The opinion of the court was delivered by: Goldberg, J.
AMENDED MEMORANDUM OPINION*fn1
At issue in this case is the validity and enforceability of Defendant, Cephalon, Inc.'s, RE'516 patent for Provigil®, a drug commonly prescribed for sleep disorders. After careful review and consideration of the evidence presented at a bench trial, I find that Plaintiff, Apotex, Inc., has met its burden in proving the invalidity of this patent. Specifically, I find that: (1) The invention claimed was on sale more than one year prior to the date of the application for the patent, 35 U.S.C. § 102(b); (2) The claimed invention was actually invented by a French company, Laboratoire L. Lafon (hereinafter, Lafon); (3) The subject matter at issue as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art, 35 U.S.C. § 103(a); and (4) The patent is invalid for failing the written description requirement of 35 U.S.C. § 112.*fn2 I also find that the patent is unenforceable due to inequitable conduct on the part of Cephalon. This Opinion explains the basis for these conclusions.
Apotex, a generic drug manufacturer, commenced this declaratory action in June 2006, alleging non-infringement, invalidity and unenforceability of Cephalon's RE'516 patent for Provigil®. This lawsuit is a result of Apotex's continuing efforts to gain approval of its Abbreviated New Drug Application (hereinafter "ANDA") 77-677 and enter the market with a generic version of Provigil®.
After completion of discovery, the Court bifurcated for trial Apotex's invalidity and unenforceability claims from its non-infringement claim. (See doc. no. 426.) A bench trial on Apotex's invalidity and unforceability claims was held first from March 29 - April 7, 2011. A subsequent bench trial on Apotex's non-infringement claims was held July 12 - 20, 2011, and the Court's decision on that issue is forthcoming.
Both the invalidity and infringement disputes revolve around a claimed invention for smaller particle size of the primary chemical compound, modafinil, that positively affected the bioavailability and dissolution of the drug. The pertinent portion of the claim states:
A pharmaceutical composition comprising a substantially homogeneous mixture of modafinil particles, wherein at least about 95% of the cumulative total of modafinil particles in said composition have a diameter of less than about 200 microns (um).
While Apotex pressed numerous theories at the invalidity trial, its primary argument was that the RE'516 patent is invalid and unenforceable because Lafon invented the claimed subject matter. Apotex stresses that Lafon was consistently manufacturing and then selling modafinil with smaller particle size. Apotex further urges that Cephalon's claim regarding the discovery of the significance of smaller particle size as it relates to the issues of bioavailability and dissolution is immaterial because "unexpected results" are irrelevant to determining derivation. Finally, Apotex claims invalidity through an "on-sale bar" and further raises issues regarding alleged material misrepresentations to the United States Patent and Trademark Office (hereinafter "PTO"), obviousness and inadequate written description.
Cephalon does not dispute that it received smaller particle size modafinil from Lafon and that such particle size fell within the claims of the RE'516 patent. Cephalon also unequivocally concedes that it did not change, modify or manipulate the modafinil it received from Lafon. Rather, Cephalon rests almost its entire case on the proposition that its "invention" is the appreciation of the significance of smaller particle size. Cephalon also explains that the modafinil it received from Lafon was not "on sale" because it was used for clinical testing, and thus, was experimental. According to Cephalon, during these clinical tests, it discovered the significance of improved bioavailability and dissolution achieved from smaller particle size, which is a significance Lafon never appreciated.
Prior to setting forth my reasoning in finding in favor of Apotex, I note that many of the underlying facts in this case are undisputed.*fn3 Moreover, most of the testimony presented at trial was through expert witnesses. Thus, to the extent that some of the following "findings of fact" may appear to be more "legal" than "factual," those findings reflect the Court's acceptance of the experts' opinions.
1. Plaintiff Apotex Inc. is a corporation organized and existing under the laws of Canada, with its principal place of business at 150 Signet Dr., Weston, Ontario M9L1T9. (Stip., doc. no. 438.)
