`
`
`
`
`
`
`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`_____________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_____________________
`
`
`ELI LILLY AND COMPANY,
`Petitioner,
`
`v.
`
`TEVA PHARMACEUTICALS INTERNATIONAL GMBH,
`Patent Owner.
`
`_____________________
`
`Case IPR2018-01427
`Patent 8,597,649 B2
`_____________________
`
`
`
`DECLARATION OF ROBERT D. STONER, PH.D.
`
`
`
`
`
`
`
`
`
`EX2123
`Eli Lilly & Co. v. Teva Pharms. Int'l GMBH
`IPR2018-01427
`
`
`
`Inter Partes Review of USPN 8,597,649
`Declaration of Robert D. Stoner, Ph.D. (EX2123)
`
`
`TABLE OF CONTENTS
`
`
`I.
`
`Introduction ..................................................................................................... 1
`
`A.
`
`B.
`
`C.
`
`Background and Qualifications ............................................................. 1
`
`Scope of Work ....................................................................................... 2
`
`Evidence Considered ............................................................................. 4
`
`II.
`
`Summary of Opinion ...................................................................................... 5
`
`III. The Teva-AlderBio Licensing Agreement Provides Additional Objective
`Evidence of Non-obviousness of the ‘649 Patent .......................................... 6
`
`IV. Conclusions ................................................................................................... 11
`
`
`
`
`
`i
`
`
`
`Inter Partes Review of USPN 8,597,649
`Declaration of Robert D. Stoner, Ph.D. (EX2123)
`
`
`I, Robert D. Stoner, Ph.D., declare as follows.
`
`I.
`
`Introduction
`A. Background and Qualifications
`I am a Principal at Economists Incorporated, and an expert in
`1.
`
`industrial organization, with more than thirty years of experience in consulting,
`
`antitrust, and economic research. I provide expert witness testimony and consulting
`
`services in a variety of areas, including reasonable royalties, commercial success,
`
`damages estimation, and business strategy.
`
`2. My expertise and experience encompass a variety of topics, including
`
`intellectual property, competition, antitrust, utility regulation, international trade,
`
`commercial litigation, and class action. My work in intellectual property spans the
`
`life sciences (with specific industry expertise in pharmaceuticals, medical devices
`
`and drug wholesaling) as well as electronics (including computer memory, digital
`
`music, smart phones, text messaging and telecommunications). I have worked on
`
`projects in a diverse range of other industries (such as pharmaceutical data, electric
`
`utilities, grocery stores, casinos, hospital beds, automobiles and oil refining and
`
`marketing). I frequently provide expertise and analysis in evaluating commercial
`
`success in the pharmaceutical industry.
`
`3.
`
`I earned my Ph.D. and M.A. in Economics from Berkeley, University
`
`of California in 1978 and 1976, respectively, and my B.A. in Economics from
`
`1
`
`
`
`Inter Partes Review of USPN 8,597,649
`Declaration of Robert D. Stoner, Ph.D. (EX2123)
`
`
`Santa Cruz, University of California in 1970. At Santa Cruz, I received both
`
`General Honors and Honors in Economics. I have also published research in
`
`several peer-reviewed academic journals.
`
`4.
`
`I am educated and experienced in economics, as detailed in this
`
`Declaration. My qualifications and credentials are also fully set forth in my
`
`curriculum vitae, provided as EX2256. I understand that my declaration will be
`
`included in Patent Owner’s Exhibit List as EX2123.
`
`B.
`5.
`
`Scope of Work
`
`I have been retained as an expert witness on behalf of Teva
`
`Pharmaceuticals International GmbH (“Teva”) for the above-captioned inter partes
`
`review (“IPR”). I am being compensated for my time in connection with this IPR
`
`at my standard consulting rate, but my compensation is not contingent upon my
`
`opinions or the outcome of this or any other proceeding.
`
`6.
`
`I understand that this Declaration accompanies Teva’s response to an
`
`IPR petition involving U.S. Patent No. 8,597,649 (“the ’649 patent”) (EX1001). I
`
`understand that the petition was filed by Eli Lilly and Company (“Lilly”). I
`
`understand that the ’649 patent resulted from U.S. Patent Application No.
