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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE GENETICS INSTITUTE, LLC, Plaintiff, v. NOVARTIS VACCINES AND DIAGNOSTICS, INC., Defendant. ) ) ) ) ) ) ) ) ) ) ) )

C.A. No. 08-290 (SLR)

GENETIC INSTITUTE'S ANSWERING BRIEF IN OPPOSITION TO DEFENDANT'S MOTION TO DISMISS OR IN THE ALTERNATIVE TRANSFER

OF COUNSEL: Barbara C. McCurdy Steven P. O'Connor Sanya Sukduang
FINNEGAN, HENDERSON, FARABOW, GARRETT & DUNNER, L.L.P.

MORRIS, NICHOLS, ARSHT & TUNNELL LLP Jack B. Blumenfeld (No. 1014) Karen Jacobs Louden (No. 2881) James W. Parrett, Jr. (#4292) 1201 N. Market Street P.O. Box 1347 Wilmington, DE 19899-1347 (302) 658-9200 [email protected] [email protected] [email protected] Attorneys for Plaintiff

901 New York Avenue, N.W. Washington, D.C. 20001 (202) 408-4000

August 29, 2008

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TABLE OF CONTENTS INDEX OF EXHIBITS.................................................................................................................. iv I. II. INTRODUCTION .................................................................................................................. 1 NATURE AND STAGE OF PROCEEDING ........................................................................ 2

III. SUMMARY OF ARGUMENT .............................................................................................. 2 IV. STATEMENT OF FACTS ..................................................................................................... 4 A. B. C. D. V. A. The '112 Patent Has Always Been Assigned to GI ............................................................ 4 Wyeth's Stock Purchase of GI Did Not Change Ownership of the '112 Patent................. 5 GI Inc. Obtained an Extension of the '112 Patent's Term Under 35 U.S.C. § 156............ 5 GI LLC's Statements in Prior Proceedings Were in Error ................................................. 6 ARGUMENT.......................................................................................................................... 8 GI LLC, as the Owner of the '112 Patent, Has Standing to Bring the Present § 291 Action ..................................................................................................... 8 GI LLC's '112 Patent Is in Force for the Purpose of § 291.............................................. 10 1. The rights granted under § 156 to file an infringement action are not the only rights GI LLC has in the '112 patent ........................................................ 11 The authority Novartis cites does not support its argument that the '112 patent has expired for the purpose of a § 291 action ...................................... 13 The claims of the '112 patent and the Novartis patents interfere ................................. 14 Transfer to the Eastern District of Texas Is Not Warranted ............................................. 15 1. Novartis's motion to transfer is premised on two contingencies that have not occurred and will not occur............................................................................ 15 Novartis failed to make a showing that transfer is warranted under 28 U.S.C. § 1404(a) ............................................................................................ 15

B.

2.

3. C.

2.

VI. CONCLUSION..................................................................................................................... 19

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TABLE OF AUTHORITIES FEDERAL CASES Abbott Labs. v. Johnson & Johnson, Inc., 524 F. Supp. 2d 553 (D. Del. 2007)......................................................................................17 ADE Corp. v. KLA-Tencor Corp., 138 F. Supp. 2d 565 (D. Del. 2001)......................................................................................17 Bergman v. Brainin, 512 F. Supp. 972 (D. Del. 1981)...........................................................................................16 Invitrogen Corp. v. Incyte Genomics, Inc., Civ. A. 01-692, 2002 WL 883963 (D. Del. May 1, 2002)..............................................18, 19 Jumara v. State Farm Ins. Co., 55 F.3d 873 (3d Cir. 1995)..............................................................................................16, 17 Kimberly-Clark Corp. v. Procter & Gamble Distrib. Co., 973 F.2d 911 (Fed. Cir. 1992).........................................................................................12, 13 Liggett Group Inc. v. R.J. Reynolds Tobacco Co., 102 F. Supp. 2d 518 (D.N.J. 2000) .......................................................................................19 Mennen Co. v. Atlantic Mutual Ins. Co., 147 F.3d 287 (3d Cir. 1998)......................................................................................3, 8, 9, 10 Oracle Corp. v. EpicRealm Licensing, LP, No. Civ. 06-414, 2007 WL 901543 (D. Del. Mar. 26, 2007) ..................................16, 17, 18 Regents of the University of California v. Eli Lilly & Co., 777 F. Supp. 779 (N.D. Cal. 1991) ...................................................................................8, 16 FEDERAL STATUTES AND REGULATIONS 28 U.S.C. § 1404.........................................................................................................................15 35 U.S.C. § 102(g) ......................................................................................................................12 35 U.S.C. § 156................................................................................................................... passim 35 U.S.C. § 271...........................................................................................................................11 35 U.S.C. § 282.....................................................................................................................12, 13 35 U.S.C. § 291................................................................................................................... passim

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37 C.F.R. § 41.203 ......................................................................................................................14

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INDEX OF EXHIBITS Exhibit No. 1 2 3 4 5 6 7 8 9 10 11 12 Description U.S. Patent No. 4,686,112 Assignment of U.S. Application No. 06/725,350, dated July 1, 1985 Assignment of U.S. Application No. 07/010,085, dated April 10, 1986 Patent Assignment Abstract of Title for U.S. Patent No. 4,686,112 and accompanying Reel and Frame assignment documents Pages 1-6 of Genetic Institute Inc.'s Quarterly Report for the Period Ending September 30, 1996 Pages 1-16 of American Home Products Corporation's Form 10-K for Fiscal Year 1996 Unanimous Consent of the Board of Directors of Genetics Institute, Inc. Application for Extension of Patent Term Under 35 U.S.C. § 156 for U.S. Patent No. 4,686,112 Settlement Agreement dated August 22, 2005 H.R. REP. 98-857(I), 1984 U.S.C.C.A.N. 2467 August 21, 2008 Docket Control Order in Northeastern Univ. v. Google, Inc., C.A. No. 2:07-CV-486 (E.D. Tex.) Declaration of Bradford A. Lewin

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I.

INTRODUCTION Genetics Institute LLC ("GI LLC") filed this action seeking a declaration by this Court

under 35 U.S.C. § 291 that GI LLC's '112 patent (U.S. Patent No. 4,868,112) has priority over two patents (U.S. Patent Nos. 6,060,447 and 6,228,620) owned by Novartis Vaccines and Diagnostics, Inc. ("Novartis"). Rather than answer, Novartis moved to dismiss this action for lack of subject matter jurisdiction, or in the alternative to transfer it to the Eastern District of Texas. The '112 patent represents the culmination of years of research stretching back to 1981 by scientists at GI LLC's predecessor, Genetics Institute, Inc. ("GI Inc.") into Factor VIII, a critical part of the clotting cascade that is missing or reduced in individuals suffering from hemophilia A. No later than 1984, Dr. John Toole, a scientist at GI Inc., conceived of a version of Factor VIII commonly known as "B-domain deleted Factor VIII." On April 12, 1985, GI Inc. filed a patent application covering this invention, which the U.S. Patent and Trademark Office ("PTO") issued nearly 19 years ago as the '112 patent. Novartis now contends that its '447 and '620 patents, which claim priority to an application originally filed at the PTO on January 26, 1986, cover B-domain deleted Factor VIII. With this cloud hanging over the '112 patent, GI LLC properly filed this interfering patent action against Novartis seeking a declaration on a single issue--that GI LLC was the first to invent B-domain deleted Factor VIII. Novartis, as the later patent filer, seeks to avoid prompt resolution of GI LLC's sole issue of priority by raising jurisdictional and venue challenges that are not supported by fact or law. Novartis's motion should be seen for what it really is--an attempt to delay the Court's consideration of the priority issue thereby postponing a decision on the merits. To that end, Novartis promotes a theory that ignores publicly available information, controlling legal

