Case No. IPR2016-00710
`Declaration of Julie L. Davis
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`____________________________________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`____________________________________________
`
`MYLAN PHARMACEUTICALS INC,
`Petitioner
`
`v.
`
`GENENTECH, INC. AND CITY OF HOPE,
`Patent Owners
`____________________________________________
`
`Case IPR2016-00710
`Patent 6,331,415
`____________________________________________
`
`EXPERT DECLARATION OF JULIE L. DAVIS
`
`Mylan v. Genentech
`IPR2016-00710
`Genentech Exhibit 2033
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`

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`Case No. IPR2016-00710
`Declaration of Julie L. Davis
`
`Table of Contents
`
`Page
`I. BACKGROUND AND EXPERIENCE ............................................................ 1
`II. SCOPE OF RETENTION .................................................................................. 2
`III. INFORMATION RELIED UPON ..................................................................... 3
`IV. BACKGROUND INFORMATION .................................................................. 5
`A. Parties to This Matter ................................................................................. 5
`1. Mylan .................................................................................................. 5
`2. Genentech ........................................................................................... 7
`3. City of Hope ........................................................................................ 8
`B. Additional Background Information .......................................................... 9
`1. The Cabilly Patents ............................................................................. 9
`a. Cabilly I ....................................................................................... 9
`b. Cabilly II ...................................................................................10
`c. Cabilly III ..................................................................................11
`2. Benefits Provided By the Cabilly Patents ........................................12
`V. SUMMARY OF OPINIONS ...........................................................................13
`VI. BASIS AND REASONING .............................................................................13
`A.
`Industry Interest in Licensing the Patented Technology ..........................13
`1. License Agreements ..........................................................................13
`2. Settlement Agreements .....................................................................22
`3. Comparison to Licensing of the Cohen-Boyer Patents ....................23
`B. Commercial Success of the Claimed Invention .......................................25
`1. Sales of Genentech Products Which Incorporate the Technology of
`the Cabilly II Patent ..........................................................................28
`2. Sales of Licensed Products That Incorporate the Technology of the
`Cabilly II Patent ................................................................................32
`VII. CONCLUSION ................................................................................................36
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`Case No. IPR2016-00710
`Declaration of Julie L. Davis
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`Exhibit 1:
`Exhibit 2:
`
`
`
`
`Appendix A:
`Appendix B:
`Appendix C:
`Appendix D:
`Appendix E:
`
`Curriculum Vitae of Julie L. Davis
`Index to Documents Considered in Forming Opinions
`
`License Agreement Summary
`Settlement Agreement Summary
`Summary of Genentech Sales
`Summary of Licensee Sales and Royalties
`Summary of Marketed Therapeutic Monoclonal
`Antibody Products
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`Case No. IPR2016-00710
`Declaration of Julie L. Davis
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`I.
`
`BACKGROUND AND EXPERIENCE
`
`1.
`
`I have been providing audit and financial consulting services to
`
`attorneys and corporate clients for thirty-eight years. The early part of my career
`
`was devoted to directing and performing independent financial audits of private
`
`and publicly held companies ranging from manufacturing entities to financial
`
`institutions. Drawing upon that background, I now consult extensively with
`
`companies involved in business and intellectual property disputes.
`
`2.
`
`I have worked on numerous intellectual property cases during my
`
`career and have conducted complex studies of damages related thereto. These
`
`studies have included evaluations of lost sales, lost profits, incremental profits,
`
`manufacturing, and marketing capacities, fixed and variable costs, product line
`
`profitability, price erosion, reasonable royalties, unjust enrichment, and
`
`prejudgment interest. I have testified in matters related to these studies.
`
`3.
`
`In addition to intellectual property disputes, I have assisted companies
`
`in developing intellectual property strategies and managing their intellectual
`
`property portfolios. I have also conducted studies related to those portfolios
`
`including patent portfolio analyses, competitive assessments, licensing analyses,
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`cost studies, and benchmarking studies. In addition, I have co-authored a book on
`
`the best practices used by leading companies in managing their intellectual
`
`property.
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`Declaration of Julie L. Davis
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`4.
