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The United States Court of Appeals for the Federal Circuit is now open and in session.

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God save the United States and this honorable court.

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Good morning.

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We have two cases this morning that we've consolidated for purposes of argument only.

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The cases are 21407, Takeda Pharmaceuticals v. Myelin Pharmaceuticals, and case number 201545,

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Takeda Pharmaceuticals versus Outcome Laboratories Limited.

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Let me just say at the outset that you all are participants in yet one of many new things we've been doing over the past few months, because this is the first oral argument we're having where no one involved in the argument is actually physically at the court.

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We were told for security purposes to not enter the court over a period of a few days.

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Everything's fine.

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But I appreciate all of the efforts of our clerk's office and IT in seamlessly, hopefully making this happen.

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So we're ready to proceed.

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Mr. Fleming, whenever you are.

[00:01:14] Speaker 04:
Uh, good morning, your honors.

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May it please the court Porter Fleming for Takeda.

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Uh, we are here today, uh, on appeal of a district court decision that denied Takeda's motion for a preliminary injunction against Milan and outcome.

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The district court held that Takeda had failed to show that it was likely to succeed on the merits.

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The district court... Can I just ask you a question?

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I'm sorry, Mr. Flaming.

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Sorry to interrupt.

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This is Sharon Price.

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Just let me ask you a sort of technical housekeeping question at the outset.

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What is the current status of this product and the case and so forth?

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I know that our court has been involved as a preliminary matter through motion.

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So can you just give us an update of what the status is now?

[00:02:02] Speaker 04:
Sure, Your Honor.

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The status is that following the court's denial of our injunction pending the appeal, my understanding is that both Mylan and Alchem relaunched their products, their generic ANDA products that compete with the Colchrist brand product.

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So in the market today is the brand Colchris product, a authorized generic product that's sold by par, as well as a Myelin product and an Alchem product.

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The proceedings in Delaware, Your Honor,

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Basically, we had the preliminary injunction hearing and following that ruling, that case has been, it hasn't been officially stayed, but there's been no activity subject to a, I assume, a decision from this panel.

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Okay.

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Thank you very much.

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Sorry to take your time.

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We'll add a couple more minutes because I didn't want to take your time.

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I just appreciate your update.

[00:03:07] Speaker 04:
Thank you.

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So our position here on appeal is that the District Court erred in concluding that section 1.2d of the license agreement had been triggered by a earlier case, which is called the Westward case.

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I'd like to go specifically to section 1.2d.

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It has specific language.

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The language is virtually identical for both Mylan and Alchem.

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There are a few little differences, but for purposes of the appeal, I think we could conclude that the language is the same and that a determination with respect to 1.2D would apply equally to Mylan and Alchem.

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Turning to the specific language of 1.2D, 1.2D was or requires that there be a final court decision holding

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that all unexpired claims of licensed patents were asserted and adjudicated against third party are either one, not infringed, or two, a combination of not infringed and invalid.

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In the Westward litigation, which involved a product called Mitigare, there were claims of eight patents that were asserted.

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of those eight patents, five of those patents were voluntarily dismissed.

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Those five patents

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were dismissed on a voluntary dismissal that we have repeatedly and consistently argued that the voluntary dismissal constituted an adjudication.

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And I would direct the court to appendix page 3420, which is a copy of the preliminary injunction brief that was filed at the district court level.

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I would direct the court to the opening brief in the Mylan Appeal, page 18, where we state a voluntary dismissal with prejudice constitutes an adjudication.

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I would direct the court to the opening brief in ALCHEM, page 22, where we again state a voluntary dismissal with prejudice constitutes an adjudication.

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So that means that the claims were all asserted and they were all adjudicated?

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Correct.

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Of all eight patents.

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Now why that matters is the language of 1.2D requires a holding where there is either a finding of non-infringement or a combination of non-infringement and invalidity.

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In the Westward case, there was a summary judgment decision

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where three patents were adjudicated to be found not infringed.

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The problem, which we say is how the court erred, is the court focused that on only those three patents that were the subject of the summary judgment decision.

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Well, let me ask you, one of the things that, I'm sorry, this is just pressed again, sorry to keep interrupting, but one of the things that I recall Judge Andrews pointed to

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was the ramifications of the construction you're asserting.