2. Defendant Cephalon, Inc. is a corporation organized and existing under the laws of the state of Delaware, with its principal place of business at 41 Moores Road, Frazer, Pennsylvania 19355. (Stip., doc. no. 438.)
3. Laboratoire L. Lafon was a French company founded by Louis Lafon that was purchased by Cephalon on December 28, 2001, and is now known as Cephalon France. (Stip., doc. no. 438.)
4. Lafon discovered modafinil in 1976, and as of 1993, Lafon had a stable and bioavailable dosage form of modafinil that was approved for sale in Europe. (N.T. 4/1/11, pp. 42, 45-46.)
5. The '290 patent was issued to Louis Lafon and assigned to Lafon on December 4, 1979, for the chemical modafinil. (N.T. 3/29/11, p. 121.)
6. The '290 patent claimed 200 mg as the dosage for humans. (N.T. 3/29/11, p. 122.)
7. Lafon's '290 patent on modafinil does not include any references to particle size. (N.T. 3/30/11, p. 10; PTX 5.)
8. Cephalon filed an Investigational New Drug Application for modafinil tablets on June 30, 1993. Cephalon filed a New Drug Application ("NDA"), No. 20-717, for Provigil® on December 26, 1996. The U.S. Food and Drug Administration ("FDA") approved the NDA on December 24, 1998, and Cephalon began marketing Provigil® in February 1999. (Stip., doc. no. 438.)
9. Cephalon filed U.S. Patent Application No. 08/319,124 with the PTO on October 6, 1994. That application issued on April 8, 1997 as U.S. Patent No. 5,618,845 ("the '845 patent") with six claims. The '845 patent is titled "Acetamide derivative having defined particle size," and names inventors Peter E. Grebow, Vincent Corvari and David Stong. (Stip., doc. no. 438.)
10. On April 1, 1999, Cephalon filed U.S. Patent Application No. 09/285,166 seeking a reissue of the '845 patent. The PTO issued U.S. Reissue Patent No. 37,516 ("the RE'516 patent") on January 15, 2002, with twenty-six claims.*fn4 The RE'516 patent is titled "Acetamide derivative having defined particle size," and also names inventors Peter E. Grebow, Vincent Corvari and David Stong. In pertinent part, the RE'516 patent claims:
[a] pharmaceutical composition comprising a substantially homogeneous mixture of modafinil particles, wherein at least 95% of the cumulative total of modafinil particles in said composition have a diameter less than about 200 microns (um). (Stip., doc. no. 438; JTX 1.)
11. The RE'516 patent was listed in the "Approved Drug Products With Therapeutic Equivalence Evaluations," an FDA publication more commonly known as the "Orange Book." (Stip., doc. no. 438.)
12. On March 30, 2005, Apotex filed ANDA No. 77-667, seeking FDA approval for its generic version of Provigil®. That ANDA included a Paragraph III certification to the RE '516 patent. (Stip., doc. no. 438.) Under the Hatch Waxman Act, a Paragraph III certification is a statement by a generic drug manufacturer that a name brand drug exists, has a valid patent, and that the generic drug manufacturer will not sell its product until the patent expires. 21 U.S.C. § 355(j)(2)(A)(vii).
13. On March 9, 2006, Apotex changed its Paragraph III certification to a Paragraph IV certification. A Paragraph IV certification is a technical act of infringement by the generic drug manufacturer, which alleges that the patent is invalid and/or that the generic drug will not infringe on the patent. A Paragraph IV certification allows the name brand manufacturer to sue the generic manufacturer for infringement. Glaxo Group, Ltd. v. Apotex, Inc., 376 F.3d 1339, 1351 (Fed. Cir. 2004); see also (Stip., doc. no. 438).
14. Apotex filed its original declaratory judgment complaint on June 26, 2006 and subsequently filed amended and second amended complaints, which seek, inter alia, declaratory judgments that the RE'516 patent is not infringed, invalid and unenforceable.*fn5 (Stip., doc. no. 438.)