`
`13/870,871 (“the ’871 application”). I understand that the ’871 application is a
`
`continuation application that relates to a series of previous applications. I also
`
`understand that the earliest possible priority date of the ’649 patent is the
`
`2
`
`
`
`Inter Partes Review of USPN 8,597,649
`Declaration of Robert D. Stoner, Ph.D. (EX2123)
`
`
`November 14, 2005 filing date of U.S. Patent Application No. 60/736,623. The
`
`’649 patent issued on May 24, 2016.
`
`7.
`
`I understand that the Patent Trial and Appeal Board (“PTAB”)
`
`instituted review on claims 1-9 of the ’649 patent.
`
`8.
`
`For this declaration, I was asked to evaluate commercial acquiescence
`
`through licensing.
`
`9.
`
`This declaration is a statement of my opinions in this matter and the
`
`basis and reasons for those opinions. In forming the opinions expressed in this
`
`declaration, I have relied upon my education, experience, and knowledge of the
`
`subjects discussed, as well as the cited documents and materials I have reviewed
`
`specifically in conjunction with this proceeding.
`
`10. This declaration summarizes only my current opinions, which are
`
`subject to change depending upon additional information, and related analysis, that
`
`comes to light as this or related proceedings progress. The entirety of my
`
`declaration, including attachments and referenced materials, supplies the basis for
`
`my analysis and conclusions. The organizational structure of the declaration is for
`
`convenience. To the extent that facts, economic analysis, and other considerations
`
`overlap, I generally discuss such issues only once for the sake of brevity. Neither
`
`the specific order in which each issue is addressed nor the organization of my
`
`declaration or attachments affects the ultimate outcome of my analysis.
`
`3
`
`
`
`Inter Partes Review of USPN 8,597,649
`Declaration of Robert D. Stoner, Ph.D. (EX2123)
`
`
`C. Evidence Considered
`I have reviewed and relied on the articles and other documents cited in
`11.
`
`the table below:
`
`Teva
`Exhibit #
`1001
`
`Description
`
`U.S. Patent No. 8,597,649
`
`2251
`
`2252
`
`2253
`
`2255
`
`2256
`
`2257
`
`2258
`
`2259
`
`2260
`
`
`
`AIPLA Survey of Costs of Patent Litigation and Inter Partes
`Review, January 30, 2017
`Oppositions before the European Patent Office (EPO) – as a
`proactive risk management tool, March 16, 2017
`AIPLA 2015 Report of the Economic Survey
`
`“Alder Biopharmaceuticals® Enters into European Patent
`Settlement and Global License Agreement with Teva in the Field of
`Anti-CGRP-Based Therapy,” Alder Biopharmaceuticals, Inc.,
`January 8, 2018
`Dr. Robert D. Stoner’s Curriculum Vitae
`
`Redacted Alder-Teva Settlement and License Agreement, Jan 5,
`2018
`Reuters, Alder Biopharmaceuticals Inc. Company Profile,
`https://www.reuters.com/finance/stocks/companyProfile/ALDR.A
`“Alder BioPharmaceuticals® Reports Fourth Quarter and Full Year
`2018 Financial and Operating Results,” Alder Biopharmaceuticals,
`Inc., February 25, 2019
`“Teva Announces Global License Agreement with Alder
`BioPharmaceuticals® in the Field of Anti-CGRP-Based Therapy,”
`Teva Pharmaceutical Industries Ltd., January 8, 2018
`
`4
`
`
`
`Inter Partes Review of USPN 8,597,649
`Declaration of Robert D. Stoner, Ph.D. (EX2123)
`
`
`II.
`
`Summary of Opinion
`
`13.
`
`I provide this declaration in support of Patent Owner Teva’s
`
`Response to Lilly’s IPR petition. Specifically, I have been asked to evaluate
`
`whether there was commercial acquiescence through licensing. Teva licensed its
`
`anti-CGRP antibody technology to AlderBio Holdings, LLC and Alder
`
`Biopharmaceuticals, Inc. (collectively “AlderBio”) in January 2018. Such
`
`commercial acquiescence is another indicator of the ’649 patent’s non-
`
`obviousness.
