Case: 1:16-cv-00651 Document #: 107 Filed: 05/08/18 Page 1 of 14 PageID #:3314
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
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`Plaintiff,
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`Defendant.
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`C.A. Nos. 1:16-cv-00651
` 1:17-cv-07903
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`Hon. Rebecca R. Pallmeyer
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`PUBLIC VERSION—REDACTED
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`HOSPIRA, INC.
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`FRESENIUS KABI USA, LLC
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`v.
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`MEMORANDUM IN SUPPORT OF FRESENIUS KABI’S
`MOTION FOR PARTIAL SUMMARY JUDGMENT ON PRIOR SALE
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
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`Plaintiff,
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`Defendant.
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`C.A. Nos. 1:16-cv-00651
` 1:17-cv-07903
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`Hon. Rebecca R. Pallmeyer
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`PUBLIC VERSION—REDACTED
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`HOSPIRA, INC.
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`FRESENIUS KABI USA, LLC
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`v.
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`MEMORANDUM IN SUPPORT OF FRESENIUS KABI’S
`MOTION FOR PARTIAL SUMMARY JUDGMENT ON PRIOR SALE
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`Case: 1:16-cv-00651 Document #: 107 Filed: 05/08/18 Page 2 of 14 PageID #:3315
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`TABLE OF CONTENTS
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`BACKGROUND ............................................................................................................................ 1
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`SUMMARY JUDGMENT STANDARD....................................................................................... 4
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`ARGUMENT .................................................................................................................................. 5
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`I.
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`The Dexmed IND was Sold, Twice. ................................................................................... 5
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`A.
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`B.
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`Orion Sold the Dexmed IND to Abbott in 1994. .................................................... 5
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`Abbott Later Sold the IND to Hospira. ................................................................... 6
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`II.
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`As Part of the Above Sales, Orion and Abbott Offered the Dexmed Glass
`Ampoules Themselves for Sale. ......................................................................................... 7
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`CONCLUSION ............................................................................................................................... 9
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`Case: 1:16-cv-00651 Document #: 107 Filed: 05/08/18 Page 3 of 14 PageID #:3316
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`TABLE OF AUTHORITIES
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`Allen Eng’g Corp. v. Bartell Indus., Inc., 299 F.3d 1336 (Fed. Cir. 2002) .................................... 4
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`Carroll v. Lynch, 698 F.3d 561 (7th Cir. 2012) .............................................................................. 4
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`Enzo Biochem, Inc. v. Gen-Probe, Inc., 424 F.3d 1276 (Fed. Cir. 2005) ....................................... 9
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`Ferraro v. Hewlett–Packard Co., 721 F.3d 842 (7th Cir. 2013) .................................................... 4
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`Helsinn Healthcare S.A. v. Teva Pharms. USA, Inc., 855 F.3d 1356 (Fed. Cir. 2017) .............. 5, 9
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`Medicines Co. v. Hospira, Inc., 827 F.3d 1363, 1376-77 (Fed. Cir. 2016) .................................... 5
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`Medicines Co. v. Hospira, Inc., 881 F.3d 1347, 1350 (Fed. Cir. 2018) ................................. 4, 8, 9
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`Trading Techs. Int’l, Inc. v. eSpeed, Inc., 595 F.3d 1340, 1361 (Fed. Cir. 2010) .......................... 5
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`ii
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`Case: 1:16-cv-00651 Document #: 107 Filed: 05/08/18 Page 4 of 14 PageID #:3317
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`The parties currently dispute whether the terms of the contracts establish a prior sale
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`occurred involving a dexmed-in-glass product, a legal part of the prior art test. As set forth
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`below, the 1994 agreement between Orion and Abbott Laboratories constitutes a sale and offer
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`for sale of dexmedetomidine (“dexmed”) as a matter of law. The undisputed terms of that
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`agreement:
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`Under Federal Circuit precedent created by Hospira by the same lawyers as in this case,
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`the Orion agreement constitutes a sale of the IND and an offer for sale of dexmed ampoules.
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`The Court, therefore, should determine as a matter of law that
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` Given the
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`limited and strictly legal nature of this determination, the issue of whether
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` can and should be resolved before trial.
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`We expect at trial that Hospira will dispute whether the prior art makes its asserted
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`patents invalid. But the issue in this motion is focused on the legal issue: showing that
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`the subject of a prior sale, one part of the prior art test that can be addressed
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`now. We asked Hospira to so stipulate, but they did not agree, necessitating this motion.