15. Dr. David Beach, who testified for Apotex, is an expert in pharmaceutical manufacturing and pharmaceutical formulation. (N.T. 3/29/11, pp. 99-100.)
16. At the subsequent infringement trial,*fn6 Dr. Beach acknowledged that between 1994 and 2004 he was the President and a member of the Board of Directors at Torpharm, a subsidiary of Apotex. In 2004, when Torpharm was absorbed by Aptoex, Dr. Beach entered into a separation agreement with Aptoex that called for him to transition out of his role at the company. Dr. Beach eventually left Apotex altogether in 2006. (N.T. 7/19/11, pp. 129-131.) The separation agreement also provided that Apotex would pay Dr. Beach $1 million in severance pay, and buy his equity interest in the company. Additionally, if Apotex were to be sold any time prior to the end of 2012, Dr. Beach would be paid the difference between the value of his ownership interest at the time of the sale and what he was paid for that interest when he left the company. (N.T. 7/19/11, pp. 130-31.)
17. A finding that the RE'516 patent is invalid will allow Apotex to enter the market and could result in an increased valuation of Apotex. If Apotex were sold before the end of 2012, that could also result in an increased payout for Dr. Beach under the separation agreement described above. While I have considered that this scenario provides a financial incentive for Dr. Beach to testify in favor of Apotex, his credibility is not essential to my determination, which, as set out infra, rests almost entirely upon documents, agreed-upon facts and lay witness testimony.
18. Dr. David Feifel, an Apotex witness, is an expert on narcolepsy, pharmacological profiles of drugs and analyzing the results of pre-clinical and clinical trials. (N.T. 3/30/11, pp. 86, 102.)
19. Dr. Palmieri, an Apotex witness, is an expert in the field of pharmaceutics, which includes the production and examination of pharmaceutical dosage forms. (NT. 3/31/11, pp. 28-29, 49-50; PTX 109.)
20. George Gerstman, an Apotex witness, is an expert on the PTO's practices and procedures, and patent prosecution. (N.T. 4/1/11, pp. 97-124.)
21. Dr. Eugene Cooper, a Cephalon witness, is an expert in the field of pharmaceutical formulation and pharmaceutical dosage forms. (N.T. 4/6/11, pp. 5-18; DTX 155.)
22. Dr. Baranski, a Cephalon witness, is an expert on the physical and psychological effects of modafinil on humans and the interpretation of results of testing involving modafinil. (N.T. 4/4/11, pp. 40-41, 54, 61.)
23. Cephalon's expert on the PTO's practices and procedures is Bruce H. Stoner, who also testified as an expert in patent law and what types of information would be important in the prosecution of patents. (N.T. 4/6/11, pp. 98, 110; DTX 157.)
C. Lafon's Work/Derivation
24. Consideration of particle size by Lafon occurred as far back as 1986, when Lafon intentionally crushed modafinil particles in order to better compress the loose powder into tablet form. Lafon knew that they were crushing the particles to a median of 90 microns. Lafon then retested once they were able to increase compression and decided to remain at the 200 micron size. (Leyder Depo., 3/30/04, pp. 41-43.)
25. Prior to 1993, Lafon conducted 125 total studies on modafinil, involving over 2,000 patients and using 9 different lots of tablets made from 30 different batches of modafinil. (N.T. 4/1/11, pp. 73-77; PTX 65.)
26. Lafon also conducted a number of studies in 1979, 1981, 1989, 1990, and 1992 on the effect of modafinil on narcoplesy. All of these tests were conducted before Lafon shipped modafinil to Cephalon in 1993. The articles published about these studies detailed the results from the testing of 50 to 700 mg of modafinil and evaluated issues such as dosage, abuse potential and side effects. (N.T. 3/29/11, pp. 124-26; N.T. 3/30/11, pp. 115-25; JTX 1, col. 1; PTX 17; PTX 31; PTX 43.)
27. Lafon conducted extensive clinical studies and received French regulatory approval for the treatment of narcolepsy with modafinil in February, 1992. (N.T. 3/29/11, pp. 128-29; PTX 64A, Bates CPH-PLD_00001869.)