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authority, and unequivocal legislative history in seeking to divest this Court of jurisdiction or, alternatively, move this case to an inconvenient forum with no connection to either of the parties. Novartis's fundamental arguments for dismissal are baseless because (1) GI LLC in fact owns the '112 patent, not Wyeth as Novartis alleges; (2) the '112 patent clearly is not "expired" since there is no dispute that the patent is enforceable under 35 U.S.C. § 156 and, furthermore, patents in their extended term are in no way excluded from application of § 291; and (3) the alternative motion to transfer is predicated solely on Novartis's assumptions that either Wyeth transferred ownership of the '112 patent back to GI LLC or GI LLC will add Wyeth as a party, and, because both are incorrect, should be rejected. For these reasons, as more fully set forth below, the Court should deny Novartis's motion and proceed quickly to adjudication of GI LLC's claim that its scientist was the first to invent B-domain deleted Factor VIII. II. NATURE AND STAGE OF PROCEEDING GI LLC filed this action under § 291 against Novartis seeking adjudication of priority of invention of the '112 patent, assigned to GI LLC, over the '447 and '620 patents, which upon information and belief are assigned to Novartis. Instead of answering the complaint, and in an effort to delay resolution of the § 291 action, Novartis filed a motion to dismiss or in the alternative transfer the action to Texas (see D.I. 8). This is GI LLC's opposition to the motion. III. SUMMARY OF ARGUMENT 1. As a factual matter, Novartis claims that GI LLC lacks standing to bring this

action because it does not own the '112 patent. That is simply wrong. GI LLC or its predecessor corporation, GI Inc., has always owned (and continues to own) the '112 patent, as clearly demonstrated by the assignment records recorded in the PTO. Ignoring those publicly available records, Novartis instead claims that Wyeth owns the patent or, in the alternative, that Wyeth recently transferred the patent to GI LLC. At no time has Wyeth held title to the '112 patent. 2

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The two statements Novartis relies on to support its motion were incorrect and run contrary to the facts. As such, those statements carry no evidentiary weight in this proceeding. See Mennen Co. v. Atl. Mut. Ins. Co., 147 F.3d 287, 293 (3d Cir. 1998). For this reason, the Court should deny Novartis's motion to dismiss. 2. Novartis also alleges that the Court lacks subject matter jurisdiction because the

'112 patent has expired for purposes of a § 291 action. In making its argument, Novartis asks this Court to adopt an interpretation of 35 U.S.C. § 156 that no court has ever adopted, runs contrary to the plain language of the statute, and is inconsistent with the unambiguous legislative history. Indeed, Novartis's allegation is based on the faulty premise that patents extended under § 156 can be asserted only in patent infringement actions. Novartis's myopic view of § 156 stands in direct conflict with Congress's intent in enacting the statute. As discussed in greater detail below, Congress stated that "all provisions of the patent law apply to the patent during the period of extension," qualified only by a more limited right with respect to an infringement action. Consequently, § 291 of the Patent Act applies to the '112 patent. 3. Novartis alternatively requests that in the event the Court does not dismiss this

action, it should transfer this case to the Eastern District of Texas only if: (1) Wyeth owned the '112 patent and subsequently transferred ownership back to GI LLC or (2) GI LLC adds Wyeth to this § 291 action. Novartis, a Delaware corporation with a principal place of business in Massachusetts, selects Texas as the forum for transfer because that is where it filed a patent infringement suit against Wyeth and Wyeth Pharmaceuticals Inc., Delaware corporations with principal places of business in New Jersey and Pennsylvania, respectively. According to

Novartis, this action "involves the same real parties in interest, both patents at issue in Texas, and many of the same issues as the related case pending there." GI LLC, however, is not a party

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to the Texas action, and Wyeth or Wyeth Pharmaceuticals Inc. are not parties here. Nor is the '112 patent at issue there. In any event, Novartis, which bears the burden, provides no evidence in support of transfer nor does it purport to seek transfer other than on the basis of the two identified contingencies, neither of which has or will occur. Novartis's motion to transfer. IV. STATEMENT OF FACTS A. The '112 Patent Has Always Been Assigned to GI The Court thus should deny

The '112 patent, and the applications from which it derives, have at all times been assigned to and owned by GI LLC or its corporate predecessor GI Inc. The '112 patent issued on September 19, 1989, from U.S. Application No. 07/010,085 ("the '085 application"). The '085 application was filed on April 11, 1986, as a continuation-inpart of U.S. Application No. 06/725,350 ("the '350 application"). (See Ex. 1, front cover.) Both the '085 and '350 applications were assigned by John J. Toole, the sole inventor, to GI Inc. (See Ex. 2.; Ex. 3.) In January 2002, GI Inc. converted from a Delaware corporation to a Delaware limited liability company. (See Ex. 4 at 17-19.) As a result, GI Inc. changed its name to GI LLC. (Id.) GI LLC subsequently recorded the document demonstrating this change in corporate name and status with the PTO in 2002. (Id.) GI LLC also recorded a document with the PTO, first in March 2002 and then again in June 2002, indicating that all of the GI Inc.'s patents--including the '112 patent--are now owned by GI LLC. (Id. at 4-141.) As Novartis acknowledges, the

The name change recordation document filed in March 2002 with the PTO did not include GI LLC's address. As a result, the document was resubmitted in June 2002 adding GI LLC's address and reconfirming ownership of the '112 patent in the name of GI LLC.

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PTO records indicate that GI LLC is the current assignee of the '112 patent. (Id. at 2-3; D.I. 9 at 3.) Those records are correct. B. Wyeth's Stock Purchase of GI Did Not Change Ownership of the '112 Patent

In 1992, American Home Products Corporation ("AHP," now known as Wyeth) obtained a 60% ownership interest in GI Inc. through a stock transaction. (See Ex. 5 at 6.) Wyeth purchased the remainder of GI Inc.'s stock in 1996. (See Ex. 6 at I-1.) As a result of those two transactions, GI Inc. (and subsequently GI LLC) became a wholly-owned subsidiary of Wyeth. (See D.I. 1 at ¶ 7.) But at no time did GI Inc. or GI LLC assign or otherwise transfer its interest in the '112 patent to Wyeth. (See Ex. 7; Ex. 12 at ¶¶ 3-4.) Although GI Inc.'s Board of Directors consented to the transfer of certain GI Inc. assets to AHP, in December 2001 the consent document expressly excluded "(iii) any intangibles, including, without limitation, all agreements, all patents, patent applications, license, disclosures, trademarks and registration, trade names, logos, copyrights, know-how, new drug applications and abbreviated new drug applications[.]" (See Ex. 7 at 1 (emphasis added).) At no time did GI Inc.'s (or GI LLC's) Board of Directors consent to transfer any patent, let alone the '112 patent, to AHP or Wyeth. (Ex. 12 at ¶¶ 3-4.) Consequently, the '112 patent has been at all times owned by GI Inc. and GI LLC. C. GI Inc. Obtained an Extension of the '112 Patent's Term Under 35 U.S.C. § 156

The duration of the "original" term of the '112 patent was 17 years from issue, or until September 19, 2006. On March 4, 2000, before the expiration of the '112 patent's original term, GI Inc., as the assignee and owner of the entire right, title, and interest in and to the '112 patent, filed an application with the PTO for a statutory extension of patent term under 35 U.S.C. § 156. (See Ex. 8.) The PTO granted the request for an extension, and on September 14, 2006, issued a 5