`
`14.
`
`It is my understanding that commercial acquiescence of a claimed
`
`invention can be used as objective evidence to further support a non-obvious claim.
`
`The underlying theory is that the taking of a license would not usually make
`
`economic sense unless the licensee perceives a strong likelihood that the patent(s)
`
`in question would be upheld as valid. To buttress that theory, it is important to
`
`establish a nexus between the taking of the license and the claimed invention. It is
`
`my understanding that there are a number of factors that are recognized as helping
`
`to establish a nexus, such as a showing that the consideration paid by the licensee
`
`is large compared to the cost of litigation, and showing that the motivation for
`
`entering the license is not “mutually beneficial.”
`
`5
`
`
`
`Inter Partes Review of USPN 8,597,649
`Declaration of Robert D. Stoner, Ph.D. (EX2123)
`
`III. The Teva-AlderBio Licensing Agreement Provides Additional Objective
`Evidence of Non-obviousness of the ’649 Patent
`
`15. On January 5, 2018, Teva reached an agreement with AlderBio to
`
`resolve an appeal, following opposition proceedings before the European Patent
`
`Office (“EPO”) relating to Teva’s European Patent No. EP1957106 with respect to
`
`anti-CGRP antagonist antibodies. EX2255, 1-2; EX2260, 1. I understand from
`
`counsel that EP1957106 is the European equivalent of the ’649 patent and that
`
`patents in this family were filed in the US and world-wide. The agreement
`
`validates Teva's IP and provides to AlderBio the ability to develop, manufacture
`
`and commercialize AlderBio’s anti-CGRP antagonist antibody, eptinezumab, for
`
`migraine prevention targeting CGRP (the “Teva-AlderBio Licensing Agreement”).
`
`EX2255, 2; EX2257, 1; EX2260, 1.1
`
`16. Pursuant to the Teva-AlderBio Licensing Agreement, Teva granted
`
`AlderBio a royalty-bearing, non-transferable, non-exclusive license to certain
`
`patents in order for AlderBio to develop, manufacture, and commercialize certain
`
`products that practiced the intellectual property in those patents in the U.S. and
`
`
`1 I understand that the Teva-AlderBio Licensing Agreement was redacted to
`
`remove sensitive AlderBio information not relied on in this IPR.
`
`6
`
`
`
`Inter Partes Review of USPN 8,597,649
`Declaration of Robert D. Stoner, Ph.D. (EX2123)
`
`worldwide (except Japan and South Korea). EX2257, 4, 6, 29; EX2255, 2;
`
`EX2260, 1.
`
`17.
`
`In exchange for the rights to these patents, AlderBio agreed to
`
`withdraw its appeal before the EPO related to European Patent No. EP1957106
`
`EX2257, 4, 29, 31; EX2255, 2; EX2260, 1. In addition, AlderBio agreed to make
`
`an initial cash payment of $25 million, and to make milestone payments of up to
`
`$175 million if certain conditions were met. The milestone payments are as
`
`follows:
`
`•
`
`$25 million upon the first regulatory approval of the AlderBio
`
`Product2 in any country, except Japan and South Korea;
`
`•
`
`$75 million upon net sales of the AlderBio Product reaching $1 billion
`
`in a calendar year; and
`
`
`2 The AlderBio Product is defined as a pharmaceutical product that contains an
`
`AlderBio Antibody, meaning either (a) eptinezumab; (b) any anti-CGRP antibody
`
`that is other than eptinezumab and is first discovered or identified by Alder Bio as
`
`of the effective date of the Agreement; or (c) any antigen-binding fragment of an
`
`anti-CGRP antibody that is described in (a) or (b). EX2257, 1. See also EX2255, 2;
`
`EX2260, 1.
`
`7
`
`
`
`Inter Partes Review of USPN 8,597,649
`Declaration of Robert D. Stoner, Ph.D. (EX2123)
`
`$75 million upon net sales of the AlderBio Product reaching $2 billion
`
`•
`
`in a calendar year. EX2257, 8 29, 31; EX2255, 2; EX2260, 1.