28. Lafon manufactured and tested several different active pharmaceutical ingredient ("API") batches and tablet lots over the course of its development of modafinil. The following chart sets forth different modafinil API batches and tablet lots produced by Lafon and shipped to Cephalon from 1986 to 1993, and notes the relevant particle size characteristics found in each batch/lot. (PDX 2.)
Lafon RE'516 Patent Batch Approximate 95% Median Tablet Lots Modafinil Designation Measurement Cumulative Value Diameter Batch No. Date (um) (um) 5/1939 E-A September 1986 > 327 202.7 5/2171 E-B September 1986 > 260 164.6 5/2236 E-C December 1986 260 76.2 5/2435 not disclosed January 1989 < 130="" 49.6="" 12="" 845,="" 12="" 975="" 1/0103="" not="" disclosed="" january="" 1993="">< 164="" 71.0="" 001="" not="" disclosed="" october="" 1993="">< 164="" 70.8="" 002a="" e-d="" january="" 1993="" 206-260="" 98.2="" m005="" 003="" l-1="" may="" 14,="" 1993="" 130="" 37.2="" m006="" 004="" not="" disclosed="" april="" 15,="" 1993="" 130="" 26.3="" 005="" l-2="" april="" 15,="" 1993="">< 130="">
29. From October 1989 to June 1991, Lafon used Batch 5/2435 in clinical study MOD-25, which evaluated the effect of small particle modafinil on narcoleptic patients. (N.T. 3/29/11, pp. 154-56; PTX 104.)
30. In May-June 1991, Lafon used Batch 5/2435 in another clinical study, MOD-29, evaluating the predictive effects of abuse liability in modafinil as compared to amphetamine, caffeine and placebo. The fact that Lafon was using this material in clinical studies establishes that they were aware it was an effective drug. (N.T. 3/29/11, pp. 150-51, 160-61; N.T. 3/30/11, pp. 113-24; PTX 65, Bates CPH-FTC 00036028; PTX 79; PTX 96b, Bates CPH_PLD_00039070; PTX 104, Bates CPH_PLD_00071298.)
31. The particle size of several batches shipped from Lafon to Cephalon between 1989 and 1993 fell squarely within the claims of the RE'516 patent. Batch 5/2435 had 99.8 percent of the particles less than 206.36 microns and a median particle size of 49.56 microns, which also falls within the RE'516 claims. Batch 003 had 98.62 percent of its particles less than 206.36 microns. The median of that lot was 37.2 microns, and thus that entire lot falls within Claims 1-14 and 16 of the RE'516 patent.
32. In a memo from Jacquelyn Naduad at Lafon dated November 10, 1993, to Dr. Grebow, the alleged inventor at Cephalon, Lafon conveyed its particle size analysis of different batches. This information was communicated to Grebow prior to Lafon shipping Batch 003 to Cephalon. Additionally, Batch 005 had 99.8 percent of the particles less than 206.36 microns, with a median of 30.7 microns. This is also within the claimed range of the RE'516 patent. (N.T. 3/29/11, pp. 138-47; PTX 83, Bates CPH-FTC 00032133, 00032136-37, 00032140.)
33. Cephalon concedes, as they must, that Lafon made batches of modafinil tablets that fell within the RE'516 patent claims. (N.T. 3/29/11, pp. 58-59.)
34. The trend in the data from Lafon's test results on modafinil API batches establishes that Lafon was purposefully decreasing particle size. From January 1989 to July 1993, six out of the seven modafinil API batches produced by Lafon fell within claim 1 of the patent and four out of seven batches fell within claim 2 of the patent. (N.T. 3/29/11, pp. 162-67; PDX 2, PDX 6; PTX 7; Moachan Depo., 5/27/04, pp. 278-79; Moisan Depo., 4/1/04, pp. 46-47.)