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`I graduated in 1978, summa cum laude, from Kansas State University
`
`with a Bachelor of Science degree in Business Administration and Accounting. In
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`the same year, I earned the Gold Key in the State of Kansas for the highest score in
`
`the state on the CPA exam. I am a member of the American Institute of Certified
`
`Public Accountants, American Bar Association, and Licensing Executives Society.
`
`My curriculum vitae, which is attached as Exhibit 1, describes my professional
`
`credentials including other publications and prior testimony experience.
`
`II.
`
`SCOPE OF RETENTION
`The above-referenced matter relates to a petition for inter partes
`5.
`
`review filed by Mylan Pharmaceuticals Inc. (“Mylan”)1 against Genentech, Inc.
`
`(“Genentech”) and City of Hope related to U.S. Patent No. 6,331,415 entitled
`
`“Methods of Producing Immunoglobulins, Vectors and Transformed Host Cells for
`
`Use Therein,” issued on December 18, 2001 (“the ’415 patent” or “the Cabilly II
`
`patent”).2
`
`6.
`
`I understand that, in a September 8, 2016 decision, the Patent Trial
`
`and Appeal Board (the “Board”) instituted inter partes review on two grounds that
`
`collectively involve claims 1-4, 11, 12, 14, 18-20, and 33 of the Cabilly II patent.3
`
`1 For the purposes of this declaration, I may refer to Mylan as “the Petitioner.”
`2 Mylan Pharmaceuticals Inc. v. Genentech, Inc., IPR2016-00710, Paper 2 (March
`3, 2016); Ex. 1001, U.S. Patent No. 6,331,415.
`3 Mylan Pharmaceuticals Inc., IPR2016-00710, Paper 13 at 15 (Sept. 8, 2016).
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`7.
`
`Davis and Hosfield Consulting LLC has been retained by Durie
`
`Tangri LLP (“Counsel”) on behalf of Genentech and City of Hope in the above-
`
`referenced matter to prepare analyses to assist the Board in considering certain
`
`factors related to the validity of the Cabilly II patent. In particular, I have been
`
`asked to address certain factors related to objective evidence of non-obviousness.
`
`8.
`
`My project team and I have been engaged for this assignment at the
`
`hourly billing rates of the individuals assigned plus expenses. The current hourly
`
`billing rates range from $175 to $900 per hour. The amount of our fees is not
`
`contingent in any way upon the opinions expressed herein or on the outcome of
`
`this matter.
`
`III.
`
`INFORMATION RELIED UPON
`9.
`My opinions are based upon information available to me as of the date
`
`of this declaration. I, and professionals working under my direction, have relied
`
`upon and examined documents produced by the parties, along with publicly
`
`available information. A listing of all documents considered is attached as Exhibit
`
`2.
`
`10.
`
`In addition, we reviewed the following deposition testimony:
`
`(cid:120) Ex. 2090, Transcript of Deposition of James H. Sabry, M.D., Sanofi-
`
`Aventis U.S. LLC v. Genentech, Inc., No. 2:15-cv-05685 (C.D. Cal)
`
`(Mar. 16, 2016); and
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`Declaration of Julie L. Davis
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`(cid:120) Ex. 2091, Transcript of Deposition of Timothy R. Schwartz, Sanofi-
`
`Aventis U.S. LLC v. Genentech, Inc., No. 2:15-cv-05685 (C.D. Cal)
`
`(Mar. 1, 2016).
`
`11. We have also reviewed the following expert reports:
`
`(cid:120) Ex. 2072, Expert Report of Carlo M. Croce, M.D., Bristol-Myers
`
`Squibb Co. v. Genentech, Inc., No. 2:13-cv-05400-MRP-JEM (C.D.
`
`Cal Nov. 9, 2014); and
`
`(cid:120) Ex. 2093, Expert Report of Robert C. Rickert, Ph.D., Bristol-Myers
`
`Squibb Co. v. Genentech, Inc., No. 2:13-cv-05400-MRP-JEM (C.D.
`
`Cal. Oct. 13, 2014).
`
`12. We have also held a discussion with Dr. Schwartz.