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`Resolution of this legal issue will streamline the trial by eliminating unnecessary testimony on
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`these issues and to focus on whether the IND and other prior art invalidates the asserted claims.
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`BACKGROUND
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`Dexmed is an old drug, and had been used in glass for two decades before Hospira
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`obtained patents on that combination. Dexmed, an injectable drug used primarily to sedate
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`1
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`Case: 1:16-cv-00651 Document #: 107 Filed: 05/08/18 Page 5 of 14 PageID #:3318
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`patients, was already developed
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` (LR56.1 ¶ 4.) Orion and Farmos obtained a patent on dexmed in March 1990. (Id.)
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`(LR56.1 ¶ 5.) An IND explains all of the details about a drug product, so that clinical studies can
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`be done, which then is used to submit an NDA, or New Drug Application.
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` (LR56.1 ¶ 6.)
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`Like most INDs, the dexmed IND
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` (LR56.1 ¶ 5.) These details will be used at trial to show
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`that Hospira’s invention had already been done in the prior art.
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` (Id.)
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`The first sale: Orion sells dexmed IND to Abbott, and offers to sell ampoules as part of a
`License and Supply Agreement.
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`The legal issue is whether the IND was the subject of a commercial sale, which despite
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`the IND’s confidential nature would make it prior art.
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` (LR56.1 ¶ 7.)
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` (LR56.1 ¶¶ 8, 9.) The culmination of the agreement was noted in
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`public press releases. (LR56.1 ¶ 9.)
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`Case: 1:16-cv-00651 Document #: 107 Filed: 05/08/18 Page 6 of 14 PageID #:3319
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`(LR56.1 ¶ 10.)
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`11.)
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`. (LR56.1 ¶¶ 12, 13, 15.)
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` (LR56.1 ¶
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`. (LR56.1 ¶¶ 16, 17.)
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`. (LR56.1 ¶ 21.)
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` (Id.)
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`(LR56.1 ¶¶ 22–29, 32.)
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` (LR56.1 ¶ 33.)
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`The second sale: Abbott sells dexmed IND to Hospira, and assigns offer to sell ampoules
`under the Separation and Distribution Agreement.
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`In 2004, Abbott created a separate company called Hospira, and entered into a Separation
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`and Distribution Agreement
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` (LR56.1 ¶¶ 35–36, 38, 40.) Portions of the Separation and Distribution Agreement
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`were filed with the SEC, and the companies represented to the government that they would be
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`operating as separate companies under separate control prior to the effective date of the
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`Separation Agreement. (LR56.1 ¶¶ 37, 39, 41, 52, 53.) Abbott exercised no control over
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`Case: 1:16-cv-00651 Document #: 107 Filed: 05/08/18 Page 7 of 14 PageID #:3320
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`Hospira. (LR56.1 ¶¶ 51–53.)
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` (LR56.1 ¶¶ 43–44.)
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` (LR56.1 ¶¶ 45–46.)
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` (LR56.1 ¶ 47.)
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`Despite these prior transactions, Hospira did not file its own patent application for
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`dexmed-in-glass until 2012.
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` that were the subjects of the 1994 and 2004
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`prior sales and offers for sale are prior art.
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`SUMMARY JUDGMENT STANDARD
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`Summary judgment is appropriate where the moving party demonstrates that “there is no
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`genuine dispute as to any material fact,” and “is entitled to judgment as a matter of law.” Fed. R.
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`Civ. P. 56(a). The court will “construe the facts and draw all reasonable inferences in favor of
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`the non-moving party.” Ferraro v. Hewlett–Packard Co., 721 F.3d 842, 847 (7th Cir. 2013).
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`“Once the moving party puts forth evidence showing the absence of a genuine dispute of
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`material fact, the burden shifts to the non-moving party to provide evidence of specific facts
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`creating a genuine dispute.” Carroll v. Lynch, 698 F.3d 561, 564 (7th Cir. 2012).
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`Whether a prior sale occurred is a question of law. “The first prong of [the on-sale bar]
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`test involves a determination of whether a commercial offer for sale [or sale] has occurred,
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`applying traditional contract law principles.” Allen Eng’g Corp. v. Bartell Indus., Inc., 299 F.3d
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`1336, 1352 (Fed. Cir. 2002). “Contract interpretation is a question of law” reviewed de novo.