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In other words, I think he gave the hypothetical that, well, that means that you could assert whatever, or anything could be asserted, and then if just one claim or one patent is withdrawn for any reason, I'm not necessarily suggesting a nefarious purpose, but for any reason, then that would mean that the section would not be operative.

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he construed that as being really something that's up for gamesmanship and doesn't seem to be what is intended by this provision.

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So what is your response to that?

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My first response is, Your Honor, is that if you look at the license agreement, Section 1.2 is titled generic entry dates.

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Both Mylan and Alchem agreed under Section 1.2a to a specific date where they would get a license to practice these patents.

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What we're looking at 1.2d is an exception.

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Something has changed.

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It's a limited exception.

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It's a specific exception.

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And so, yes, with respect to this exception, which would mean a change in the status quo,

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That requires that there would have to be a holding of all patents or claims of patents that were asserted and adjudicated.

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So, yes, we're saying that there would have to be a finding of non-infringement or a combination of non-infringement for all claims that were asserted and adjudicated.

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That is the clear and unambiguous language of Section 1- I guess I'm not hearing a real response to my question.

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which is that means the parties entered into, you're right, it's an exception, but that the parties have entered into something for which you maintain entire control in terms of what can be asserted, and you can effectively, really easily and readily make sure that this exception never comes into play.

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And that doesn't seem the norm in terms of negotiating, whether it's an exception or not,

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That seems a little odd and one-sided.

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Your Honor, I understand what you're asking and the answer is we do not, Takeda, one side does not control this.

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To the extent that a defendant, which is not uncommon and that's why we gave the example of the 30-month stay,

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A defendant can request that the dismissal have language which would say there is no non-infringement.

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And actually, we have attached to our paper situations where Mylan has entered into dismissals of cases where certain patents, they have required language that the patent was not infringed.

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And specifically, I'm referring to appendix page 4118.

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and appendix page 4120.

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And in both of those cases, Myland sought a statement that their product did not infringe a patent that was at issue and that the remaining patents then continued to further adjudication.

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So, no, it is not a situation where there can be gamesmanship.

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There is a situation where the defendant can seek language in the dismissal

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setting forth either non-infringement or that the patent's invalid, which would protect it from exactly against this point.

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Let me ask you about just, I know this actually, I don't think it was referred to in Judge Andrew's opinion, but I think in the transcript he raised this hypothetical, which is under your construction, if there were a DJ, if a party filed a DJ that resulted in a judgment of invalidity,

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Is it possible that the claim has not been asserted against a third party with respect to this provision?

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Yes, that question did come up on oral argument.

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And hypothetically, I guess you could have a situation where there would be no adjudication.

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But I think the reality, Your Honor, is that in almost every case,

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where there is a DJ complaint, there would be some form of either a counterclaim back saying there was infringement or there would be an affirmative defense saying that there was infringement or that the patent is valid.

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So in those types of cases, even though a DJ action was brought, the patent would be asserted by virtue of a counterclaim or an affirmative defense.

[00:11:26] Speaker 02:
Uh, let me also, I'm sorry to monopolize your time, but I just have one other question about you mentioned and I appreciate that.

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Uh, I think at the outset that the two claims, the two cases before us involve the same provision.

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And so that would dictate, and I want to be clear with that necessarily dictate the outcome, the same outcome in both cases or.

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In other words, is our construction of a license agreement just positive and does it resolve both appeals?

[00:11:59] Speaker 04:
Your Honor, I think the language that's important in 1.2D requiring a holding of all claims of the patents were both asserted and adjudicated

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and that holding goes to either non-infringement or combination, that language is the same and would apply equally to both Mylan and ALCHEM.

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I would point out that with respect to the five patents that were the subject of the dismissal, that adjudication was on with claim preclusion.

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So there was an adjudication with those five patents.

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The three patents that were the subject of the non-infringement finding on summary judgment, they were only a subset of the eight.

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And so for 1.2D to be enacted or to be a trigger, you need a holding, as the language says, of all eight patents or all claims of all eight patents.

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And that simply did not happen in this Westward case.

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I know it's not in dispute or it's not an issue in this case, so I'm not bringing new matters in, but I'm just interested in what you keep referring to.

