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`UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
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`CA NO. 13-1104-RGA
`December 13, 2013
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`11:00 o'clock a.m.
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`: : : : : : : : : :
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`ALZA CORPORATION, et al.,
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`Plaintiffs,
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`v.
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`PAR PHARMACEUTICAL INC, et
`al.,
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`Defendants.
`.............................
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`TRANSCRIPT OF DISCOVERY DISPUTE
`BEFORE THE HONORABLE RICHARD G. ANDREWS
`UNITED STATES DISTRICT JUDGE
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`APPEARANCES:
`
`For Plaintiff:
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`ASHBY GEDDES
`BY: STEVEN J. BALICK, ESQ
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`For Defendants:
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`-and-
`SIDLEY AUSTIN LLP
`BY: LISA A. SCHNEIDER, ESQ
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`PHILLIPS, GOLDMAN & SPENCE
`BY: JOHN C. PHILLIPS JR., ESQ
`-and-
`RAKOCZY MOLINO MAZZOCHI SIWIK
`BY: PETER J. CURTIN, ESQ
`For Defendant Osmotica
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`RICHARDS, LAYTON & FINGER
`BY: STEVEN J. FINEMAN, ESQ
`For Defendant Par
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`Court Reporter:
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`LEONARD A. DIBBS
`Official Court Reporter
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`P R O C E E D I N G S
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`(The proceedings commenced as 10:10 o'clock a.m. as
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`follows:)
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`THE COURT: Good morning, everyone.
`(All counsel responded, "Good morning, your Honor.")
`THE COURT: Please be seated.
`So I take it you are, Mr. Curtin?
`MR. CURTIN: I am, your Honor.
`THE COURT: I know I've seen you before, Ms. Schneider.
`MS. SCHNEIDER: Yes, you have.
`THE COURT: Good morning, Mr. Balick, Mr. Phillips, Mr.
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`Fineman.
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`Mr. Fineman.
`MR. FINEMAN: Yes, your Honor.
`THE COURT: Oh, I see. You know, I'm looking at the
`caption of case, which has one party.
`I'm looking and seeing two defendants being
`represented, but that's because there are two defendants.
`MR. FINEMAN: Correct, your Honor.
`THE COURT: Okay. So you can see what level of
`analysis that I'm doing today.
`So, ALZA Corporation vs. Par Pharmaceutical, Civil
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`Action No. 13-1104.
`I've gotten the two letters, which apparently I only
`brought one with me. I just -- I can tell you we're not
`operating at a high level today.
`MR. FINEMAN: Which one do you need, your Honor?
`THE COURT: I brought them both, so it doesn't really
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`matter.
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`I've got Docket Item 76, which is, I guess, is the
`response. I did read the original letter, too.
`MR. CURTIN: Here's one for your Honor.
`THE COURT: Thanks.
`We've got the Patent Prosecution Bar, how far it
`extends into reexamination, inter partes review, whatever kinds
`of proceedings, and we've got this FDA Bar.
`Are those the two issues?
`MS. SCHNEIDER: Yes, your Honor.
`MR. CURTIN: Yes, your Honor.
`THE COURT: All right.
`So it's defendants' request. So before I ask
`defendants to articulate their request, Ms. Schneider, I saw in
`there that you have said that you, and I guess the members of
`your firm, have been representing ALZA on litigation relating to
`these patents over a long period of time?
`MS. SCHNEIDER: The members of my firm have, and some
`of the people that filed a Notice of Appearance have. I,
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`personally, have not, but Mr. Kushan, and Mr. Pritikin, and Mr.
`Choi all have been representing ALZA in Concerta matters for
`quite some time.
`THE COURT: And is the reason why there has been quite
`some time, because I think I -- and have they -- I saw -- I
`actually did look to see.
`The last one was with Judge Stark?
`MS. SCHNEIDER: I apologize, your Honor.
`I do not know which Judge that was with. There were
`two prior litigations that my firm has represented ALZA on with
`respect to --
`THE COURT: Okay. And from what I could tell, because
`I looked at the Protective Order, that didn't seem to address
`this issue.
`MS. SCHNEIDER: That's my understanding as well.