`
`18. AlderBio also agreed to pay Teva tiered royalties of between five
`
`percent and seven percent based on worldwide net sales (excluding Japan and
`
`South Korea) of the AlderBio Product. EX2257, 29, 31; EX2255, 2; EX2260, 1.
`
`19. The agreement logically would have included the ’649 patent, because
`
`Alder intends to introduce its eptinezumab product in the United States in 2020 and
`
`would presumably not have taken a license that would risk infringement of the
`
`’649 patent (and at least eight other patents in the same patent family, which were
`
`challenged by Lilly in various related IPR proceedings). Indeed, Schedule 1.14
`
`lists the challenged patent among the licensed patents within the Teva-AlderBio
`
`Licensing Agreement. EX2255, 2; EX2257, 20-28; EX2260, 1.
`
`20. Companies routinely enter into license agreements in acquiescence to
`
`validity and infringement. AlderBio’s agreement to seek this license, which
`
`involves hundreds of millions of dollars in consideration and running royalties of
`
`5-7 percent on all net sales worldwide, by itself, would have been an implicit
`
`admission that the ’649 patent is valid and infringed. EX2255, 2; EX2257, 8, 29,
`
`31; EX2260, 1. In the agreement, AlderBio acknowledged that the licensed ’649
`
`patent issued as of the effective date of the agreement, is valid and enforceable and
`
`that AlderBio would otherwise infringe the ’649 patent (and at least eight other
`
`8
`
`
`
`Inter Partes Review of USPN 8,597,649
`Declaration of Robert D. Stoner, Ph.D. (EX2123)
`
`patents in the same patent family) absent the granted license. EX2255, 2; EX2257,
`
`5, 23; EX2260, 1.
`
`21. AlderBio is a clinical-stage biopharmaceutical company with assets of
`
`over $400 million, which strives to discover, develop, and seek to commercialize
`
`genetically engineered therapeutic antibodies. EX2258,1. AlderBio is focused on
`
`developing antibodies for the treatment of migraine. Id. In addition, AlderBio is
`
`focusing its resources and development efforts “principally” on eptinezumab,
`
`which is expected to compete with Teva's Ajovy® and Eli Lilly's Emgality®, and
`
`submitted a biologics license application to the FDA for eptinezumab for the
`
`prevention of migraine. Id. AlderBio's agreement to pay hundreds of millions of
`
`dollars for rights to patents is evidence that the licensed patents are valid and
`
`would be infringed by AlderBio’s anti-CGRP antagonist antibody product.
`
`22.
`
`Indeed, the Teva-AlderBio Licensing Agreement reflects a license of
`
`the ’649 patent to a potential direct competitor, which suggests the inability to
`
`design around this patent to develop a competing product. The Teva-AlderBio
`
`Licensing Agreement shows that AlderBio sought a license to the ’649 patent (and
`
`at least eight other patents in the same patent family) to avoid infringement, and is
`
`willing to pay a royalty and upfront consideration to accomplish that end.
`
`23.
`
`I understand that when consideration paid by a licensee is large in
`
`comparison to the expected cost of litigation, the license can provide evidence that
`
`9
`
`
`
`Inter Partes Review of USPN 8,597,649
`Declaration of Robert D. Stoner, Ph.D. (EX2123)
`
`the licensee believed the patent to be valid. Indeed, AlderBio agreed to pay Teva
`
`upfront payments, future milestone payments, and royalties on net sales totaling in
`
`the hundreds of millions of dollars. The total consideration to be paid pursuant to
`
`the Teva-AlderBio Licensing Agreement significantly exceeds the cost to attempt
`
`to invalidate a patent within an EPO proceeding, an IPR, or in the U.S. Federal
`
`Court system. I understand that opposition proceedings before the EPO typically
`
`amount to €25,000 to €65,000 ($27,900 to $72,600 at current exchange rates), the
`
`median cost of an IPR is approximately $350,000, and the median cost for patent
`
`litigation when more than $25 million is at risk is approximately $8 million, which
`
`is significantly below the consideration that AlderBio agreed to pay to Teva.