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The last portion of the disputed provision says any combination of not infringed and invalid or unenforceable.

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Combination is a hard word to construe.

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a combination of not infringed and invalid enforcement.

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Does that mean just invalidity with nothing on infringement necessarily because it's not reached or unenforceability?

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Is that sufficient to satisfy this?

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Is that what you mean by a combination?

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I don't know what you mean by a combination.

[00:13:47] Speaker 04:
Yeah, I'm happy to address that, Your Honor.

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I think, first of all, the purpose of that language is that you need a substantive determination of all the issues.

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And so to the extent that there are multiple patents involved, some patents may not be infringed, and then other patents may be either invalid or unenforceable.

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So you're addressing all.

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So again, I think it highlights the importance that you need all the patents that have been asserted

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and adjudicated to be resolved by way of a holding.

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So that's, I believe, the purpose of combination.

[00:14:24] Speaker 02:
That's helpful.

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I didn't see the combination as applying to the different claims and so forth.

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So thank you.

[00:14:28] Speaker 02:
That's helpful.

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Let me move you on to the irreparable harm piece of this, because I don't see that you're arguing that irreparable harm under the usual factual standards

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the fact finding.

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That doesn't seem to be your argument here.

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Your argument seems to rest pretty much exclusively on the provision and contract which deals with the stipulation of irreparable harm.

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Am I reading that correctly?

[00:14:58] Speaker 04:
I would say it a little bit differently, Your Honor.

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I would agree that the language of Section 1.10 emphatically

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illustrates that the party stipulated, both Mylan and Alcom, that there would be irreparable harm if sections 1.2d or 1.4 were breached.

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We believe that happened.

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And so there is an agreement that there is irreparable harm.

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Unlike a lot of cases, section 1.10 goes even farther.

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And it states, again, Mylan and Alcom agreed that we're entitled to immediate injunctive relief.

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So yes, that is in the license agreement.

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And to your final point.

[00:15:38] Speaker 02:
Oh, sorry.

[00:15:40] Speaker 02:
Let me just ask you about what you've just said so I don't lose my chain of thought.

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So you're saying, clearly, your analysis rests on our conclusions with respect to the interpretation of 1.2D.

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So if we disagree with your construction of that, then that eliminates your argument with respect to irreparable harm.

[00:16:04] Speaker 02:
because it's based on a breach of the agreement and we based on your construction of the agreement, right?

[00:16:10] Speaker 04:
Actually, that was my second point I was getting to.

[00:16:12] Speaker 04:
So the answer to that is no, your honor, because we did include in our papers and as an exhibit that we have lost sales with respect to there's a letter from

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I'll find the citation to it, but it's a letter from Par Pharmaceutical, who's our partner with respect to the brand generic product.

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And yes, there have been lost sales, and there have been loss of goodwill, and we have been irreparably harmed with respect to the improper launch by Myelin and Alchem with respect to their infringing, admitted infringing, ANDA products.

[00:16:57] Speaker 02:
But still, I still come back to the point I was making, which I think you don't disagree with, which is, to the extent you're resting the provision that says we stipulate to irreparable harm, that is predicated on an argument that they violated the agreement.

[00:17:18] Speaker 02:
And the decision of whether or not the agreement has been violated is the essence of this appeal here.

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So the irreparable harm stipulation only comes into play if we agree with your interpretation of the agreement.

[00:17:32] Speaker 04:
I will agree.

[00:17:33] Speaker 04:
I will agree, Your Honor, that sections that the one point 10 sections are predicated on a breach of the agreement.

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And to the extent there is a breach, which we believe there is, that there would be irreparable, there's agreed to already irreparable harm and there is agreed language that there should be immediate injunctive relief.

[00:17:56] Speaker 04:
Correct.

[00:17:56] Speaker 02:
Can I just ask you one more question about that, which is, and then I'll be quiet, I promise.

[00:18:01] Speaker 02:
But on the stipulation portion of it, is there, it's an interesting issue, but do we have any cases that you're aware of

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we're I mean, in our view, the courts decide whether or not there's irreparable harm and injunction is warranted.

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And is there a case where this court has said we are willing to rely and accept a stipulation from the parties and therefore invoke our authority

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to assert an injunction just based on the party stipulation and in the absence of our own finding or the district court's own finding about irreparable harm?