`THE COURT: Okay. And are there any -- and I realize
`this is not dispositive one way or the other -- but are there
`any actual pending proceedings going on at this moment to which
`this Prosecution Bar could actually apply?
`MS. SCHNEIDER: Not to my knowledge.
`There are no post-issuance proceedings going on at the
`moment to which the bar could apply.
`THE COURT: I forget.
`How many patents are involved here?
`MS. SCHNEIDER: One patent is involved in this
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`litigation.
`THE COURT: Is this the same patent that was involved
`in the earlier litigations?
`MS. SCHNEIDER: It is not.
`THE COURT: Okay. But it's the same family I guess?
`MS. SCHNEIDER: The same family. Related -- related --
`same drug, the same ALZA drug that's on the market.
`THE COURT: When does -- when was this patent issued,
`the one in this case?
`MS. SCHNEIDER: About a year-and-a-half ago.
`THE COURT: All right.
`And the people you mentioned, I think -- I forget what
`their names were -- do these -- but the other attorneys you said
`had more history with this -- with ALZA, this -- I guess this is
`Concerta?
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`MS. SCHNEIDER: Concerta is the drug.
`THE COURT: On Concerta.
`Do the people have more history, or do you typically do
`patent prosecution or reissue, or who does that for ALZA?
`MS. SCHNEIDER: None of us do original application
`prosecution for ALZA. They hire another firm to do all of that
`sort of work.
`Our firm has been involved extensively in post-issuance
`proceedings, although, not on this drug, because there have been
`none on this drug.
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`THE COURT: On this drug or this patent?
`MS. SCHNEIDER: I don't believe there have been any
`post-issuance proceedings on this drug. There definitely have
`not been any on this patent.
`THE COURT: Okay. All right.
`So why don't I hear from you, Mr. Curtin.
`Tell me what the highlights of your argument are?
`MR. CURTIN: Very well, your Honor.
`Well, the highlights -- and obviously you've got the
`papers and I don't want to repeat too much from what's in
`them -- is that, you know, defendants -- I mean the dispute here
`is not about whether there should be a Prosecution Bar. The
`dispute is whether it should apply to post-issuance proceedings,
`and defendants believe that it should.
`We think that the -- it's common for Protective Orders
`to limit both access to and use of the producing party's
`protected information, and that's because -- I mean a use
`restriction, by itself, is often not enough to protect against a
`risk of inadvertent disclosure or competitive -- you know,
`misuse or advantage of the defendants' confidential information,
`because people just can't segregate what they know.
`You know, an attorney knowing -- that has access to the
`defendants highly confidential information to our abbreviated
`new drug applications, if that attorney is later -- later or at
`the same time involved in a post-issuance proceeding before the
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`Patent Office where the claims covering that drug
`methylphenidate HCL, can be amended. And not all these are
`narrowing proceedings, your Honor.
`Reexamination, the claims can only be narrowed.
`Reissue, the claims can be broadened.
`THE COURT: And I guess there's two years to follow
`reissue proceedings?
`MR. CURTIN: Yes, your Honor.
`But, in this case -- and I want to back up and point
`something out -- that while there's one patent involved in this
`case, and that patent -- presently -- and that patent issued
`about a year-and-a-half ago, there are five pending
`applications, at least that the defendants know of that ALZA has
`in the Concerta patent family related to these patents.
`One of them is almost certainly going to issue early
`next month. Another one is going to issue before -- by the
`spring of 2014. And the other three are in various stages
`before the office.
`When those patents issue -- I mean, obviously, we don't
`know what ALZA is going to do, but we -- we think it's likely
`that those patents will be listed in the Orange Book, and if
`that happens, it is likely -- I mean our sales -- it's likely
`there will be a Paragraph 4 Notice filed, and that they will be
`swept into this case, because I would suspect, in that
`situation, both sides would want it all to be dealt with, you
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`know, in one litigation.
`So given that situation, there is a realistic
`possibility of post-issuance proceedings that involve -- I mean
`it could be reexaminations where claims can only be narrowed.
`It could also be reissue proceedings where the claims can be
`broadened.
`And in either of those cases, the risk of inadvertent
`disclosure, and competitive use of defendants' highly
`confidential information in this -- in these proceedings, which
`are under the Deutsche Bank analysis -- In Re: Deutsche Bank --
`I mean there's competitive decision-making going on.
