶ 29. The SCRIP announcement appeared on June 22, 1988, less than 11 months after Mr. McVey wrote the Lederle letter. Although the statement in the pretrial stipulation does not itself indicate that the subject of the Lederle letter also fell within the scope of the claims of the `320 patent, it does provide a background for Elan's waiver of its claim construction argument.
Elan's expert, Vincent Colainni, testified on the on-sale bar issue. He discussed various exhibits and opined that they should not be considered offers for sale. Mr. Colainni testified specifically about the Lederle letter. See Trial Transcript at 1770-72. At no point, however, did he indicate that the subject of that letter was not the same product as the completed invention. Indeed, he was never asked a question relating to that issue in regard to any of the documents that could be considered an offer for sale. Additionally, Elan's other experts did not testify on this issue, and it was never mentioned in closing arguments.
By referring to the testimony of Elan's witnesses, I do not mean to shift the burden of proof from Andrx to Elan. Instead, I cite this testimony only to show that Elan never made an issue about whether the product in the Lederle letter anticipated the claims of the `320 patent.
Elan's waiver of this argument is also demonstrated by its post-trial filings. In its proposed findings of fact and conclusions of law, Elan never discussed claim construction in relation to the on-sale bar. See Elan's Proposed Findings at ¶¶ 96-239. The proposed findings lay out in detail how each of the contested documents do not constitute offers for sale, yet nowhere does Elan ever propose that the subjects of those documents are not the same as the claimed invention. See Id. at ¶¶ 130-222. Specifically, the discussion of the Lederle letter in the proposed findings never raises this argument. See id. at ¶¶ 180-191. In its proposed conclusions regarding the various documents, Elan only states that "[for the foregoing reasons, none of the licensing-related documents would have been objectively viewed as an offer to sell an embodiment of the `320 patent." Id. at ¶ 218.
In sum, throughout the course of this litigation, Elan never seriously contested that the subject of the Lederle letter was the same as the claimed invention. Its pretrial stipulation, presentation of evidence at trial, and post-trial filings all dealt exclusively with the issue of whether there was an offer for sale. Accordingly, Elan waived its argument that Andrx failed to establish by clear and convincing evidence that the subject of the Lederle letter fully anticipated the claimed invention.
discussed at the hearing on December 19, 2002, Elan's position may have been a result of its view of the then-existing Federal Circuit precedent. Both parties, however, have declined my invitation to reopen the evidence further in light of the change in the law.
4. ANDRX ESTABLISHED THAT THE SUBJECT OF THE LED ERLE LETTER WAS THE SAME PRODUCT
Even assuming that Elan did not waive its argument, I find that Andrx established by clear and convincing evidence that the subject of the Lederle letter was the same product as the claimed invention.
Andrx's expert, Eugene Rzucidlo, testified that the Lederle letter was "clearly referring to the naproxen product that was the subject of the patent application." Trial Transcript at 1238. Elan never addressed this testimony during Mr. Rzucidlo's cross examination. See id. at 1258-1342. And, as discussed above, none of Elan's experts challenged Mr. Rzucidlo's testimony, and the issue was never mentioned during closing arguments.
Mr. Rzucidlo's testimony was permissible. See generally Snellman v. Ricoh Co., 862 F.2d 283, 287 (Fed. Cir. 1988) ("Although claim interpretation is a question of law, expert testimony is admissible . . . to give an opinion on the ultimate question of infringement."). "The responsibility for challenging the factual underpinnings of the testimony fell squarely on [Elan] during cross-examination." Symbol Techs., Inc. v. Opticon, Inc., 935 F.2d 1569, 1575 (Fed. Cir. 1991). See also Bryan v. FMC Corp., 566 F.2d 541, 545 (5th Cir. 1978) ("Rule 705 shifts to the cross-examiner the burden of eliciting the bases of an expert witness' opinion."); United States v. Santarpio, 560 F.2d 448, 454-55 (1st Cir. 1977) (court was entitled to accept the expert's conclusion even though expert did not describe the factors on which his opinion rested; defendant never cross-examined on basis for opinion nor attempted to show its inadequacy). Accordingly, I may and do accept Mr. Rzucidlo's testimony that the product referenced in the Lederle letter fully anticipated the claims of the `320 patent. See Terrell v. Household Goods Carriers' Bureau, 494 F.2d 16, 24 (5th Cir. 1974) (factfinder has responsibility of judging credibility of witnesses, resolving conflicting evidence, and assessing the weight of expert testimony).
Additionally, the parties stipulated that the product in the SCRIP announcement embodied all the claims of the completed invention. Given the proximity in time of the SCRIP announcement and the Lederle letter, it is reasonable to find that the subject of both was the same product, and I make such a finding.
In sum, I find alternatively that the SCRIP stipulation, its temporal proximity to the Lederle letter, and Mr. Rzucidlo's uncontradicted expert testimony establish by clear and convincing evidence, in the absence of any evidence to the contrary, that the subject of the Lederle letter was the same as the claimed invention.
As discussed above, Elan was offered an opportunity to reopen the record and present evidence on this issue. It declined that option, and in fact indicated that it possessed no evidence relating to the composition of the subject of the Lederle letter.
5. THE PRODUCT WAS "READY FOR PATENTING" AT THE TIME OF THE LEDERLE LETTER
Elan argues that I erred in finding that the once-daily naproxen sodium tablet was "ready for patenting" at the time of the Lederle letter. In order for the on-sale bar to render a patent invalid, (I) the product must be the subject of a commercial offer for sale, and (2) the invention must be ready for patenting. See Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 67 (1998). I found that "it is not subject to reasonable dispute that Elan completed the formulation of its once-daily naproxen tablet by mid-1988," and that the evidence established that the product was ready for patenting by the time the Lederle letter was written. Elan has proffered no persuasive reasons why this finding should be overturned, and I, therefore, adhere to the prior ruling.
6. THE "TOTALITY OF THE CIRCUMSTANCES" TEST WAS NOT APPLIED
Finally, Elan argues that I incorrectly applied the defunct "totality of the circumstances" test in ruling that the Lederle letter constituted an offer for sale. This argument was withdrawn by Elan at the December 19, 2002, hearing, and therefore need not be addressed. In any event, the prior order applied Pfaff and its progeny, including Group One.
B. ANDRX'S MOTION TO AMEND
A court has discretion whether to address remaining issues once it has disposed of a case. Cf. Drake v. Kemp, 762 F.2d 1449, 1457 n. 9 (11th Cir. 1985). Although the parties are still involved in antitrust litigation where the issue of infringement is relevant and may need to be resolved, I exercise my discretion and do not address the other issues in the case.
III. CONCLUSION
Elan's motion for reconsideration [D.E. 240-1] and motion to supplement [D.E. 240-2] are DENIED, with the exception that Mr. McVey's declaration has been considered. Andrx's motion to amend the judgment [D.E. 239] is DENIED. All pending motions are DENIED AS MOOT, and these cases are CLOSED.