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Are there any cases about that?

[00:18:42] Speaker 04:
There are cases, Your Honor.

[00:18:44] Speaker 04:
I think you're asking me about federal circuit authority.

[00:18:47] Speaker 04:
I'm not aware of federal circuit authority.

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I am aware of Delaware authority and we do cite the TP group case and we believe the Delaware law is controlling on this point.

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So yes, in that sense.

[00:19:03] Speaker 02:
I know your bell has gone off, but I've been monopolized the whole time.

[00:19:06] Speaker 02:
So I want to turn to Judge Newman and Judge Hughes if they have any questions for you.

[00:19:12] Speaker 01:
Well, my question is the same as I've had all along, to make sure that we understand what the contractual intent and understanding was of the parties when this agreement was entered.

[00:19:28] Speaker 01:
At the time, it was known that Medicare was on the market.

[00:19:31] Speaker 01:
It was known how many patents there were, and all of this, as I said before, seemed to me to weigh on the side of Takeda's contractual position.

[00:19:44] Speaker 01:
At the same time, these interpretations have a certain color to them, and it can't be that it wasn't foreseen by counsel, the excellent counsel on all sides, to make sure that

[00:20:01] Speaker 01:
No gaps were held and yet here is this gap.

[00:20:05] Speaker 01:
There is a product, a generic product on the market which although not A, B identical, other than that is the same chemical and these complications we see now can't have been unforeseen.

[00:20:22] Speaker 01:
I don't know if it's possible in a moment or two to bridge that gap but that's,

[00:20:30] Speaker 01:
been something that's troubled me from the beginning.

[00:20:34] Speaker 04:
Your Honor, I'm happy to address that.

[00:20:36] Speaker 04:
Thank you.

[00:20:37] Speaker 04:
I believe that the language of 1.2D was intended to be an exception.

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It should be narrowly interpreted to the extent there was an agreed date in 1.2A.

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And as a narrow exception, the exception of 1.2D requires the holding of all the patents.

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That didn't happen, and to the extent that Mitigair was known, Mitigair did not change the status quo.

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It was not kind of the type of event where Mylan or Alchem would be unfairly treated by having to wait.

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They agreed, as in other provisions of the agreement,

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that there were first filers.

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They weren't going to be in the first wave.

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And so what they're trying to do here is

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put the square peg through the round hole or the round peg through the square hole and try to get out from under an agreed-upon date.

[00:21:37] Speaker 04:
So, yes, I think that there hasn't been a change of the status quo.

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The status quo should remain.

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The agreed-upon date in 1.2a should control, and the Mitigare product, which, if you correctly state, Judge Newman, was on the market, was known,

[00:21:55] Speaker 04:
was never intended by the parties to be some type of triggering event for 1.2D.

[00:22:02] Speaker 04:
And to the extent we have to get into the intent of the parties, following on Chief Judge Prost's comment about where the Delaware case is, there has not been discovery about that point.

[00:22:14] Speaker 04:
And to the extent you have to get into either extrinsic evidence or parole evidence, we haven't gotten there yet.

[00:22:20] Speaker 04:
And so even though it's our position that 1.2D is clear and unambiguous,

[00:22:25] Speaker 04:
You know, if reasonable people can disagree as to what it means, I think the case should be remanded for that type of discovery.

[00:22:34] Speaker 04:
Our preference, obviously, would be for the decision to be vacated and the Delaware court be instructed to issue an injunction.

[00:22:44] Speaker 04:
But to the extent there's questions about intent and a proper construction in view of the party's respective intent, I think there needs to be discovery.

[00:22:55] Speaker 04:
I'd like to reserve subject to more questions.

[00:22:59] Speaker 02:
Let me just turn to Judge Hughes and see if he has any.

[00:23:02] Speaker 02:
Thank you.

[00:23:04] Speaker 02:
I don't have any questions.

[00:23:06] Speaker 02:
Okay.

[00:23:06] Speaker 02:
All right.

[00:23:07] Speaker 02:
We'll restore some of your rebuttal and we appreciate your response.

[00:23:11] Speaker 02:
Let's turn to the other side.

[00:23:15] Speaker 02:
Mr. Sommer and Ms.