`
`13. My opinions are based on my skills, knowledge, experience,
`
`education, and training, as well as information gathered by and/or provided to me
`
`as of the date of this declaration. It is usual and customary for me and other
`
`experts to consider and/or rely upon sources of information such as those identified
`
`above and in Exhibit 2.
`
`14.
`
`I understand that I may be asked to testify by deposition regarding my
`
`opinions contained herein as well as related matters, including those raised on
`
`cross examination. I expect to further elaborate and expand on the content of my
`
`declaration as necessary to make my testimony understandable to the Board. To
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`Declaration of Julie L. Davis
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`the extent helpful to explain, or to put in context, the subject matters discussed
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`throughout my declaration, I also expect to provide further general explanations of
`
`the matters I discuss. In connection with any testimony, I may rely on materials
`
`referenced in this declaration and on the attachments and demonstrative exhibits to
`
`be prepared in connection with my testimony.
`
`15.
`
`I understand that discovery in this matter is ongoing and new
`
`information may become available prior to the issuance of a Final Written
`
`Decision. Therefore, I will be prepared to supplement my declaration in the event
`
`that any new facts that impact my opinions or the bases therefor become known to
`
`me.
`
`IV. BACKGROUND INFORMATION
`A.
`Parties to This Matter
`
`1. Mylan
`
`16. Mylan is a West Virginia corporation with its principal place of
`
`business in Morgantown, West Virginia.4 Mylan is a wholly owned subsidiary of
`
`4 Ex. 2095, West Virginia Secretary of State Business Organization Detail for
`Mylan Pharmaceuticals Inc.,
`http://apps.sos.wv.gov/business/corporations/organization.aspx?org=20402 (last
`visited Dec. 17, 2016).
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`Mylan N.V., a Netherlandic public limited liability company.5 Mylan N.V.
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`describes itself as “a leading global pharmaceutical company, which develops,
`
`licenses, manufactures, markets and distributes generic, branded generic and
`
`specialty pharmaceuticals.”6 Mylan N.V. states that it “offers one of the industry’s
`
`broadest product portfolios, including more than 1,400 marketed products, to
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`customers in approximately 165 countries and territories.”7 Mylan N.V.’s
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`“medicines include generic, brand name and over-the-counter products in a variety
`
`of dosage forms and therapeutic categories, such as difficult-to-manufacture
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`injectables, transdermal patches, topicals and HIV/AIDS antiretroviral (ARV)
`
`therapies.”8
`
`17. Mylan N.V.’s global workforce included nearly 35,000 employees
`
`and external contractors as of December 31, 2015.9
`
`5 Ex. 2096, Mylan N.V., United States Securities and Exchange Commission Form
`10-K at 4, 97 (for fiscal year ended Dec. 31, 2015), available at
`https://www.sec.gov/Archives/edgar/data/1623613/000162361316000046/myl10k
`_20151231xdoc.htm.
`6 Id. at 3.
`7 Id. at 3.
`8 Ex. 2097, Mylan Fact Sheet, http://www.mylan.com/-
`/media/mylancom/files/company/20161123_85x11%20mylan%20fact%20sheet.pd
`f (last visited Dec. 17, 2016).
`9 Ex. 2096, Mylan N.V., United States Securities and Exchange Commission Form
`10-K at 24 (for fiscal year ended Dec. 31, 2015), available at
`https://www.sec.gov/Archives/edgar/data/1623613/000162361316000046/myl10k
`_20151231xdoc.htm.
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`Genentech
`2.
`18. Genentech is a Delaware Corporation10 with a principal place of
`
`business in South San Francisco, California.11 Genentech is a wholly-owned
`
`subsidiary of the Roche Group (“Roche”), which acquired Genentech in March
`
`2009.12 Following the acquisition, Genentech and Roche combined their U.S.
`
`pharmaceutical operations. “Genentech’s South San Francisco campus now serves
`
`as the headquarters for Roche pharmaceutical operations in the [U.S.]”13
`
`19. According to Genentech, it is “a leading biotechnology company that
`
`discovers, develops, manufactures and commercializes medicines to treat patients
`
`with serious or life-threatening medical conditions.”14 In addition to producing
`
`medicines and products that address serious or life-threatening medical conditions,
`
`10 Ex. 2100, Certificate of Third Amendment of Amended and Restated Certificate
`of Incorporation (Apr. 16, 2004), available at
`http://www.sec.gov/Archives/edgar/data/318771/000031877104000010/dna-
`ex3_5.htm.