`When you're amending --
`THE COURT: Well, I think that's not really at issue.
`The issue is the balancing.
`MR. CURTIN: Yes. And, so, it is the -- I mean having
`-- I would argue that defendants then having met the threshold
`inquiry of whether there's a risk and whether there is
`competitive decision-making going on, the question is the
`balancing after that that the Court has to get to.
`And we submit that -- I would like to point out a
`couple of points then.
`Defendants believe they shouldn't face a situation in
`which plaintiffs' counsel, whether it is trial counsel or
`in-house, who had access to our highly confidential information,
`have the ability to shepherd the plaintiffs' Concerta patents
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`through post-issuance proceedings, whether it's reexamination,
`reissue, or post-grant review.
`As Judge Sleet recognized in the Bear Creek vs.
`Verizon, Footnote 6, as your Honor just acknowledged,
`reexaminations can involve competitive decision-making despite
`the fact that the claim scope can't be broadened.
`And we say that's true even more so for reissue
`proceedings where the patentees express they are able to broaden
`their claims.
`The plaintiffs cite to Judge -- in their letter to
`Judge Thynge's opinion in Xerox vs. Google, you know, holding
`that a Prosecution Bar in that case should not apply to
`reexaminations.
`I would say that's -- that is one critical distinction
`there. That case only involved the reexamination. It dealt
`with reexamination. Not the full scope of all post-issuance
`proceedings. So the risk there is somewhat different.
`THE COURT: So would that mean that if the patent
`Prosecution Bar was extended reissue proceedings, but not the
`other sorts of post-grant proceedings, you would say, Okay,
`you're exactly consistent with Judge Thynge in the Xerox vs.
`Google?
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`MR. CURTIN: I would say, your Honor -- I mean Judge
`Thynge didn't address that issue at all, so I don't know how she
`would have come out on it. I would say it's not inconsistent
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`with what was done in Xerox vs. Google, if that was the
`decision.
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`Secondly, while it is true that the defendants' product
`information is not relevant to the validity of patent claims and
`reexamination, as Judge Thynge noted -- in his other cases noted
`-- the risk of inadvertent use or competitive misuse still
`exists.
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`And, in fact, you know, Judge Thynge acknowledged that
`defendants had raised a, quote, "legitimate concern that their
`confidential information could be competitively misused in
`strategically narrowing plaintiffs' patent claims during
`reexamination.
`And you can do so -- and this applies also certainly
`more to reissue and also to post-grant review. And you can do
`this --
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`THE COURT: Well --
`MR. CURTIN: -- and I'm not talking about any kind of
`misconduct.
`THE COURT: All right.
`But post-grant review, you can't expand the claims in
`it, you can only narrow them, right?
`MR. CURTIN: I believe that's the case, your Honor.
`I'm not a patent attorney. I've not appeared in such
`proceedings, but I understand that all claims can be amended. I
`think -- I think your Honor is correct there.
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`And you can do so both in terms of strategic -- when
`you have to narrow, the strategic narrowing can take the form
`both of amendments and of statements made on -- on the record at
`the Patent Office, which your Honor know can also effect future
`claim construction.
`You know, it's a -- and the Xerox Court sort of moved
`past that concern by noting that, Well, plaintiffs would
`undoubtedly seek the broadest coverage possible in
`reexamination, regardless of their counsel's knowledge of
`defendants products.
`That's Page 185. So, in her view, the risk was
`attenuated.
`But I would submit that that analysis doesn't give
`enough weight to the potential impact of the knowledge of
`competing products. And we're not -- I want to clarify -- we're
`not talking about bad faith here.
`THE COURT: No. I understand you're talking about
`inadvertence.
`MR. CURTIN: Inadvertence.
`And putting it in a tough situation where, if as a
`lawyer -- and the patent counsel involved in this has had access
`to confidential information -- and they've got to narrow. They
`some prior art in the reexamination, or whatever proceeding, and
`they say, Oh, this art is rough. I've got to make some
`arguments to get a claim around that.