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Certificate Extending Patent Term Under 35 U.S.C. § 156, which extended the term of the '112 patent for 1,258 days. (See Ex. 1, last page.) Accordingly, the '112 patent does not expire until February 28, 2010. D. GI LLC's Statements in Prior Proceedings Were in Error

The '112 patent was involved in an interference proceeding in the PTO, styled as Toole v. Vehar, with a patent application owned by a third-party, Genentech, to determine the first to invent. During that interference, in May 2002, Toole filed a statement identifying Wyeth as the "real party in interest" for Toole's '112 patent. According to that statement, GI had transferred its assets to AHP, now known as Wyeth. (D.I. 10, Ex. 4.) That statement was incorrect. Ownership of the '112 patent had not been transferred to either AHP or Wyeth. (See Ex. 7; Ex. 12 at ¶¶ 3-4.) Indeed, as discussed above (see §§ IV A-B, supra), in March and again in June 2002, GI LLC recorded with the PTO a document identifying that the assignee and owner of the '112 patent, GI Inc., had changed its name to GI LLC. After the PTO ruled in the Toole v. Vehar interference that Toole was entitled to priority of invention, Genentech "appealed" the decision under 35 U.S.C. § 146 by filing a complaint to this Court seeking to overturn the PTO decision. (See D.I. 10, Ex. 1.) In its § 146 complaint, Genentech alleged, inter alia, that Wyeth, not GI LLC, owned the '112 patent, carrying over the erroneous assumption that there had been an acquisition of all of GI LLC's assets by AHP/Wyeth. (Id.) The defendants failed to correct the earlier erroneous assumption in their response filed in June 2004. (Id. at Ex. 2.) In fact, however, at no time during the interference or the § 146 litigation, which ultimately was settled and the action dismissed, was ownership of the '112 patent transferred to Wyeth. (See Ex. 7; Ex. 12 at ¶¶ 3-4.) On the contrary, the settlement

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papers signed by GI LLC, Wyeth, Bayer and Genentech in 2005 specifically identify GI LLC as the sole owner of the '112 patent. (See Ex. 9 at 1 § B.2) Thus, as the following timeline indicates, both before and after the two misstatements, the '112 patent has always been owned by GI Inc. or GI LLC, and never by Wyeth.

GI LLC submits as Exhibit 9 a redacted version of the Settlement Agreement discussed above. GI LLC is currently seeking permission from Genentech and Bayer to provide the Court and Novartis with an unredacted version of the Settlement Agreement.

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V.

ARGUMENT A. GI LLC, as the Owner of the '112 Patent, Has Standing to Bring the Present § 291 Action

Novartis acknowledges in its opening brief that the PTO assignment database identifies GI LLC as the assignee of the '112 patent. (D.I. 9 at 3; Ex. 4.) Despite this fact, Novartis alleges that GI LLC lacks standing to file the present § 291 action because it is not the owner of the '112 patent. Novartis's argument, however, is premised on incorrect assumptions. As discussed above (see §§ IV A-B and timeline, supra) GI LLC (or its corporate predecessor GI Inc.) has been at all times the assignee and owner of the '112 patent. (See Ex. 7; Ex. 12 at ¶¶ 3-4.) Thus, contrary to Novartis's allegation, neither GI LLC nor Wyeth had reason to notify the PTO of any change in ownership of the '112 patent. (See D.I. 9 at 3.) There can be no dispute that GI LLC, as the owner of the '112 patent, has standing to bring a § 291 action involving that patent. See 35 U.S.C. § 291 ("The owner of an interfering patent may have relief against the owner of another by civil action . . . ."); Regents of the Univ. of Cal. v. Eli Lilly & Co., 777 F. Supp. 779, 783 (N.D. Cal. 1991) (stating that the "title holder" of a patent is the "owner" for purposes of § 291). Ignoring the chain of assignment documents for the '112 patent recorded at the PTO, and in contradiction to all other documents identifying GI LLC or its predecessor GI Inc. as the owner of the '112 patent, Novartis relies exclusively on two misstatements made in prior pleadings. (See D.I. 9 at 1-3.) Novartis does not, and cannot, contend that these two

misstatements are binding and irrefutable admissions. Indeed, the Third Circuit has clearly held that misstatements, such as the two Novartis cites, have no evidentiary value when determining subject matter jurisdiction--the issue raised by Novartis here--if they run contrary to the empirical facts. Mennen, 147 F.3d at 293.

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In Mennen, defendant Federal Insurance Co. ("Federal") filed a motion to dismiss for lack of subject matter jurisdiction on the basis that Federal's principal place of business was New Jersey, rather than Indiana, thereby divesting the New Jersey district court of diversity jurisdiction. Id. at 289. In response, Mennen relied on pleadings Federal filed in other

proceedings where Federal stated that its principal place of business was in Indiana. Mennen argued that the prior pleadings reflected Federal's true understanding of its principal place of business. Id. at 293. The Third Circuit disagreed, stating that Federal's prior pleadings have no evidentiary value because they "run contrary to the empirical facts with which the jurisdictional inquiry is concerned." Id. (emphasis added). The court went on to state that "pleadings

themselves have no intrinsic capacity either to establish or disestablish jurisdiction; it is axiomatic that a party may not confer or defeat jurisdiction by mere pleading." Id. (emphasis added). Here, the two misstatements in prior pleadings run contrary to the empirical facts that GI LLC is the assignee and owner of the '112 patent, and that at all times the '112 patent has been owned by GI LLC, or its predecessor GI Inc. For instance, although mistakenly stated in a paper submitted to the PTO in May 2002 that Wyeth owns all right, title, and interest in the '112 patent (see D.I. 9 at 2-3), in March and June 2002 GI LLC publicly recorded with the PTO a document indicating that GI LLC owned the '112 patent. (See Ex. 4 at pp. 4-5.) In failing to even address GI LLC's public recordation of the change in assignee name for the '112 patent, Novartis implicitly asserts that regardless of the underlying facts, a statement concerning ownership in a prior litigation is irrefutable proof of ownership. As shown by Mennen, however, the rule is just the opposite--the underlying facts concerning ownership control, not a contrary statement in a pleading.

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The evidence here also demonstrates that GI LLC incorrectly stated in June 2004 that Wyeth owns all right, title, and interest in the '112 patent. (See D.I. 9 at 2.) The error of this statement is evidenced not only by documents publicly recorded with the PTO, but also by the subsequent settlement agreement entered into by the parties involved in the § 146 action in 2005. In that agreement, GI LLC and Wyeth make clear that "GI owns" the '112 patent. (See Ex. 9 at p. 1 § B.) Further, Genentech and Bayer, which originally stated that Wyeth was the owner of the '112 patent in their complaint, also confirmed in the settlement agreement that GI LLC is the owner of the '112 patent. Id. The identification of GI LLC rather than Wyeth as the owner in the settlement agreement as late as 2005, well after the statements on which Novartis relies, is consistent with and supports the fact that GI LLC is the owner of the '112 patent and is properly named as plaintiff in this case. Because GI LLC's two prior misstatements about ownership of the '112 patent are plainly inconsistent with the underlying empirical facts, they cannot be used to divest this Court of subject matter jurisdiction. Mennen, 147 F.3d at 293. GI LLC is the proper party with standing to bring this action. As such, the Court should deny Novartis's motion to dismiss for lack of standing. B. GI LLC's '112 Patent Is in Force for the Purpose of § 291