35. Lafon and Cephalon started meeting in 1992 to discuss Cephalon as a licensee of modafinil in the United States. Prior to the formalization of their relationship, and as part of those meetings, Lafon supplied technical information about its modafinil to Cephalon. (N.T. 4/4/11, p. 174.)
36. Lafon provided Cephalon with data from 1989 tests which showed that Lafon achieved better dissolution rates with modafinil that was ground into smaller particles than with non-ground. (N.T. 3/29/11, pp. 168-70; PTX 20a; PTX 131b.)
37. After a visit to Lafon in October 1992, Dr. Grebow noted that there had been a change in the formulation of the modafinil during development which involved decreasing particle size. (N.T. 4/5/11, pp. 141-42; PTX 36.)
38. In October 1992, Lafon conveyed to Cephalon that they decreased the particle size of modafinil and conducted all clinical trials with small particle modafinil. Lafon also conveyed that their recommended dosage was early morning and early afternoon for a total of 300 mg, which they had found to be successful in treating narcolepsy in clinical studies. (N.T. 3/29/11, pp. 172-74; N.T. 3/30/11, pp. 115-18; PTX 36, Bates CPH_PLD_ 00046185; PTX 43, Bates AI 0000604.)
39. In November 1992, Lafon conveyed to Cephalon that they knew particle size related to solubility and that they would be measuring the particle size of the bulk API to be supplied for Cephalon's clinical studies. (N.T. 3/29/11, pp. 175-77; PTX 37, Bates CPH_PLD _00050278-80.)
40. On February 26, 1993, Cephalon sent Lafon a fax requesting particle size information. Lafon responded that 300-315 microns was their specification for the modafinil API, which was the range approved by the French regulatory agency. (N.T. 4/4/11, pp. 201-10, 218; PTX 197, CPH-FTC 00023337; DTX 52; DTX 54.)
41. In March 1993, Lafon conveyed to Cephalon that the recommended dosage was a range of 200 to 400 mg a day with 300 mg being the most used. Lafon also acknowledged that it had conducted various particle size tests in accordance with the United States and European Pharmacopedia. (N.T. 3/29/11, pp. 177-79; PDX 19; PTX 56, Bates CPH_PLD_00018794, 97.)
42. A Phase I study is a study conducted in normal volunteers to assess maximum tolerated dosage, drug interaction, effect of food on the medication, etc. This study provides a baseline for the drug so it can be studied in patients. (N.T. 4/4/11, p. 230.)
43. Lafon conducted a Phase I study where increasing dosages of modafinil were administered to patients. That study revealed that modafinil, particularly at high dosages of 800 and 1,000 mg, increased heart rate and blood pressure. Despite having received this information from Lafon, Cephalon subsequently informed the PTO that there were "no statistically significant changes in heart rate or blood pressure." (N.T. 3/30/11, pp.138-52; JTX 4, Bates CPH_PLD_00000331; PDX 20; PTX 53.)
44. In meetings held on March 29 and 30, 1993, Lafon communicated to Cephalon that its clinical investigations showed that the maximum tolerable dosage was 600 mg. (N.T. 3/30/11, pp. 154-56; N.T. 4/4/11, pp. 109, 137-40; PDX 19; PTX 51, Bates CPH_PLD_00050336-37; PTX 56, Bates CPH_PLD_00018795.)
45. On April 19, 1993, Lafon sent Cephalon a memorandum advising that side effects from modafinil could be seen in normal healthy patients. (N.T. 4/4/11, pp. 125-27; PTX 60.)
46. Lafon's P-1421 study showed statistically significant changes in blood pressure with increased dosages of modafinil, and a report on that study was sent to Cephalon in May 1993. (N.T. 4/4/11, pp. 143-55; PTX 193, Bates CPH-FTC 00028364.)
47. Cephalon learned about the safety and efficacy of modafinil from Lafon's French clinical studies. (N.T. 4/4/11, p. 194.)
48. Cephalon received and reviewed all of Lafon's clinical trial data from January to June 1993. (N.T. 4/4/11, ...