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`Are they going to -- I mean how do they -- they narrow
`it enough to get around the prior art, but they would still want
`to be able to -- obviously, you want as much coverage as you can
`to still capture competing -- I mean that's a tough conflict to
`be in. I'm sputtering a little bit here. But that's tough
`conflict to be in, in terms of your duty to your client, to
`zealously advocate their interest, and yet your duty to not make
`use of information that you know of from another situation, from
`a litigation. That's an imposs -- I think a very difficult
`situation for counsel.
`THE COURT: All right.
`Well, I think I've got the highlights there.
`Mr. Schneider?
`MS. SCHNEIDER: Sure, your Honor. We would not concede
`that they've met their burden of showing an unreasonable risk.
`There are plenty of cases out there that say the risk in
`post-issuance proceedings is greatly reduced.
`That is the only thing we're talking about here. We
`did not believe that a Prosecution Bar was necessary for outside
`counsel, but we consented to it, because they had that concern,
`and we didn't want to add yet another fight to -- to your
`docket.
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`But we do not think that when you're talking about only
`post-issuance proceedings, there is a serious risk to
`defendants' confidential information.
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`THE COURT: Do you agree with the idea that I've
`floated out there that whatever the balance, the weight is,
`there's, you know, some slightly greater risk in the reissue
`proceeding than the other kinds of post-grant proceedings?
`MS. SCHNEIDER: I would agree that you can broaden your
`claim for two years, if you file -- two years after your patent
`issues, you can file a reissue that allows you to broaden your
`claims.
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`Whatever claims you've broadened, however broad you
`make your claims, they still have to be supported by what is in
`specification, so that information still has to be there. In
`that sense, I don't think the risk is that significant, because
`it already has to be there.
`THE COURT: But as a theoretical matter, the post --
`the reissue proceeding is slightly riskier for the inadvertent
`disclosure effecting, you know, being tied in with strategic
`choices that counsel is making, just because you could expand
`the scope.
`MS. SCHNEIDER: Theoretically, yes, you might be able
`to make that argument, but that is not what their bar is limited
`to. Their bar goes far beyond that.
`THE COURT: Right.
`MS. SCHNEIDER: And it encompasses proceedings in
`which, by their own admission, you can only narrow the claims.
`In those kinds of circumstances, the patent either
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`covers their product now, or it doesn't, and nothing we can do
`in reissue -- in reexamination proceedings will change that.
`THE COURT: Do the attorneys at your firm who are
`working on this case, are also people who work on post-grant
`proceedings, do they get involved in reissue proceedings?
`MS. SCHNEIDER: On occasion, yes. Yes, your Honor.
`THE COURT: Okay.
`MS. SCHNEIDER: But there are no pending reissue
`proceedings in this case.
`THE COURT: To the extent that there are never any
`reissue proceedings, then it is moot on that, right?
`MS. SCHNEIDER: Right. That is true. That is true.
`And I also think that, in this particular case, there
`is a significant harm to all of us if their counsel is not
`allowed to participate in post-issuance proceedings.
`Counsel has -- Sidley Austin as well as in-house that
`is handling this case, have extensive knowledge about the
`product, about the prior art, about potential ways to get around
`the prior art if that ever becomes a concern, and to -- to sort
`of yank those people off the case and say, No, you cannot have
`any role in post-issuance proceedings, even though those
`proceedings may impact the litigation, and may adversely impact
`the litigation, you can't have any role in that is grossly
`unfair given the long history these counsel have had.
`THE COURT: As kind of a sideline, because I looked
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`rather quickly, the prior litigations, have either of the two
`cases that were in Delaware, did either of them actually result
`in a trial, or were they resolved by some other kind of means?
`MS. SCHNEIDER: One was a trial, as I understand it,
`that then went up on appeal.
`THE COURT: Is that the earlier of the two?
`MS. SCHNEIDER: I couldn't answer that. I believe that
`is the case. I believe that is the case.
`THE COURT: Okay.
`MR. BALICK: I think so as well, your Honor. I'm not
`positive, but I was involved in it and I think it was the
`earlier one.
`THE COURT: And, so, whatever decisions were made about
`the patents in that case, probably has not much impact on this
`case, since we're talking about a new patent and --
`MS. SCHNEIDER: I think the parties are likely going to
`have a difference of opinion on that. I would certainly take
`that view. I'm not sure the defendants will take that view.