Novartis contends that, regardless of ownership, there is no subject matter jurisdiction under § 291 because the 17-year term of the '112 patent expired on September 19, 2006. Recognizing that GI Inc. applied for, and was granted, an extension of patent term under 35 U.S.C. § 156, Novartis asserts that in enacting § 156 Congress intended to provide "extensions for the narrow purpose of restoring exclusivity to a patent owner who lost a portion of its patent term during the FDA approval process." (D.I. 9 at 6.) That narrow right to exclude, Novartis argues, "is not intended to support a claim of interfering patents." (Id. at 7.) Novartis, however, 10

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cites no authority supporting its position, and § 291, on which the present action is based, applies to all patents, without any exception for patents having an extended term. Nor can it, as Novartis's interpretation wholly lacks support. Furthermore, Novartis completely ignores the legislative history evidencing Congress's intent in enacting § 156, which undermines Novartis's theory. Thus, while § 156 may limit the scope of an infringement action under 35 U.S.C. § 271, that limitation is not germane to the jurisdictional challenge Novartis raises because Congress clearly indicated that all other provisions of the patent law apply to a patent during the period of extension. (See Ex. 10 at *39.) Accordingly, the Court should deny Novartis's request to dismiss on this ground. 1. The rights granted under § 156 to file an infringement action are not the only rights GI LLC has in the '112 patent

In arguing that the '112 patent has expired for the purposes of a § 291 action, Novartis points to the language of § 156 (D.I. 9 at 7), the Federal Circuit's interpretation of § 156 (id. at 78), and the PTO's Manual of Patent Examining Procedure ("MPEP") (id. at 8-9), as support for its contention that the extended rights provided under § 156 are only "for a limited purpose relating to uses approved for the product that underwent FDA review and is not intended to support a claim of interfering patents." (Id. at 7.) What these authorities establish, however, is that any limitations to patent term extensions under § 156(b) apply to bringing a patent infringement action, not that a patent extended under § 156 is unavailable for a § 291 action. Neither the statute, Federal Circuit case law, nor the MPEP limits an action under § 291 for challenging an interfering patent, and Novartis has pointed to no authority supporting such a position. Indeed, Congress expressly stated the contrary. Specifically, § 156 was introduced into the patent law with passage of the "Drug Price Competition and Patent Term Restoration Act" in

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1984. In the House Report's discussion of the rights to be extended under § 156(b) the Congress stated unambiguously: "Except for the limitations described below with respect to the scope of the patent claims, all provisions of the patent law apply to the patent during the period of extension." (Ex. 10 at *39 (emphasis added).) The report then proceeds to explain the limitations on patent infringement actions. (Id. at *39-40.) Nowhere in the House Report's discussion of § 156 is there any suggestion that § 291 does not apply during the period of extension. To put it plainly, Novartis's contention that a patent extended under § 156 has expired for the purpose of a § 291 suit is simply wrong. Moreover, if a § 291 suit could not be brought based on a patent extended by § 156, then GI LLC would be deprived of its right to exclude unencumbered by the cloud of an interfering patent, a right to exclude that even Novartis concedes § 156 grants to GI LLC. All provisions of the patent law apply to the '112 patent, including the presumption of validity provided by 35 U.S.C. § 282. That presumption, however, has been eroded by the issuance of Novartis's patents. As the Federal Circuit explained in Kimberly-Clark Corp. v. Procter & Gamble Distrib. Co., 973 F.2d 911, 914 (Fed. Cir. 1992): The rights to which one is entitled by ownership of a patent are principally the right to exclude others from making, using, and selling patented subject matter. . . . The fact that the Patent and Trademark Office issued patents to both K-C and P & G on the same invention is a serious impediment to the enjoyment of this essential right to exclude. Neither patent owner knows if its patent is valid in light of the other's patent, the presumption of validity provided by 35 U.S.C. § 282 having been eroded by the grant of an "interfering" patent. One owner has a patent which it will lose if asserted against third parties, thereby incurring for itself, the accused infringer, and the public unneeded expense. See 35 U.S.C. § 102(g). The other has to assert or defend its patent before its presumption of validity, at least regarding priority of invention, is meaningful. Section 291 provides a means for resolving the contested issue of priority of invention solely between two patent owners, without involving third parties. (Citation omitted).

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With the issuance of the later-filed Novartis patents, GI LLC's rights in the '112 patent have been adversely affected. The law provides a mechanism, via § 291, for GI LLC to remove the impediment of the Novartis patents so it may obtain the full scope of its rights under the law, including the presumption of validity provided by § 282. In addition, § 291 serves the public interest by ensuring that there is only one patent on a given invention. Contrary to Novartis's statement that "there is no rationale . . . for allowing a § 291 action during the period of extended exclusivity under § 156," (D.I. 9 at 6), the rationale articulated by the Kimberly-Clark court aptly applies here to ensure that the extension afforded by § 156 and the rights that exist in the extended term are preserved by avoiding an unjustified restriction on § 291. Moreover, Novartis's assertion that there is also "no authority" for an interfering patent suit during a period of patent term extension is just as meritless in view of the plain language of § 291 and the legislative history of § 156. 2. The authority Novartis cites does not support its argument that the '112 patent has expired for the purpose of a § 291 action

Novartis's argues that there is no subject matter jurisdiction for an action brought under § 291 when one of the interfering patents has expired also fails because the '112 patent has not expired. Novartis nowhere challenges the propriety of the PTO granting the extension under § 156, extending the term to 2010. Moreover, Novartis concedes that the '112 patent is in force for at least the purpose of bringing a patent infringement action, for example against a third party's unauthorized sale of the approved product that was the basis for the § 156 extension. (See D.I. 9 at 6-8.) In these circumstances, the argument and cases Novartis cites are plainly inapposite--Novartis cites no case that even addresses the question of whether jurisdiction lies in a § 291 action involving a patent that is still in force like the '112 patent, much less a case that holds that there is no jurisdiction.

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In short, a major premise of Novartis's argument--that the '112 patent is expired--is wrong and the argument must accordingly fail. GI LLC undisputedly has rights under the '112 patent in view of the § 156 term extension, during which all provisions of the patent law apply as Congress intended. GI LLC should be permitted to invoke one of those provisions, § 291, to remove the impediment to those rights arising from the PTO's issuance of patents to Novartis with claims that interfere with the claims of the '112 patent. 3. The claims of the '112 patent and the Novartis patents interfere

According to Novartis, there is no interference-in-fact because the law requires interfering claims. (D.I. 9 at 9-10.) Novartis correctly points out that a suit under § 291 requires two patents that claim the same or substantially the same subject matter, as defined by the test set forth in 37 C.F.R. § 41.203. Notably, Novartis does not challenge the allegations in GI's complaint that the subject matter of the '112 patent and Novartis patents interfere. Instead, Novartis asserts the patents do not claim interfering subject matter solely on the ground that "[b]ecause the extension under § 156 provides exclusivity only for approved uses of a particular product, not for the now-expired claims of the '112 patent, no interference can exist between the '112 patent and the Novartis patents." (D.I. 9 at 10 (emphasis in original).) Novartis's single-minded attack on subject matter jurisdiction based on the scope of rights provided by § 156(b) related to infringement actions must fail. Again, Novartis provides no factual basis or legal authority supporting its arguments that the '112 patent has expired or that § 156(b) somehow limits the right to bring a § 291 action during the extended term. And as explained above, Novartis's position is contradicted by the plain language of § 291, ignores the clear intent of Congress as expressed in the legislative history of § 156(b), and would undermine the enforcement right granted to GI LLC by § 156. If, as Novartis would have the Court believe,