[00:23:17] Speaker 02:
Sommers, you have 20 minutes.

[00:23:19] Speaker 02:
Are you dividing it 10 minutes apiece?

[00:23:22] Speaker 06:
Your Honor, this is Michael Summer.

[00:23:24] Speaker 06:
Good morning.

[00:23:25] Speaker 06:
I'm going to be making the principal argument, and Ms.

[00:23:29] Speaker 06:
Summers will address any questions the panel may have with respect to outcome-specific issues.

[00:23:36] Speaker 06:
Otherwise, our goal is for me to cover the field.

[00:23:40] Speaker 02:
Okay.

[00:23:41] Speaker 02:
As long as Mr. Lichtenberg understands, then, how to run the clock.

[00:23:46] Speaker 02:
That's fine with me.

[00:23:48] Speaker 06:
All right.

[00:23:48] Speaker 06:
Please proceed.

[00:23:51] Speaker 06:
Thank you.

[00:23:51] Speaker 06:
Uh, good morning and may it please the court.

[00:23:53] Speaker 06:
My name is Michael summer.

[00:23:55] Speaker 06:
I represent appellee Milan pharmaceuticals.

[00:23:59] Speaker 06:
The decision of the district of Delaware denying to Kate his motion for a preliminary injunction should be affirmed because the district court was correct.

[00:24:09] Speaker 06:
Takeda failed to satisfy any of the four elements necessary to warrant the extraordinary relief of a preliminary injunction.

[00:24:18] Speaker 06:
Judge Andrews in the District of Delaware read the relevant contract section, he read the words, asserted and adjudicated, and with neither party arguing that those words were in any way ambiguous, the District Court ruled that they meant just what they said and that those words did not at all support the extraordinary relief being sought by Takeda.

[00:24:40] Speaker 06:
The District Court's assessment of the preliminary injunction package was in no way clearly erroneous

[00:24:47] Speaker 06:
There was no abuse of discretion by the district court in denying the CAIDA's motion.

[00:24:53] Speaker 06:
None.

[00:24:54] Speaker 02:
And as a result... Well, what about your friend... Sorry, I'm going to interrupt.

[00:24:58] Speaker 02:
This is Sharon Proce.

[00:24:59] Speaker 02:
That's fine.

[00:25:00] Speaker 02:
What about your friend's argument that he emphasized repeatedly that this is an exception?

[00:25:07] Speaker 02:
Presumably the view is this is a narrow exception.

[00:25:11] Speaker 02:
So if it is construed as a narrow, narrow exception, why shouldn't it be

[00:25:17] Speaker 02:
fairly confined to the more limited reading that they are giving it in terms of asserted and adjudicated.

[00:25:26] Speaker 06:
Well, Judge, the starting point, as you all know, are the words in the contract.

[00:25:31] Speaker 06:
These are sophisticated parties with experienced counsel, just as Judge Newman pointed out a moment ago, who negotiated this contract.

[00:25:40] Speaker 06:
And so Delaware law teaches us, and of course the law of the Federal Circuit is no different, that the starting point

[00:25:46] Speaker 06:
is the language the parties put in the contract.

[00:25:50] Speaker 06:
So what we have here is exactly what came to pass in the Westward litigation.

[00:25:56] Speaker 06:
There were claims, patents that were asserted and adjudicated in that action.

[00:26:02] Speaker 06:
Yes, there were originally eight.

[00:26:04] Speaker 06:
There's no dispute about that.

[00:26:06] Speaker 06:
But by the time the case was being adjudicated, there were three.

[00:26:10] Speaker 06:
That is, Takeda dismissed five of them voluntarily and chose

[00:26:15] Speaker 06:
to no longer assert those patents.

[00:26:18] Speaker 06:
They thereby became unasserted.

[00:26:21] Speaker 06:
And the district court then in the Westward case adjudicated those three and ruled that they were all not in friendship.

[00:26:29] Speaker 06:
It is against that background, that factual litigation background that we have this written license agreement that was negotiated and provided a launch trigger for precisely a scenario of what happened in the Westward litigation.

[00:26:45] Speaker 06:
And when Milan then alerted to Cata that it was going to launch, and then Cata did nothing for well over a month, and Milan did launch, Cata brought its action for preliminary injunction in the district court seeking to rewrite what the contract says.