`THE COURT: Okay. And I'm sorry, because I don't know
`what the result of the first case -- the trial was in the
`Federal Circuit, what did they end up holding?
`MS. SCHNEIDER: The particular claim at issue was
`invalidated.
`THE COURT: All right.
`You were talking, Ms. Schneider?
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`MS. SCHNEIDER: Sure. I was just saying that I think
`there's a potential harm to them, if they are deprived of their
`counsel.
`
`And ALZA has a legitimate interest in formulating a
`coherent and consistent litigation strategy. Choices before the
`PTO may impact that strategy.
`Post-issuance proceedings are often seen as an
`extension of a litigation. And, in fact, many of them can only
`be filed by somebody other than ALZA, so those typically get
`filed by defendants or somebody with similar interests as
`defendants, and to not allow ALZA's counsel to participate in
`all these types of proceedings, would be unfair and prejudicial
`to ALZA.
`
`THE COURT: Okay. All right.
`I think I got it.
`I do think quoting In Re: Deutsche Bank Trust, that
`strategically amending or surrendering claim scope during
`prosecution, which is what the case says, is, essentially,
`competitive decision-making, and there is the risk of an
`inadvertent disclosure.
`And, so, I do think there is an issue here, but I do
`think then you get to the balancing.
`You know, I give some credit to Ms. Schneider's
`representations, which are obviously undisputed that her firm
`has a history of representing ALZA in relations over these -- to
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`these patents, which includes appearances before the PTO. And,
`so, that there would be some prejudice to ALZA, and any bar
`works to prejudice ALZA.
`And I also take into account, which neither counsel
`have discussed, but which seemed to me the patent Prosecution
`Bar was narrowly tailored -- I forget exactly what the right --
`the right words were -- but it was specified as a drug. And I
`thought that -- you know, sometimes the definition of a subject
`matter is too broad. Here the subject matter seemed to be
`appropriately narrow, so I think you get to a balancing test.
`And, of course, I should say, as always is the case,
`you know, we are talking about inadvertent disclosure here, so
`that there is no -- you know, we are talking about human nature,
`not something where there is any hint or allegation of any
`untoward behavior by counsel.
`So what I'm inclined to do is, you know, is to say that
`the patent Prosecution Bar should extend to reissue proceedings,
`but not to any other kind of post-grant proceedings, because I
`think there's a greater risk. It might not be a much greater
`risk, but there is a greater risk in those kinds of proceedings
`where the scope of the claims can go either way.
`There are some cases, and it kind of makes sense that
`the -- even inadvertently the ability to use or to have what
`you've learned about confidential information, affect your
`judgments about narrowing the scope, which really have to do
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`more with the prior art than with confidential -- men with
`knowledge of the products that you've been infringing. The
`balance there -- the -- the risk is not that -- not as great.
`That is what I'd like you to do. I assume the actual
`wording of that probably doesn't require any input from me?
`MS. SCHNEIDER: I'm confident that we can agree on that
`
`wording.
`
`THE COURT: So, then, we also have this FDA Bar.
`Do you want to say a word about that, Mr. Curtin?
`MR. CURTIN: Yes, your Honor.
`And I will say -- I'll address it very briefly.
`I think that the plaintiffs' letter brief gave the
`defendants short shrift, short of brushed them aside a bit.
`Of course, an FDA Bar is designed to guard against what
`may happen. Not what has happened.
`And, in that sense, the possibility is speculative that
`that also applies to post-grant proceedings before the
`Prosecution Bar. At the same time, the defendants concerns
`here, and the policies concerns involved are real, they're not
`far-fetched.
`You know, sure, in this letter all we say -- all I say
`
`is --
`
`THE COURT: Well, it seemed to me that your argument --
`and tell me if have I misunderstood it, because it is possible
`that I have -- it seems that your argument on the FDA was,
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`essentially -- and I may have the term wrong -- but a citizen's
`petitions, which, I guess as a theoretical matter, ALZA could
`file something making some references to your generic product,
`right? That is the citizen's petition that you are worried
`about?
`
`MR. CURTIN: Well, that is -- yes, that is one type of
`citizen's petition that could be filed.
`Another example is one that happened just this year in
`a case that I'm involved in now in this district where I'm
`representing the defendant in the Hatch/Waxman case and the
`plaintiff's filed a citizen's petition, which ask the FDA to
`drastically change the requirements approving bioequivalence to
`their drug products.