`
`EX2251, 2; EX2252, 6; EX2253, 43.
`
`24.
`
`I also understand that the fact the license is not a “mutually
`
`beneficial” arrangement with additional benefits to the licensee increases its value
`
`as a secondary indicia of non-obviousness. The license that AlderBio took did not
`
`give it any consideration beyond the ability to practice the Teva patents virtually
`
`worldwide. Most notably, the license granted by Teva to AlderBio was not an
`
`exclusive license—so AlderBio may have to compete with other potential Teva
`
`licensees in the future. EX2257, 6-7; EX2255, 2; EX2260, 1. As such, the license
`
`is not “mutually beneficial,” meaning that Alder is getting nothing more (or less)
`
`10
`
`
`
`Inter Partes Review of USPN 8,597,649
`Declaration of Robert D. Stoner, Ph.D. (EX2123)
`
`than the right to sell its anti-CGRP product without being sued for infringement of
`
`Teva’s applicable patents.
`
`25. AlderBio decided to take a license from Teva to cover its anti-CGRP
`
`antagonist antibody product. EX2255, 2; EX2257, 1; EX2260, 1. Absent such a
`
`license, AlderBio would not be able to market its anti-CGRP antagonist antibody
`
`product without risk of infringement and a potential damages award to Teva. In
`
`fact, AlderBio stated that the agreement “provides clarity regarding Alder’s
`
`freedom to develop, manufacture and commercialize eptinezumab, its lead product
`
`candidate for migraine prevention targeting CGRP.” EX2257, 31; EX2259, 3;
`
`EX2255, 2; EX2260, 1.
`
`IV. Conclusions
`26. Alder’s acquiescence to the validity of the challenged patent claims
`
`through licensing further supports the nonobviousness of claims 1-9 of the ’649
`
`patent. In addition, Alder’s license has nexus to every challenged claim because
`
`the agreement includes the challenged patent, the consideration paid by AlderBio
`
`is large in comparison to the expected cost of litigation, and the motivation for
`
`AlderBio to enter into the license was not “mutually beneficial.”
`
`11
`
`
`
`Inter Partes Review of USPN 8,597,649
`Declaration ofRobert D. Stoner, Ph.D.(EX2123)
`
`I hereby declare that all statements made herein of my own knowledge are
`
`true and that all statements made on information and belief are believed to be true,
`
`and further that these statements were made with the knowledge that willful false
`
`statements and the like so made are punishable by fine or imprisonment, or both,
`
`under § 1001 of title 18 of the United States Code.
`
`Dated:
`
`MALI 30202?
`
`fl 9%
`
`Robert D. Stoner, Ph.D.
`
`
Accessing this document will incur an additional charge of $.
After purchase, you can access this document again without charge.
Accept $ Charge
Still Working On It
This document is taking longer than usual to download. This can happen if we need to contact the court directly to obtain the document and their servers are running slowly.
Give it another minute or two to complete, and then try the refresh button.
A few More Minutes ... Still Working
It can take up to 5 minutes for us to download a document if the court servers are running slowly.
Thank you for your continued patience.
This document could not be displayed.
We could not find this document within its docket. Please go back to the docket page and check the link. If that does not work, go back to the docket and refresh it to pull the newest information.
Your account does not support viewing this document.
You need a Paid Account to view this document. Click here to change your account type.
Your account does not support viewing this document.
Set your membership
status to view this document.
With a Docket Alarm membership, you'll
get a whole lot more, including:
- Up-to-date information for this case.
- Email alerts whenever there is an update.
- Full text search for other cases.
- Get email alerts whenever a new case matches your search.
One Moment Please
The filing “” is large (MB) and is being downloaded.
Please refresh this page in a few minutes to see if the filing has been downloaded. The filing will also be emailed to you when the download completes.
Your document is on its way!
If you do not receive the document in five minutes, contact support at support@docketalarm.com.
Sealed Document
We are unable to display this document, it may be under a court ordered seal.
If you have proper credentials to access the file, you may proceed directly to the court's system using your government issued username and password.
Access Government Site