[00:27:01] Speaker 06:
And they're not permitted to do that.

[00:27:03] Speaker 06:
And that's why I say the starting point has to be the words in the contract itself and the meaning of those words.

[00:27:10] Speaker 06:
And by the way, there is an integration clause here.

[00:27:14] Speaker 06:
Takeda is urging this panel to add new sections to the contract, new interpretations that are not faithful to the clear and unambiguous language of the contract.

[00:27:23] Speaker 06:
And that lies in the face of the integration clause.

[00:27:27] Speaker 06:
But if I may, I really want to start with where the parties don't disagree, where there is agreement.

[00:27:34] Speaker 06:
Because until this morning, maybe 15 minutes ago, both Mylan and Takeda agreed that the five licensed patents

[00:27:43] Speaker 06:
that Takeda voluntarily dismissed in the westward litigation were not adjudicated.

[00:27:49] Speaker 06:
Their position, as I said until 15 minutes ago, is those five patents were not adjudicated.

[00:27:55] Speaker 06:
I can cite the panel to Takeda's appeal brief, ECF number 35 at 24, where they said with respect to those five patents, quote, there was no adjudication at all.

[00:28:09] Speaker 06:
In their reply brief, ECF number 56 at page 7,

[00:28:13] Speaker 06:
They wrote, the claims of five of the patents that were asserted in the westward litigation were never adjudicated.

[00:28:21] Speaker 06:
And in their reply in support of their motion for an injunction pending appeal, which is ECF number 26.1 at five, they wrote, Takeda, quote, has consistently argued to the district court as well as to this court that only three of the eight patents in the westward litigation

[00:28:42] Speaker 06:
were adjudicated and that the five remaining patents were not adjudicated.

[00:28:48] Speaker 02:
That, you know, I have a, we'll ask your friend about that on rebuttal because that was, I didn't call him on it, but that was my recollection too.

[00:28:54] Speaker 02:
So what do you understand?

[00:28:56] Speaker 02:
So you're contending that his position changed this morning.

[00:28:59] Speaker 02:
So what's the change?

[00:29:01] Speaker 06:
Well, frankly, your honor, he's not permitted to change an argument, a position that was advanced to this court.

[00:29:08] Speaker 02:
No, I'm just asking you to clarify.

[00:29:10] Speaker 02:
You're alleging that he's changed his position, and I just want to be clear on what you contend the change is.

[00:29:16] Speaker 06:
The change is, prior to today, Takeda clearly took the position that the five dismissed patents were not adjudicated.

[00:29:25] Speaker 06:
This morning, counsel was arguing that they were adjudicated.

[00:29:29] Speaker 06:
I just pointed out three places in their brief to this court where they took the position prior to today that they were not adjudicated, and as a result,

[00:29:38] Speaker 06:
there were only three patents that were asserted and adjudicated.

[00:29:43] Speaker 06:
And those are the only relevant patents for section 1.2d.

[00:29:47] Speaker 02:
And so that's the... Okay, let me ask you just... I just want to be clear on this.

[00:29:52] Speaker 02:
Let me ask you, this is all a little mumboed in my mind, but is that not... Is that what you argue is a different position that they asserted at argument here.

[00:30:03] Speaker 02:
Is that not the position that was argued by the amicus brief?

[00:30:08] Speaker 06:
Yes, and that's why I was prepared to say this morning that it's a little surprising and actually against the president of this court for an iniquity to come in and take a position at odds with all three parties that are actually litigants.

[00:30:25] Speaker 06:
You have two different contracts here, Mylan and Takeda on the one hand, Malcolm and Takeda on the other hand.

[00:30:31] Speaker 02:
No, no, no, but is it your position?

[00:30:33] Speaker 02:
I'm sorry, I'm interrupting, but is it your position that the switch that you allege Takeda has embraced this morning is switching from its original position to the position that was taken by the amicus on appeal here?

[00:30:48] Speaker 02:
I just want to be clear on what positions are.

[00:30:51] Speaker 02:
Yes.

[00:30:52] Speaker 00:
Okay.

[00:30:52] Speaker 00:
All right.

[00:30:53] Speaker 00:
Thank you.

[00:30:55] Speaker 00:
We'll ask your friends about that.