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`Medicines Co. v. Hospira, Inc., 881 F.3d 1347, 1350 (Fed. Cir. 2018).
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`4
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`Case: 1:16-cv-00651 Document #: 107 Filed: 05/08/18 Page 8 of 14 PageID #:3321
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`The Federal Circuit does not use a bright line rule to determine if a sale has occurred,
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`instead “our focus is on what makes our on-sale bar jurisprudence coherent: preventing inventors
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`from filing for patents a year or more after the invention has been commercially marketed,
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`whether marketed by the inventor himself or a third party.” Medicines Co. v. Hospira, Inc., 827
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`F.3d 1363, 1376-77 (Fed. Cir. 2016) (en banc). In fact, the Federal Circuit rejected the notion
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`that a transaction must comply with the UCC in order to be considered a “sale” under the patent
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`laws. Id. at 1376 (“we agree with Hospira that the UCC does not have ‘talismanic significance’
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`with respect to the on-sale bar”).
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`ARGUMENT
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`I.
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`The Dexmed IND was Sold, Twice.
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`As a matter of law, the dexmed IND
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`A.
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`Orion Sold the Dexmed IND to Abbott in 1994.
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`The Federal Circuit has laid out the following test for invalidating a patent under § 102(b)
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`when a sale occurs: “A sale occurs when there is a ‘contract between parties to give and to pass
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`rights of property for consideration which the buyer pays or promises to pay the seller for the
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`thing bought or sold.’” Helsinn Healthcare S.A. v. Teva Pharms. USA, Inc., 855 F.3d 1356, 1364
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`(Fed. Cir. 2017) (quoting Trading Techs. Int’l, Inc. v. eSpeed, Inc., 595 F.3d 1340, 1361 (Fed.
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`Cir. 2010)). The transaction between Orion and Abbott meets this test.
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`Case: 1:16-cv-00651 Document #: 107 Filed: 05/08/18 Page 9 of 14 PageID #:3322
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`In addition, the parties confirmed to the public that Abbott acquired the dexmed IND.
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` (LR56.1 ¶ 15.)
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`B.
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`Abbott Later Sold the IND to Hospira.
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` (LR56.1 ¶¶ 43–45.)
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` (LR56.1 ¶ 46.)
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`Moreover, Hospira
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` (LR56.1 ¶ 14.)
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`which is important because there is no question that Hospira and Abbott were
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`separate companies at least as of the effective date of the agreement. (LR56.1 ¶¶ 45, 51–53.)
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` (LR56.1 ¶¶ 35–37, 41.) The parties also informed shareholders and the
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`SEC that the two companies would be operating as separate and independent business concerns.
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`(LR56.1 ¶¶ 51–53.)
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`Case: 1:16-cv-00651 Document #: 107 Filed: 05/08/18 Page 10 of 14 PageID #:3323
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` (LR56.1 ¶¶ 48–50.)
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` (LR56.1 ¶ 47.)
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` (LR56.1 ¶¶ 48–50.)
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`II.
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`As Part of the Above Sales, Orion and Abbott Offered the Dexmed Glass Ampoules
`Themselves for Sale.
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`The 1994 agreement contains the same contractual clauses that the Federal Circuit has
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`found in other cases demonstrate an offer for sale as a matter of law. As discussed below, in one
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`of the Federal Circuit cases (Med Co), Hospira itself successfully argued that many of the types
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`of contractual clauses also found in the 1994 agreement evidence an offer for sale. The 1994
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`agreement constitutes
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` (LR56.1 ¶ 42.)
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`In the 1994 agreement,
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` (LR56.1 ¶ 25.)
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` (LR56.1 ¶¶ 26, 28–29, 33.)
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`(LR56.1 ¶ 27.) These contractual terms constitute an offer for sale.