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the '112 patent and its claims have expired, there would be no meaning to Congress's statement that all provisions of the patent law apply during the term of extension. Since all provisions of the patent law do apply, the '112 patent and its claims have not expired for the purpose of a § 291 action, and Novartis's sole challenge to interference-in-fact must fail. C. Transfer to the Eastern District of Texas Is Not Warranted 1. Novartis's motion to transfer is premised on two contingencies that have not occurred and will not occur

Novartis asserts that the present case should be transferred to the Eastern District of Texas if either of two contingencies is met: (1) Wyeth owned the '112 patent and subsequently transferred ownership of it back to GI LLC or (2) GI LLC adds Wyeth to the present § 291 action. (See D.I. 9 at 3-4.) Neither of Novartis's two contingencies has or will come to fruition. GI LLC, or its predecessor GI Inc., has at all times been the assignee and owner of the '112 patent; thus Wyeth could not transfer ownership back to GI LLC. (See §§ IV A-B, supra.) Moreover, because GI LLC is the owner of the '112 patent, it is unnecessary to add Wyeth as a party. Because neither contingency outlined in Novartis's motion has been met, the Court should deny Novartis's motion to transfer.3 2. Novartis failed to make a showing that transfer is warranted under 28 U.S.C. § 1404(a)

That Novartis's pending motion is nothing more than a tactical effort to delay resolution of the first to invent issue before this Court is evidenced by Novartis's failure to even attempt to

Novartis contends that it may need discovery to resolve this issue "[i]f in response to this motion, GI LLC contends that ownership of the '112 patent was reassigned back to GI . . . ." (D.I. 9 at 4 (emphasis added).) Because GI LLC has established herein that it, or its predecessor GI Inc., has held title to the '112 patent at all times and that ownership of the '112 patent was never transferred to AHP/Wyeth, the contingency for Novartis's alleged need for discovery has not occurred and discovery related to ownership of the '112 patent is not warranted.

3

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meet its burden of establishing that "the balance of convenience of the parties and witnesses strongly favors the defendants" motion to transfer. Oracle Corp. v. EpicRealm Licensing, LP, C.A. No. 06-414, 2007 WL 901543, at *3 (D. Del. Mar. 26, 2007), quoting Bergman v. Brainin, 512 F. Supp. 972, 973 (D. Del. 1981). Indeed, Novartis readily acknowledges its willingness to delay by asserting in a footnote that its alternative motion to transfer could be decided at some later date. (See D.I. 9 at 1, n.1.) The Court should not countenance Novartis's dilatory tactics. Novartis's sole case for transfer is a single sentence asserting that "this action involves the same real parties in interest, both patents at issue in Texas, and many of the same issues as the related case pending there." (D.I. 9 at 4.) Not only is Novartis's conclusory statement incorrect, it falls far short of any showing that the private and public factors set forth in Jumara v. State Farm Insurance Co. favor transfer. 55 F.3d 873, 879-80 (3d Cir. 1995). First, GI LLC is not a party to the patent infringement action pending in the Eastern District of Texas and neither Wyeth nor Wyeth Pharmaceuticals Inc. is a party to this § 291 action. Thus, contrary to Novartis's allegation, the § 291 action pending before this Court does not have the same parties as the Texas action. Second, the patents involved in the Texas action do not overlap with the patents involved here because the '112 patent is not in suit there and the validity of the '112 patent will not be addressed in Texas. Finally, under § 291, this Court must determine priority of invention as between GI LLC's '112 patent and Novartis's '620 and '447 patents. This issue is not before the Texas court. Indeed, because Wyeth is not the owner of the '112 patent, Wyeth cannot assert a § 291 counterclaim in Texas. See Regents of the Univ. of Cal., 777 F. Supp. at 781-86 (denying exclusive licensee from bringing a § 291 counterclaim because the licensee was not the "owner" of the patent).

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These same facts also prevent the Texas action from being accorded first-filer status. In particular, the first-filed rule applies only when "proceedings involving the same parties and issues are pending simultaneously in different federal courts." Abbott Labs. v. Johnson & Johnson, Inc., 524 F. Supp. 2d 553, 557 (D. Del. 2007). Here, the parties are not the same and the issue of first to invent between GI LLC's '112 patent and Novartis's '620 and '447 patents is not pending in Texas, so first-filer status does not apply. Id. at 558 ("[I]t would not be

appropriate to apply the first-filed rule to the 06-613 action and the first New Jersey action, because those cases involve different patents."). Although Novartis does not address them, the private and public factors set forth in Jumara warrant denial of Novartis's motion to transfer.4 With respect to the private interests, GI LLC chose to file this action in Delaware because both GI LLC and Novartis are Delaware corporations. Novartis, on the other hand, offers no explanation for its decision to file its infringement action against Delaware corporations Wyeth and Wyeth Pharmaceuticals Inc. in the Eastern District of Texas. As this Court has stated, "[u]nless the balance is strongly in favor of a transfer, the plaintiff's choice of forum should prevail." Oracle, 2007 WL 901543, at *4, quoting ADE Corp. v. KLA-Tencor Corp., 138 F. Supp. 2d 565, 567-68 (D. Del. 2001). This Court has recognized that filing suit against a Delaware corporation, like Novartis, is a rational and legitimate reason to litigate in Delaware and that a defendant should not be heard to complain about the inconvenience of litigating in its corporate home. Oracle, 2007 WL 901543, at *4 ("[Defendant's] complaints about litigating here are outweighed by the fact that [it] has enjoyed the benefits and protections of Delaware as a limited partnership here and the State has Pursuant to D. Del. L.R. 7.1.3(c)(2) Novartis cannot now address the Jumara factors in its reply brief, as those factors "should have been included in [Novartis's] full and fair opening brief."
4

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an interest in litigation regarding companies incorporated within its jurisdiction.") Further, Novartis has not alleged that litigating in Texas would be more convenient due to the location of witnesses and documents. Indeed, that is not surprising since both GI LLC and Novartis have principal places of business in Massachusetts. If anything, Delaware is a more convenient forum for these Delaware companies. (See D.I. 1 at ¶¶ 1-2.) In terms of the public interests, resolution of the single issue of first to invent in Delaware will be less complicated, faster, and likely less expensive than if consolidated with the multiplicity of infringement and invalidity issues pending in Texas. See Oracle, 2007 WL 901543, at *4. More specifically, patent infringement actions filed in 2007 in Texas are

currently being scheduled for trial in the second quarter of 2011. (See Ex. 11 at 1.5) Novartis filed its Eastern District of Texas action against Wyeth in February 2008 and a status conference has not yet been set. Fully aware that the Texas action will likely not be scheduled for trial until late 2011--three years from now--Novartis seeks to transfer this action to a forum where resolution of this limited issue will be a long time coming. But, because of the very limited scope of a § 291 action, the minimal discovery needed by the parties, and the fact that the single issue of first to invent will be tried to the bench, this Court could quickly adjudicate GI LLC's claim of priority. Accordingly, GI LLC will seek the earliest possible trial date in Delaware, and certainly a date much earlier than 2011. Finally, the public interest embodied in § 291 would be served by this Court's prompt decision on GI LLC's claim of priority. Moreover, Delaware has an interest in resolving legal issues involving companies incorporated within its jurisdiction. See Oracle, 2007 WL 901543, at *3.
5

The attached scheduling order was signed by Magistrate Judge Everingham. (See Ex. 11 at 5.) Judge Everingham has also been assigned to the Novartis Texas action.