`11 Ex. 2101, Genentech, Visit Us, https://www.gene.com/contact-us/visit-us (last
`visited Dec. 17, 2016).
`12 Ex. 2102, Genentech, “Roche Completes Acquisition of Genentech” (Mar. 26,
`2009), available at http://www.gene.com/media/press-releases/12007/2009-03-
`26/roche-completes-acquisition-of-genentech (last visited Dec. 17, 2016).
`13 Ex. 2103, Genentech, About Us, http://www.gene.com/about-us (last visited
`Dec. 17, 2016).
`14 Id.
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`“Genentech conducts basic and applied research in the areas of … Oncology,
`
`Immunology, Neuroscience, Metabolism, and Infectious Disease.”15
`
`20. Currently, Genentech employs more than 13,000 people.16
`
`City of Hope
`3.
`21. City of Hope is a California nonprofit organization17 with a principal
`
`place of business in Duarte, California.18 City of Hope was founded in 1913 and
`
`“is one of only 45 comprehensive cancer centers in the nation, as designated by the
`
`National Cancer Institute ….”19
`
`22. According to City of Hope, it “is a leading research and treatment
`
`center for cancer, diabetes and other life-threatening diseases.”20 City of Hope’s
`
`mission “is to transform the future of health care by turning science into a practical
`
`benefit, hope into reality. [City of Hope] accomplish[es] this by providing
`
`15 Ex. 2104, Genentech, Genentech Fast Facts,
`http://www.gene.com/media/company-information/fast-facts (last visited Dec. 17,
`2016).
`16 Ex. 2105, Genentech, Company Information,
`http://www.gene.com/media/company-information (last visited Dec. 17, 2016).
`17 Ex. 2106, City of Hope and Affiliates, Consolidated Financial Statements at 7
`(years ended Sept. 30, 2015 and 2014), available at
`http://www.cityofhope.org/doc/1430376104234-wcc_031604.pdf (last visited Dec.
`17, 2016).
`18 Ex. 2107, City of Hope, Locations, http://www.cityofhope.org/about-city-of-
`hope/locations (last visited Dec. 17, 2016).
`19 Ex. 2108, City of Hope, Who We Are, http://www.cityofhope.org/about-city-of-
`hope/who-we-are (last visited Dec. 17, 2016).
`20 Ex. 2109, City of Hope, About Us, http://www.cityofhope.org/about-city-of-
`hope (last visited Dec. 17, 2016).
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`outstanding care, conducting innovative research and offering vital education
`
`programs focused on eliminating these diseases.”21
`
`23.
`
`In 2013, City of Hope employed over 200 individuals and benefited
`
`from the time of 10,000 volunteers.22
`
`B.
`
`Additional Background Information
`
`
`
`1.
`
`The Cabilly Patents
`
`
`
`24.
`
`I understand that three patents assigned to Genentech and City of
`
`Hope comprise the Cabilly family of patents. I further understand that the
`
`inventions of the Cabilly patents relate to the production of antibodies. Figure 1 of
`
`the Cabilly II patent shows that antibodies have a “Y” shape and include both a
`
`variable region, which I understand binds to an antigen, and a constant region,
`
`which forms the base of the “Y” shape.23 These regions are made up of two chains
`
`of amino acids, referred to as the heavy chain and light chain.24
`
`a.
`
`Cabilly I
`
`25.
`
`The Cabilly I patent was applied for on April 8, 1983, and issued on
`
`March 28, 1989, as U.S. Patent No. 4,816,567 entitled “Recombinant
`
`21 Ex. 2108.
`22 Ex. 2110, City of Hope, Form 990, Part I (year ending Sept. 30, 2013).
`23 Ex. 1001.
`24 Id.
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`Immunoglobin Preparations.”25 I will refer to this patent as the “Cabilly I” patent.
`
`I have been informed that Cabilly I expired in March 2006.