`And not surprisingly -- I mean because -- and this is
`-- I mean defendants -- you know, an abbreviated drug
`application was designed to meet the current standards for
`bioequivalence. And this -- this -- if granted by FDA would
`have --
`
`THE COURT: But -- but --
`MR. CURTIN: -- so that's what would have made it
`impossible for that drug to be approved.
`THE COURT: -- but that's something -- you know, part
`of the reason why the FDA Bars are seen more in frequently is,
`presumably, it's not going to be Ms. Schneider who learns stuff
`about your -- you know, gets discovery, and then decides to do
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`this bioequivalent thing, because she's already barred from
`doing that. I mean --
`MR. CURTIN: Yes. I mean that's -- yes, but all
`counsel with access are barred from doing it.
`THE COURT: Well, and, so the -- you know, the thing
`is, I mean it just seems really remote that the situated Sidley
`and Austin attorneys, or the in-house counsel who are involved
`in this case. You know, you're trying to guard against
`inadvertent stuff, and really the example you're giving me is
`pretty much advertent stuff.
`MR. CURTIN: There are situations where -- I mean, you
`know, if it was advertent, and obviously I think this has
`happened in cases before, including the Urander (phonetic), the
`case with Judge Robinson, you know, the plaintiff's wanted to
`file a citizen's petition. They went to the Court and said, We
`found information that we think is important, your Honor, in
`this litigation and we would like permission to the citizen's
`petition. We need permission under the Protective Order.
`In that situation, it's not inadvertent. It is
`advertent and the Court ruled on that.
`THE COURT: Well that was with the Court's --
`MR. CURTIN: Permission and approval. Absolutely.
`I'm saying that's a very different kind of situation.
`But if we're talking about a situation, your Honor,
`where it is this inadvertent situation, the question that I
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`would ask, and the defendants would ask is, Why is there any
`reason that counsel, trial counsel in this litigation, or the
`in-house litigation counsel at Johnson and Johnson, who are
`supervising this litigation -- they are the ones that have
`access to the defendants' highly confidential information -- why
`does ALZA need them to be involved in the communications?
`THE COURT: That's sort of shifting the burden to them,
`but it's actually your burden?
`MR. CURTIN: It is our burden to show good cause, your
`Honor, but I think that having articulated a -- a real -- a
`possibility of real prejudice.
`I suppose what I'm saying is, the -- the argument that
`there is no need for them to be involved goes to the balancing
`that the Court was talking about earlier.
`THE COURT: Well, so --
`MR. CURTIN: Because balancing the harm to -- the harm
`to ALZA from excluding them, I -- there's nothing that indicates
`there would be significant harm.
`THE COURT: So besides the citizen petition possibility
`-- and I think I did have one other case, and I think Mr.
`Phillips might have been involved in it -- where I actually
`heard about the citizen petitions. I can't remember exactly
`what it was about at this point. Even such things are
`occasionally at least filed.
`But besides for that possibility, what other
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`possibilities -- what other thing do you have in mind that --
`that you think could arise where we could have some inadvertent
`disclosure, or use of your -- not disclosure so much -- but use
`of your confidential information in front of the FDA?
`MR. CURTIN: Well, your Honor, I think the citizen's
`petition and venue is the one that we're particularly concerned
`about.
`
`In plaintiffs' letter brief -- and I read their paper
`filed yesterday -- they talk about the scope of this bar as
`being vastly overbroad.
`Well, all I've got to say is that we never negotiated
`about scope, because the position -- the plaintiffs' position
`from the outset was an FDA Bar is not appropriate, so we never
`talked about that.
`THE COURT: Okay. But, so, citizen's petition, other
`than that, you don't have any particular specters that you are
`worried about?
`MR. CURTIN: No, your Honor. Certainly not intended to
`apply to, say, adverse offender reporting Orange Book listings
`or things like that, or, you know, statements regarding their
`own -- to the FDA regarding their own product that they're
`required to make.
`THE COURT: All right.
`Ms. Schneider?
`MS. SCHNEIDER: The problem with this bar, setting
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`aside the fact that it's very, very much overbroad as I think
`counsel has now recognized, is th