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`Hospira—represented by the same lawyers and law firm representing it in this case—
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`7
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`Case: 1:16-cv-00651 Document #: 107 Filed: 05/08/18 Page 11 of 14 PageID #:3324
`Case: 1:16-cv-00651 Document #: 107 Filed: 05/08/18 Page 11 of 14 PageID #:3324
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`successfully argued to the Federal Circuit in another case that these very same contractual terms
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`evinced an offer for sale. In Medicines Compamr, Hospira successfully argued that a supply
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`agreement containing an exclusive license, a product supply clause, delivery terms‘ a transfer of
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`title of the product, a clause requiring rolling forecasts, and a pricing formula were sufficient to
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`show an offer for sale. 881 F.3d at 1349—52. The summary comparison below shows that the
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`same clauses argued in that case are found in the 1994 agreement between Orion and Abbott:
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`The Medicines C0. v. Hosgiraa Inc.I 881
`F.3d 1347
`ed. Cir. 2018
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`1994 Dexmed Agreement
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`Title transfer: agreed that title would pass to
`the pru'chaser upon receipt of the product.
`881 F.3d at 1349, 1351.
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`Exclusive License: TMC prohibited from
`selling to any other party. 881 F.3d at 1349.
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`. (LR56.1 1] 27.)
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`Forecasts: Purchaser was required to “place
`weekly orders” for quantities based on
`historical pru‘chase volumes. 881 F.3d at
`1349.
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`Pricing formula: The agreement contained a
`“Commercial Price List” dictating the price of
`the product. 881 F.3d at 1349.
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`(LR56.1 'n
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`(LR56.1 1m 29,
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`32.)
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`Beth eereemeee— Meee-eeee
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`me e
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`(LR56.1 1] 21.)
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`Quantity: TMC required to place weekly
`orders “for such quantities of Product as are
`necessary to maintain an appropriate level of
`inventory...” 881 F.3d at 1349.
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`(LR56.1 11 33.)
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`Product Delivery: TMC agreed to ‘ilse its
`commercially reasonable efforts” to fill
`product orders in two days. 881 F.3d at 1349,
`1352.
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`11 33.
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`(LR56.l
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`Case: 1:16-cv-00651 Document #: 107 Filed: 05/08/18 Page 12 of 14 PageID #:3325
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`1351, 1353. Hospira cannot argue in one case that certain contract clauses constitute an offer for
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`sale as a matter of law, and then argue in another case that the same clauses are not an offer for
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`sale. Yet when we asked them to stipulate as to the prior sale in this case, Hospira did not agree.
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`Other cases, too, have also found that similar clauses are evidence of an offer for sale.
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`See, e.g., Helsinn, 855 F.3d at 1361–62, 1364–65 (finding an offer for sale where the contract
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`included exclusive licensing, quantity, pricing, purchase order, transfer of title, and delivery
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`terms); Enzo Biochem, Inc. v. Gen-Probe, Inc., 424 F.3d 1276, 1279 (Fed. Cir. 2005) (finding an
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`offer for sale where the contract included quantity, pricing, delivery, and product forecasting
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`terms). This Court should follow the precedent that the Federal Circuit has given several times
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`over and find that the clauses in the 1994 agreement constitute an offer for sale.
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`CONCLUSION
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`For the above reasons, the Court should find as a matter of law that
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`Case: 1:16-cv-00651 Document #: 107 Filed: 05/08/18 Page 13 of 14 PageID #:3326
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`Dated: May 8, 2018
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`Respectfully submitted,
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`/s/ Imron Aly
`Imron T. Aly
`Kevin M. Nelson
`Joel M. Wallace
`Emily M. Peña
`Tara L. Kurtis
`233 South Wacker Drive, Suite 7100
`Chicago, Illinois 60606
`(312) 258-5500
`ialy@schiffhardin.com
`knelson@schiffhardin.com
`jwallace@schiffhardin.com
`epena@schiffhardin.com
`tkurtis@schiffhardin.com
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`Ahmed M.T. Riaz (pro hac vice)
`666 Fifth Avenue, 17th Floor
`New York, NY 10103
`(212) 753-5000
`ariaz@schiffhardin.com
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`Attorneys for Defendant Fresenius Kabi USA,
`LLC
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`Case: 1:16-cv-00651 Document #: 107 Filed: 05/08/18 Page 14 of 14 PageID #:3327
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`CERTIFICATE OF SERVICE
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`I, Tara Kurtis, an attorney at the law firm of Schiff Hardin LLP, hereby certify that on
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`May 8, 2018, I caused a true and correct copy of the foregoing MEMORANDUM IN SUPPORT
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`OF FRESENIUS KABI’S MOTION FOR PARTIAL SUMMARY JUDGMENT ON PRIOR
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`SALE to be electronically served on counsel of record via the Court’s CM/ECF system.
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`/s/ Tara Kurtis
`Tara Kurtis
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