`
`Cabilly II
`b.
`The Cabilly II patent is a continuation of Cabilly I.26 Cabilly II was
`
`26.
`
`filed for on June 10, 1988, and issued on December 18, 2001, as U.S. Patent No.
`
`6,331,415 entitled “Methods of Producing Immunoglobulins, Vectors and
`
`Transformed Host Cells for Use Therein.”27 I have been informed that the Cabilly
`
`II patent expires on December 18, 2018.
`
`27.
`
`In general, I understand the invention of Cabilly I specifies a method
`
`for producing chimeric heavy or light chains of an antibody, in which one portion
`
`of the heavy or light chain is derived from one species or class of mammals and the
`
`other portion is derived from a different species or class of mammals.28 Cabilly I
`
`claims the expression of a chimeric heavy chain or a light chain in a host cell.29
`
`Cabilly II specifies vectors, host cells, and methods used to express both heavy and
`
`light chains (“co-expression”) in a single host cell to produce an antibody or
`
`25 Ex. 1007, U.S. Patent No. 4,816,567; Petition for Inter Parties Review of U.S.
`Patent No. 6,331,415 Under 35 U.S.C. § 311-319 and 37 C.F.R. § 42.100 et seq.,
`Mylan Pharmaceuticals, Inc. v. Genentech, Inc., IPR2016-00710, Paper 2 at 4
`(March 3, 2016).
`26 Ex. 1001.
`27 Id.
`28 Ex. 1007 at 6:48-7:18.
`29 Id. at cl. 1(a).
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`antibody fragment.30 While the method claims of the Cabilly II patent specify that
`
`heavy and light chains are co-expressed in a single host cell, the claims of the
`
`Cabilly I patent do not require co-expression.31
`
`Cabilly III
`c.
`28. Cabilly III is a continuation of Cabilly II.32 Cabilly III was filed for
`
`on April 13, 1995, and issued on April 12, 2011, as U.S. Patent No. 7,923,221
`
`entitled “Methods of Making Antibody Heavy and Light Chains Having
`
`Specificity for a Desired Antigen.”33 I will refer to this patent as the “Cabilly III”
`
`patent. I have been informed that because Cabilly III is subject to a terminal
`
`disclaimer over Cabilly II,34 it will also expire on December 18, 2018.
`
`29.
`
`In general, I understand the invention of Cabilly III specifies vectors,
`
`host cells, and methods used to co-express heavy and light chains of an antibody in
`
`a single host cell, where the heavy chain and light chain both include human
`
`constant regions.35 As noted above, Cabilly I does not specify co-expression and
`
`30 Ex. 1001 at Abstract, cl. 1.
`31 Ex. 2112, Order Den. Pls’ Mot. for Summ. J. on Double Patenting, Eli Lilly and
`Co. and ImClone Systems LLC v. Genentech, Inc. and City of Hope, Case No.
`2:13-cv-07248-MRP-JEM, 5 (C.D. Cal. Mar. 5, 2015).
`32 Ex. 2113, U.S. Patent No. 7,923,221.
`33 Id.
`34 Id.
`35 Id. at Abstract, cl. 26.
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`Cabilly II does not specify that the heavy and light chains must include a human
`
`constant region.
`
`2.
`
`Benefits Provided By the Cabilly Patents
`
`30.
`
`I understand the inventions of the Cabilly patents
`
`36 Dr. Carlo Croce, Genentech’s litigation expert in district
`
`court proceedings regarding the validity of the Cabilly patents, opines that
`
`
`
`31. According to Dr. Croce, among other things,
`
`Dr. Croce elaborates that
`
`
`
`36
`37
`38
`
`
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`V.
`
`SUMMARY OF OPINIONS
`32.
`I understand that evidence of non-obviousness of a patent can be
`
`demonstrated by, among other things, industry recognition of the claimed
`
`invention as shown by licensing and the commercial success of the claimed
`
`invention. My review of the evidence related to these factors supports a
`
`conclusion that the Cabilly II patent is non-obvious.
`
`VI. BASIS AND REASONING
`A.
`Industry Interest in Licensing the Patented Technology
`
`1.