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Novartis, as the moving party, must provide sufficient information in the record to support its motion to transfer. See Invitrogen Corp. v. Incyte Genomics, Inc., C.A. No. 01-692, 2002 WL 883963, at *3 (D. Del. May 1, 2002) citing Liggett Group Inc. v. R.J. Reynolds Tobacco Co., 102 F. Supp. 2d 518, 529 (D.N.J. 2000). Having failed to do so, the Court should deny Novartis's motion to transfer. VI. CONCLUSION For all the above reasons, GI LLC respectfully requests that this Court deny Novartis's motion to dismiss or in the alternative transfer this action to the Eastern District of Texas.

MORRIS, NICHOLS, ARSHT & TUNNELL LLP

/s/ James W. Parrett, Jr.
Jack B. Blumenfeld (#1014) Karen Jacobs Louden (#2881) James W. Parrett, Jr. (#4292) 1201 North Market Street P.O. Box 1347 Wilmington, DE 19899 (302) 658-9200 [email protected] [email protected] [email protected] Attorney for Plaintiff

Of Counsel: Barbara C. McCurdy Steven P. O'Connor FINNEGAN, HENDERSON, FARABOW, GARRETT & DUNNER, LLP 901 New York Avenue, N.W. Washington, D.C. 20001-4413 (202) 408-4000 Willem G. Schuurman VINSON & ELKINS L.L.P. The Terrace 7 2801 Via Fortuna, Suite 100 Austin, TX 78746-7568 (512) 542-8400 August 29, 2008

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CERTIFICATE OF SERVICE I hereby certify that on August 29, 2008, I electronically filed the foregoing with the Clerk of the Court using CM/ECF, which will send notification of such filing(s) to the following: Richard K. Herrmann, Esquire Mary B. Matterer, Esquire Amy Arnott Quinlan, Esquire MORRIS JAMES LLP I also certify that copies were caused to be served on August 29, 2008 upon the following in the manner indicated: BY ELECTRONIC MAIL and HAND DELIVERY Richard K. Herrmann, Esquire Mary B. Batterer, Esquire Amy Arnott Quinlan, Esquire MORRIS JAMES LLP 500 Delaware Avenue, Suite 1500 Wilmington, DE 19801 BY ELECTRONIC MAIL George A. Riley, Esquire John C. Kappos, Esquire George C. Yu, Esquire O'MELVENY & MYERS LLP 275 Battery Street, Suite 2600 San Francisco, CA 94111-3305

/s/ James W. Parrett, Jr.
James W. Parrett, Jr. (#4292)

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H.R. REP. 98-857(I) Page 1 H.R. REP. 98-857(I), H.R. Rep. No. 857(I), 98TH Cong., 2ND Sess. 1984, 1984 U.S.C.C.A.N. 2647, 1984 WL 37416 (Leg.Hist.) (Cite as: H.R. REP. 98-857(I), 1984 U.S.C.C.A.N. 2647) **2647 P.L. 98-417, DRUG PRICE COMPETITION AND PATENT TERM RESTORATION ACT SEE PAGE 98 STAT. 1585 SENATE REPORT (JUDICIARY COMMITTEE) NO. 98-547, JUNE 26, 1984 (TO ACCOMPANY S. 1538) HOUSE REPORT (ENERGY AND COMMERCE COMMITTEE) NO. 98-857(I), JUNE 21, 1984 (TO ACCOMPANY H.R. 3605) HOUSE REPORT (JUDICIARY COMMITTEE) NO. 98-857(II), AUG. 1, 1984 (TO ACCOMPANY H.R. 3605) CONG. RECORD VOL. 130 (1984) DATES OF CONSIDERATION AND PASSAGE SENATE JUNE 29, AUGUST 10, SEPTEMBER 12, 1984 HOUSE SEPTEMBER 6, 1984 S. 1538 WAS PASSED IN LIEU OF THE HOUSE BILL AFTER AMENDING ITS LANGUAGE TO CONTAIN THE TEXT OF THE HOUSE BILL. THE HOUSE REPORT (PART I, THIS PAGE, AND PART II, PAGE 2686) AND A RELATED REPORT (PAGE 2721) ARE SET OUT. (CONSULT NOTE FOLLOWING TEXT FOR INFORMATION ABOUT OMITTED MATERIAL. COMMITTEE REPORT IS A SEPARATE DOCUMENT ON WESTLAW.) EACH

HOUSE REPORT NO. 98-857(I) JUNE 21, 1984 *1 THE COMMITTEE ON ENERGY AND COMMERCE, TO WHOM WAS REFERRED THE BILL (H.R. 3605) TO AMEND THE FEDERAL FOOD, DRUG, AND COSMETIC ACT TO AUTHORIZE AN ABBREVIATED NEW DRUG APPLICATION UNDER SECTION 505 OF THAT ACT FOR GENERIC NEW DRUGS EQUIVALENT TO APPROVED NEW DRUGS, HAVING CONSIDERED THE SAME, REPORT FAVORABLY THEREON WITH AMENDMENTS AND RECOMMEND THAT THE BILL AS AMENDED DO PASS. * * * *

*14 PURPOSE AND SUMMARY TITLE I THE PURPOSE OF TITLE I OF THE BILL IS TO MAKE AVAILABLE MORE LOW COST GENERIC DRUGS BY ESTABLISHING A GENERIC DRUG APPROVAL PROCEDURE FOR PIONEER DRUGS FIRST APPROVED AFTER 1962. UNDER CURRENT LAW, THERE IS A GENERIC DRUG APPROVAL PROCEDURE FOR PIONEER DRUGS APPROVED BEFORE 1962, BUT NOT FOR PIONEER DRUGS APPROVED AFTER 1962. TITLE I OF THE BILL GENERALLY EXTENDS THE PROCEDURES USED TO APPROVE GENERIC COPIES OF PRE-62 DRUGS TO POST-62 DRUGS. GENERIC COPIES *15 **2648 OF ANY DRUGS MAY BE APPROVED IF THE GENERIC IS THE SAME AS THE ORIGINAL DRUG OR SO SIMILAR THAT

© 2008 Thomson Reuters/West. No Claim to Orig. US Gov. Works.

Case 1:08-cv-00290-SLR Document 11-3 Filed 08/29/2008 Page 49 Page 2 of 98 H.R. REP. 98-857(I) H.R. REP. 98-857(I), H.R. Rep. No. 857(I), 98TH Cong., 2ND Sess. 1984, 1984 U.S.C.C.A.N. 2647, 1984 WL 37416 (Leg.Hist.) (Cite as: H.R. REP. 98-857(I), 1984 U.S.C.C.A.N. 2647)