`
`License Agreements
`
`33.
`
`I understand that interest in licensing by others in the industry is a
`
`type of objective evidence of non-obviousness.40 In my opinion, licensing supports
`
`a finding of non-obviousness with respect to the Cabilly II patent.
`
`34. Genentech has an extensive licensing history of the Cabilly patents.
`
`39
`
`40 See, e.g., Transocean Offshore Deepwater Drilling, Inc. v. Maersk Contractors
`USA, Inc., 699 F.3d 1340 (Fed. Cir. 2012).
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`As detailed in Appendix A (Ex. 2114),
`
` Many of these companies approached Genentech in an effort to
`
`become licensed. I understand from a discussion with Dr. Schwartz, Genentech’s
`
`former Associate General Counsel for Patents and the individual responsible for
`
`licensing the Cabilly patents,
`
`41
`
` Ex. 2114, Appendix A to Declaration of Julie L. Davis, Mylan
`Pharmaceuticals, Inc. v. Genentech, Inc., IPR2016-00710. Discussion with
`Counsel.
`
`42 Id.
`43 Id.
`44
`
`45
`
`46
`
`
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`35.
`
`Licenses executed after the Cabilly II patent had issued, and while the
`
`Cabilly III patent was still pending,
`
`These provisions are typical of licenses granted during this period. These terms
`
`reflect industry demand for licenses to the Cabilly II patent (as well as the Cabilly
`
`III patent). As noted above, the patents differ in scope: a co-expressed antibody
`
`without a human constant region on the heavy chain and the light chain would
`
`infringe the Cabilly II patent, but not the Cabilly III patent.
`
`36.
`
`
`
`
`
`47
`
`48 Id.; Ex. 1001.
`49 See supra ¶ 25.
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` This licensing history supports a conclusion that Cabilly II is
`
`not obvious.
`
`37.
`
`Licenses to the Cabilly II patent,
`
` provided Genentech with multiple streams of
`
`50 Ex. 2114.
`
`51 Id.
`
`52 Ex. 2114.
`
`53 Id.; Ex. 2130
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`38.
`
`
`
`39.
`
`40.
`
`41.
`
`The royalty rates agreed to by licensees of the Cabilly II patent have
`
`generated substantial royalties for Genentech.
`
`54 Ex. 2114.
`55 Id.
`56
`57 Ex. 2114.
`58
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`59 Ex. 2117, Appendix D to Declaration of Julie L. Davis, Mylan Pharmaceuticals,
`Inc. v. Genentech, Inc., IPR2016-00710.
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`42.
`
`43.
`
`60 Id.
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`44.
`
`61 Id.
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`indicate that sophisticated companies in the industry believe that the Cabilly II
`
`patent, along with the other Cabilly patents, are valid.
`
` In my view, these facts
`
`45.
`
`
`62 Id.
`
`63 Id.; Ex. 2118, Appendix E to Declaration of Julie L. Davis, Mylan
`Pharmaceuticals Inc. v. Genentech, Inc., IPR2016-00710.
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`2.
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`Settlement Agreements
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`46.
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`In addition to the licenses discussed above,
`
`
`
`
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`
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`64 These agreements are summarized in Ex. 2115, Appendix B to Declaration of
`Julie L. Davis, Mylan Pharmaceuticals Inc. v. Genentech, Inc., IPR2016-00710;
`see also Ex. 2131.
`65 Ex. 2115.
`66 Id.; Ex. 2118.
`67 I understand that the chronology is as follows: Re-examination was initiated on
`July 7, 2005, a first final rejection issued on February 16, 2007, and a second final
`rejection issued on February 25, 2008.
`The Notice of Intent to Issue a Re-examination Certificate
`issued on February 3, 2009.
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`3.
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`Comparison to Licensing of the Cohen-Boyer Patents
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`47.
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`The above agreements licensing the Cabilly II patent can be compared
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`to another well-known invention in the biotechnology field—the Cohen-Boyer
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`patents. In my opinion, this comparison further supports a finding of non-
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`obviousness with respect to the Cabilly II patent.
`
`48.
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`The Cohen-Boyer “discovery covers the technique of recombinant
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`DNA and allows for the useful manipulation of genetic material.”68 The technique
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`of the Cohen-Boyer patents was described as “fundamental … with the potential to
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`become a platform technology that essentially led to a new paradigm in biotech
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`research.”69 Indeed, the “pioneering” Cohen-Boyer patent is described variously as
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`“the backbone of genetic engineering,”70 a “blockbuster invention[],”71 and having
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`68 Ex. 2122, Maryann P. Feldman et al., Lessons from the Commercialization of the
`Cohen-Boyer Patents: The Stanford University Licensing Program, In Intellectual
`Property Management in Health and Agricultural Innovation: A Handbook of Best
`Practices 1797 (A Krattiger et al., eds. 2007).
`69 Id.
`70 Ex. 2123, Ann Gibbons, Molecular Scissors: RNA Enzymes Go Commercial,
`Science, New Series, 251:521 (1991).
`71 Ex. 2124, Lita Nelsen, The Rise of Intellectual Property Protection in the
`American University, Science, New Series, 279:1460-61 (1998) (internal quotation
`marks omitted).
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`a “revolutionary impact on the biotechnology industry’s development ….”72
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`Stanford University’s licensing program surrounding the Cohen-Boyer patents has
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`been found “by any variety of metrics … [to be] widely successful.”73
`
`49.
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`Evidence suggests that the Cabilly II patent is viewed as fundamental
`
`in a similar manner. A July 2007 article, written at a time when the Cabilly II
`
`patent had received a first final rejection in re-examination, notes that “Cabilly is
`
`one of the most ubiquitous patents in biotech. Nearly any company wishing to use
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`host cell culture to make therapeutic recombinant antibodies has to obtain rights to
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`the patent.”74
`
`Further, Joe Patti, Chief Scientific Officer for Inhibitex, described the
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`$500,000 upfront fee his company paid to license Cabilly II as “‘the price you pay
`
`to be in the game.’”76
`
`50.
`
`Licenses granted to the Cohen-Boyer patents generated $254 million
`
`in licensing revenue, of which $26 million was associated with sign-up and annual
`
`72 Ex. 2125, Frederic M. Scherer, The Size Distribution of Profits from Innovation,
`The Economics and Econometrics of Innovation, No. 49/50:495-516, 502 (1998).
`73 Ex. 2122 at 1797.
`74 Ex. 2126, Emily Waltz, Industry Waits for Fallout from Cabilly, Nature
`Biotechnology, 25(7):699-700, 699 (2007).
`75 Ex. 2118.
`76 Ex. 2126 at 700.
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`fees.77
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`Declaration of Julie L. Davis
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`Approximately 94% of the royalty revenue associated
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`with the Cohen-Boyer patents was earned through royalty rates of 0.5% to 1% on
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`end products and 1% to 3% on bulk products.81
`
`
`
`B.
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`Commercial Success of the Claimed Invention
`
`51.
`
`In my determination of whether the invention claimed in the Cabilly II
`
`patent has been commercially successful, I have considered certain factors which a
`
`reasonable business person would consider in determining commercial success. In
`
`77 Ex. 2122 at 1803.
`78 Ex. 2117.
`79 Id.
`80
`81 Id. at 1801-02.
`82 Ex. 2114.
`
`Id.; Ex. 2122 at 1803.
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`particular, I have considered the following factors as evidence of commercial
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`success which I understand have been accepted by the courts:83
`
`(cid:120) Sales of Genentech products that incorporate the technology of the
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`Cabilly II patent; and
`
`(cid:120) Sales of licensed products that incorporate the technology of the
`
`Cabilly II patent.
`
`52.
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`I understand that the commercial success must be due to a nexus
`
`between the commercial success and the elements of the patented invention.84 I
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`further understand that a “prima facie” case of nexus is made when the patentee
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`shows both that there is commercial success, and that the product that is
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`commercially successful is the invention disclosed and claimed in the patent.85
`
`83 See, e.g., Tec Air, Inc. v. Denso Mfg. Mich. Inc., 192 F.3d 1353 (Fed. Cir. 1999);
`Transocean Offshore Deepwater Drilling, Inc. v. Maersk Drilling USA, Inc., 699
`F.3d 1340 (Fed. Cir. 2012); Broadcom Corp. v. Emulex Corp., 732 F.3d 1325 (Fed.