FDA HAS DETERMINED THE DIFFERENCES DO NOT REQUIRE SAFETY AND EFFECTIVENESS TESTING. TITLE I ALSO REQUIRES PATENT OWNERS TO SUBMIT INFORMATION TO FDA REGARDING PRODUCE AND USE PATENTS THAT COVER APPROVED DRUGS. GENERIC COPIES OF THESE DRUGS MAY BE APPROVED WHEN THE PATENTS EXPIRE UNLESS THE GENERIC COMPANY CERTIFIES THAT THE PATENT IS INVALID OR WILL NOT BE INFRINGED. IN SUCH CASES, THE GENERIC COMPANY MUST NOTIFY THE PATENT OWNER ABOUT ITS CERTIFICATION AND APPROVAL OF THE GENERIC DRUG MAY NOT BE MADE EFFECTIVE UNTIL THE COURT DECIDES THE SUIT FOR PATENT INFRINGEMENT OR A PERIOD OF 18 MONTHS, WHICHEVER OCCURS FIRST. NOTIFICATION MUST BE GIVEN WHEN THE GENERIC HAS SUBMITTED AN ANDA WITH BIOEQUIVALENCE DATA. IN ADDITION, TITLE I AFFORDS FOUR YEARS OF EXCLUSIVE MARKET LIFE TO DRUGS WHICH MAY NOT BE PATENTED AND WHICH ARE APPROVED FOR THE FIRST TIME AFTER ENACTMENT OF THE BILL. FURTHER, DRUGS WHICH WERE APPROVED FOR THE FIRST TIME BETWEEN 1982 AND THE DATE OF ENACTMENT RECEIVED TEN YEARS OF EXCLUSIVE MARKET LIFE. TITLE II THE PURPOSE OF TITLE II OF THE BILL IS TO CREATE A NEW INCENTIVE FOR INCREASED EXPENDITURES FOR RESEARCH AND DEVELOPMENT OF CERTAIN PRODUCTS WHICH ARE SUBJECT TO PREMARKET GOVERNMENT APPROVAL. THE INCENTIVE IS THE RESTORATION OF SOME OF THE TIME LOST ON PATENT LIFE WHILE THE PRODUCT IS AWAITING PRE-MARKET APPROVAL. UNDER CURRENT LAW, A PATENT CONTINUES TO RUN WHILE THE MAKER OF THE PRODUCT IS TESTING AND AWAITING APPROVAL TO MARKET IT. TITLE II OF H.R. 3605 PROVIDES FOR ONE EXTENSION OF THE EARLIEST PATENT ON CERTAIN PRODUCTS SUBJECT TO PRE-MARKET APPROVAL. THE EXTENSION WOULD BE FOR A PERIOD EQUAL TO: (1) HALF OF THE TIME REQUIRED TO TEST THE PRODUCT FOR SAFETY (AND EFFECTIVENESS IN SOME CASES); AND (2) ALL OF THE TIME REQUIRED FOR THE AGENCY TO APPROVE MARKETING OF THE PRODUCT. THESE PRODUCTS INCLUDE: HUMAN DRUGS, ANIMAL DRUGS, MEDICAL DEVICES, AND FOOD AND COLOR ADDITIVES. TITLE II PLACES SEVERAL LIMITS ON THE PERIOD OF PATENT EXTENSION. FIRST, THE PERIOD OF EXTENSION MAY NOT EXCEED TWO YEARS FOR PRODUCTS EITHER CURRENTLY BEING TESTED OR AWAITING APPROVAL. FOR ALL OTHER PRODUCTS, THE PERIOD OF EXTENSION MAY NOT EXCEED FIVE YEARS. SECOND, THE PERIOD OF PATENT EXTENSION WHEN ADDED TO THE PATENT TIME LEFT AFTER APPROVAL OF THE PRODUCT MAY NOT EXCEED FOURTEEN YEARS. THIRD, ANY TIME THAT THE PRODUCT'S MANUFACTURER DID NOT ACT WITH DUE DILIGENCE DURING THE REGULATORY REVIEW PERIOD WOULD BE SUBTRACTED. FINALLY, TITLE II PROVIDES THAT IT IS NOT AN ACT OF PATENT INFRINGEMENT FOR A GENERIC DRUG MAKER TO IMPORT OR TO TEST A PATENTED DRUG IN PREPARATION FOR SEEKING FDA APPROVAL IF MARKETING OF THE DRUG WOULD OCCUR AFTER EXPIRATION OF THE PATENT. HEARINGS THE COMMITTEE'S SUBCOMMITTEE ON HEALTH AND THE ENVIRONMENT HELD ONE DAY OF HEARINGS ON H.R. 3605, THE DRUG PRICE COMPETITION ACT, ON JULY 15, 1983. TESTIMONY WAS RECEIVED FROM 15 WITNESSES, *16 **2649 REPRESENTING NINE ORGANIZATIONS, WITH ADDI-

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Case 1:08-cv-00290-SLR Document 11-3 Filed 08/29/2008 Page 50 Page 3 of 98 H.R. REP. 98-857(I) H.R. REP. 98-857(I), H.R. Rep. No. 857(I), 98TH Cong., 2ND Sess. 1984, 1984 U.S.C.C.A.N. 2647, 1984 WL 37416 (Leg.Hist.) (Cite as: H.R. REP. 98-857(I), 1984 U.S.C.C.A.N. 2647)

TIONAL MATERIAL SUBMITTED BY TWO INDIVIDUALS AND ORGANIZATIONS. COMMITTEE CONSIDERATION ON AUGUST 2, 1983, THE COMMITTEE'S SUBCOMMITTEE ON HEALTH AND THE ENVIRONMENT MET IN OPEN SESSION AND ORDERED FAVORABLY REPORTED H.R. 3605 WITHOUT AMENDMENT BY VOICE VOTE. ON JUNE 12, 1984, THE COMMITTEE MET IN OPEN SESSION ON H.R. 3605, AMENDED THE BILL, AND ORDERED IT FAVORABLY REPORTED BY A VOICE VOTE. THE TITLE OF THE BILL, AS AMENDED, IS THE 'DRUG PRICE COMPETITION AND PATENT TERM RESTORATION ACT OF 1984.' BACKGROUND AND NEED FOR THE LEGISLATION TITLE I-- ABBREVIATED NEW DRUG APPLICATIONS PRIOR TO 1962, THE FEDERAL FOOD, DRUG AND COSMETIC ACT (FFDCA) REQUIRED THAT ALL DRUGS BE APPROVED AS SAFE BEFORE THEY COULD BE MARKETED. THE 1962 AMENDMENTS REQUIRED THAT ALL NEW DRUGS, GENERIC AND PIONEER, MUST BE APPROVED AS SAFE AND EFFECTIVE PRIOR TO MARKETING. AS A RESULT OF THE 1962 AMENDMENTS, FDA DID TWO THINGS REGARDING PRE-1962 DRUGS. FIRST, THE AGENCY CREATED THE DRUG EFFICACY STUDY (DESI) TO DETERMINE IF ALL PRE1962 DRUGS WERE EFFECTIVE. SECOND, FDA ESTABLISHED A POLICY PERMITTING THE APPROVAL OF A GENERIC DRUG EQUIVALENT TO A SAFE AND EFFECTIVE PRE-1962 PIONEER DRUG. AS A RESULT OF THE 1962 AMENDMENTS, THE MANUFACTURER OF A PIONEER DRUG MUST CONDUCT TESTS ON HUMANS THAT SHOW THE PRODUCT TO BE SAFE AND EFFECTIVE AND SUBMIT THE RESULTS IN A NEW DRUG APPLICATION (NDA). A MANUFACTURER OF A GENERIC DRUG MUST CONDUCT TESTS THAT SHOW THE GENERIC DRUG IS THE SAME AS THE PIONEER DRUG AND THAT IT WILL BE PROPERLY MANUFACTURED AND LABELED. THIS INFORMATION IS SUBMITTED IN AN ABBREVIATED NEW DRUG APPLICATION (ANDA). THE ONLY DIFFERENCE BETWEEN A NDA AND AN ANDA IS THAT THE GENERIC MANUFACTURER IS NOT REQUIRED TO CONDUCT HUMAN CLINICAL TRIALS. FDA CONSIDERS SUCH RETESTING TO BE UNNECESSARY AND WASTEFUL BECAUSE THE DRUG HAS ALREADY BEEN DETERMINED TO BE SAFE AND EFFECTIVE. MOREOVER, SUCH RETESTING IS UNETHICAL BECAUSE IT REQUIRES THAT SOME SICK PATIENTS TAKE PLACEBOS AND BE DENIED TREATMENT KNOWN TO BE EFFECTIVE. THE FDA ALLOWS THIS ANDA PROCEDURE ONLY FOR PIONEER DRUGS APPROVED BEFORE 1962. THERE IS NO ANDA PROCEDURE FOR APPROVING GENERIC EQUIVALENTS OF PIONEER DRUGS APPROVED AFTER 1962. WHILE THE FDA HAS BEEN CONSIDERING SINCE 1978 AN EXTENSION OF THE PRE-1962 ANDA POLICY TO POST-1962 DRUGS, IT HAS NOT EXTENDED THE REGULATION. BECAUSE OF THE AGENCY'S FAILURE TO ACT, TITLE I OF H.R. 3605 IS NECESSARY TO ESTABLISH A POST-1962 ANDA POLICY. SOME HAVE SUGGESTED THAT 'PAPER NDAS' BE USED TO APPROVE GENERIC EQUIVALENTS OF PIONEER DRUGS APPROVED AFTER 1962. UNDER THE PAPER NDA PROCEDURE, THE GENERIC MANUFACTURER MAY SUBMIT SCIENTIFIC REPORTS, INSTEAD OF CLINICAL TRIALS, TO SUPPORT FINDINGS OF SAFETY AND EFFICACY. THIS PROCEDURE IS INADEQUATE, HOWEVER, BECAUSE

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Case 1:08-cv-00290-SLR Document 11-3 Filed 08/29/2008 Page 51 Page 4 of 98 H.R. REP. 98-857(I) H.R. REP. 98-857(I), H.R. Rep. No. 857(I), 98TH Cong., 2ND Sess. 1984, 1984 U.S.C.C.A.N. 2647, 1984 WL 37416 (Leg.Hist.) (Cite as: H.R. REP. 98-857(I), 1984 U.S.C.C.A.N. 2647)

FDA ESTIMATES THAT SATISFACTORY REPORTS ARE NOT AVAILABLE FOR 85 PERCENT OF ALL POST-1962 DRUGS. *17 **2650 CURRENTLY, THERE ARE APPROXIMATELY 150 DRUGS APPROVED AFTER 1962 THAT ARE OFF PATENT AND FOR WHICH THERE IS NO GENERIC EQUIVALENT. ALL OF THESE DRUGS COULD BE APPROVED IN GENERIC FORM IF THERE WAS A PROCEDURE. EACH YEAR, MORE PIONEER DRUGS GO OFF PATENT AND BECOME AVAILABLE FOR APPROVAL AS GENERICS. AMONG THE DRUGS AVAILABLE OR SOON TO BE AVAILABLE FOR GENERIC APPROVAL ARE FIVE BEST SELLERS: VALIUM, MOTRIN, INDERAL, DYAZIDE, AND LASIX. DYAZIDE, FOR EXAMPLE, IS THE MOST WIDELY USED DIURETIC FOR THE TREATMENT OF HIGH BLOOD PRESSURE. ITS PATENT EXPIRED IN 1981. VALIUM IS A POPULAR TRANQUILIZER WHOSE PATENT EXPIRES IN 1985. ANOTHER DRUG WHOSE PATENT HAS EXPIRED IS INDOCIN, AN ANTI-INFLAMMATORY DRUG USED IN THE TREATMENT OF ARTHRITIS THAT IS THE TENTH HIGHEST SELLING DRUG IN THE UNITED STATES. THE AVAILABILITY OF GENERIC VERSIONS OF PIONEER DRUGS APPROVED AFTER 1962 WOULD SAVE AMERICAN CONSUMERS $920 MILLION OVER THE NEXT 12 YEARS. OLDER AMERICANS, IN PARTICULAR, WOULD BENEFIT BECAUSE THEY USE ALMOST 25 PERCENT OF ALL PRESCRIPTION DRUGS. MOREOVER, THE LACK OF GENERICS FOR POST-1962 PIONEER DRUGS WILL COST FEDERAL AND STATE GOVERNMENTS MILLIONS OF DOLLARS. FOR THE DRUG METRONIDAZOLE, PURCHASED BY THE DEPARTMENT OF DEFENSE, THE TAXPAYERS SAVED APPROXIMATELY $1.2 MILLION IN ONE YEAR AS A RESULT OF THE AVAILABILITY OF A LOWER PRICED GENERIC VERSION. FEDERAL AND STATE GOVERNMENTS WILL BE DENIED COMPARABLE SAVINGS ON DRUGS APPROVED AFTER 1962 BECAUSE OF THE LACK OF AN APPROVAL PROCEDURE. TITLE II-- PATENT TERM RESTORATION PATENTS ARE DESIGNED TO PROMOTE INNOVATION BY PROVIDING THE RIGHT TO EXCLUDE OTHERS FROM MAKING, USING, OR SELLING AN INVENTION. THEY ENABLE INNOVATORS TO OBTAIN GREATER PROFITS THAN COULD HAVE BEEN OBTAINED IF DIRECT COMPETITION EXISTED. THESE PROFITS ACT AS INCENTIVES FOR INNOVATIVE ACTIVITIES. ALTHOUGH THE PATENT TERM IN THE UNITED STATES IS 17 YEARS, THE PERIOD DURING THE PATENT TERM IN WHICH PRODUCTS ARE MARKETED (THE EFFECTIVE PATENT TERM) IS USUALLY LESS THAN 17 YEARS BECAUSE PATENTS OFTEN ARE OBTAINED BEFORE PRODUCTS ARE READY TO BE MARKETED. EFFECTIVE PATENT TERMS ARE INFLUENCED BY MANY FACTORS, INCLUDING FEDERAL PREMARKETING AND PREMANUFACTURING REGULATIONS. THE PRODUCTS COVERED BY THESE REGULATIONS INCLUDE PHARMACEUTICALS, MEDICAL DEVICES, FOOD ADDITIVES, AND COLOR ADDITIVES. PHARMACEUTICALS FOR INSTANCE CANNOT BE MARKETED IN THE UNITED STATES UNTIL THEY HAVE BEEN APPROVED BY THE FOOD AND DRUG ADMINISTRATION (FDA). TO OBTAIN SUCH APPROVAL, DRUGS MUST UNDERGO EXTENSIVE TESTING TO PROVE THEY ARE BOTH SAFE AND EFFECTIVE. ALL THESE PRODUCTS ARE SUBJECT TO DIFFERENT REGULATIONS THAT HAVE HAD VARYING IMPACTS ON EFFECTIVE PATENT TERMS. IN TESTIMONY BEFORE SEVERAL CONGRESSIONAL COMMITTEES, REPRESENTATIVES FROM THE PHARMACEUTICAL FIRMS THAT ARE HEAVILY INVOLVED IN BASIC RESEARCH AND RELY UPON PATENTS, CLAIMED THAT THE AVERAGE EFFECTIVE PATENT TERM OF DRUGS HAS DECLINED.

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Case 1:08-cv-00290-SLR Document 11-3 Filed 08/29/2008 Page 52 Page 5 of 98 H.R. REP. 98-857(I) H.R. REP. 98-857(I), H.R. Rep. No. 857(I), 98TH Cong., 2ND Sess. 1984, 1984 U.S.C.C.A.N. 2647, 1984 WL 37416 (Leg.Hist.) (Cite as: H.R. REP. 98-857(I), 1984 U.S.C.C.A.N. 2647)

THEY ARGUED THAT A CONTINUATION OF THE DECLINE WOULD RESULT IN DECREASED EXPENDITURES FOR RESEARCH AND DEVELOPMENT AND, EVENTU