`Cir. 2013); Rolls-Royce, PLC v. United Techs. Corp., 603 F.3d 1325 (Fed. Cir.
`2010).
`84 For example, I understand that “[e]vidence of commercial success … is only
`significant if there is a nexus between the claimed invention and the commercial
`success.” See Galderma Labs., L.P. v. Tolmar, Inc., 737 F.3d 731, 740 (Fed. Cir.
`2013) (quoting Ormco Corp. v. Align Tech., Inc., 463 F.3d 1299, 1311-12 (Fed.
`Cir. 2006)).
`85 See Crocs, Inc. v. ITC, 598 F.3d 1294, 1310-11 (Fed. Cir. 2010).
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`53.
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`I have reviewed the expert report of Robert C. Rickert, Ph.D., dated
`
`October 13, 2014,86
`
`54. According to Dr. James Sabry, Senior Vice-President of Genentech
`
`Partnering,
`
`86 Ex. 2093, Rickert Rep.
`87 Id. at 2.
`88 Ex. 2090, Sabry Dep. 102-03; Ex. 2111, Exhibit 17 to Deposition Timothy R.
`Schwartz, Sanofi-Aventis U.S. LLC v. Genentech, Inc., No. 2:15-cv-05685 (C.D.
`Cal) (Mar. 1, 2016), Selected Historical Financial Data.
`89 Ex. 2090, Sabry Dep. 126-29.
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`1.
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`Sales of Genentech Products Which Incorporate the
`Technology of the Cabilly II Patent
`
`55.
`
`90 Id. at 130-31.
`91 Ex. 2116, Appendix C to Declaration of Julie L. Davis, Mylan Pharmaceuticals
`Inc. v. Genentech, Inc., IPR2016-00710; Ex. 2127, Letter from Jay P. Siegel, M.D.,
`FACP, to M. David MacFarlane, Ph.D. (Nov. 26, 1997), available at
`http://www.fda.gov/downloads/Drugs/DevelopmentApprovalProcess/HowDrugsar
`eDevelopedandApproved/ApprovalApplications/TherapeuticBiologicApplications/
`ucm107740.pdf (last visited Dec. 17, 2016); Ex. 2093, Rickert Rep. 2.
`92 Ex. 2116; Ex. 2093, Rickert Rep. 2.
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`56.
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`93 Ex. 2116.
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`57.
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`94 Id.
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`58.
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`59.
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`95 Id.
`96
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`60.
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`In my opinion, the extent of Genentech’s sales of covered products,
`
`
`
` support a conclusion that
`
`the Cabilly II patent is non-obvious.
`
`2.
`
`Sales of Licensed Products That Incorporate the
`Technology of the Cabilly II Patent
`
`61. As discussed above, Genentech has entered into a number of licenses
`
`that grant rights to the Cabilly II patent.
`
` Sales of such products are additional evidence of
`
`commercial success.
`
`97 Ex. 2116.
`98 Ex. 2091, Schwartz Dep. 68.
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`62.
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`Case No. IPR2016-00710
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`99 Ex. 2117.
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`63.
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`100 Id.
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`64.
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`Case No. IPR2016-00710
`Declaration of Julie L. Davis
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`65.
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`In my opinion, the extent of sales of licensed products,
`
` support a conclusion that the Cabilly
`
`II patent is non-obvious.
`
`101 Id.
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`VII. CONCLUSION
`66. Based on my understanding of the facts and circumstances
`
`surrounding this matter, I believe that the evidence supports a conclusion that the
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`Cabilly II patent is non-obvious.
`
`67. My declaration, with supporting exhibits, is contained herein, and
`
`presents a summary of my opinions and the bases and reasons therefore as of this
`
`date. To the extent any additional information is produced by either party, I will be
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`prepared to amend or supplement my declaration as appropriate.
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`68.
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`This declaration is to be used only for the purpose of this inter partes
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`review and may not be published or used for any other purpose without prior
`
`written consent.
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