[00:30:57] Speaker 06:
Yeah, there was a second way in which the parties agreed.

[00:31:02] Speaker 06:
And that was that the three remaining asserted patents were all adjudicated in the Westwood case.

[00:31:13] Speaker 06:
In other words, prior to this morning, CACADA did not dispute that the only three licensed patents that were, quote, asserted and adjudicated, close quote, in the Westwood case were held non-infringing.

[00:31:27] Speaker 06:
And that is what the contract requires for section 1.2D to be triggered.

[00:31:32] Speaker 06:
And that is what the district court found.

[00:31:35] Speaker 06:
And it was not clearly erroneous.

[00:31:37] Speaker 06:
In fact, right at the end of his argument, my friend, Mr. Fleming, said, hey, reasonable people could differ here.

[00:31:45] Speaker 06:
Now, I don't agree with him.

[00:31:46] Speaker 06:
I think the language is clear and unambiguous.

[00:31:49] Speaker 06:
But even if you accept that, there is no way to conclude that Judge Andrew's decision was clearly erroneous.

[00:31:57] Speaker 06:
It's a concession that my adversary has now made this morning.

[00:32:01] Speaker 06:
And that really should be the end of this appeal.

[00:32:04] Speaker 06:
For the clear and unambiguous words of section 1.2d, allow Mylan to launch, where the patents that were asserted and adjudicated are held non-infringing.

[00:32:15] Speaker 06:
And that's precisely what came to pass.

[00:32:19] Speaker 02:
Well, what gives you on the law, on the prong of likelihood of success on the merits, if there are two

[00:32:26] Speaker 02:
reasonable positions asserted.

[00:32:29] Speaker 02:
Is that enough to satisfy the likelihood of success on the merits, or is it, in your view, as a matter of law, insufficient?

[00:32:39] Speaker 06:
It is the latter, Your Honor.

[00:32:40] Speaker 06:
They bear a heavy burden.

[00:32:42] Speaker 06:
The burden is actually higher in a preliminary injunction context, where the motion for preliminary injunction has been denied.

[00:32:50] Speaker 06:
In order for this court to reverse Judge Andrew's careful analysis of the contract language

[00:32:56] Speaker 06:
it would have to find that his views were clearly erroneous and an abuse of discretion.

[00:33:01] Speaker 06:
This court has repeatedly said that the movement on such an appeal has a very heavy burden.

[00:33:08] Speaker 06:
So, you know, that is why it's sort of seized upon the language that Mr. Fleming says at the end of his argument that reasonable people can differ.

[00:33:16] Speaker 02:
That does not come... But construing a contract, construing a contract is pretty much a legal question and not a factual question, right?

[00:33:25] Speaker 06:
Right.

[00:33:25] Speaker 06:
And that's why the starting point that the district court took was the right starting point.

[00:33:30] Speaker 06:
It looked at the language of the contract.

[00:33:33] Speaker 06:
And that's why our position has always been that what CACADA is trying to do is actually read out the words from the contract that say, and adjudicated.

[00:33:43] Speaker 06:
Because all they want this court to focus on are the original eight claims that were asserted.

[00:33:48] Speaker 06:
That's it.

[00:33:49] Speaker 06:
They say, that's it.

[00:33:50] Speaker 06:
Stop reading the contract.

[00:33:51] Speaker 06:
You cannot read out the words, and adjudicated.

[00:33:55] Speaker 06:
because the term there is asserted and adjudicated.

[00:33:59] Speaker 06:
Takeda also suggests that we're reading out the word all.

[00:34:03] Speaker 06:
Well, that's not true at all.

[00:34:05] Speaker 06:
Of the three asserted patents that went to the courts for adjudication in the Westward case, if one or more of those was not held to be unenforceable, then we acknowledge that the 1.2D trigger would not apply.

[00:34:22] Speaker 06:
You know, that's why we are at the view that each of the words in the contract has to be viewed.

[00:34:29] Speaker 06:
Your Honor asked the question about the declaratory judgment back and forth in the district court.

[00:34:36] Speaker 06:
And Takeda's counsel conceded that that was a possibility.

[00:34:39] Speaker 06:
And of course, what's so important about that is the language is asserted against a third party, which means

[00:34:49] Speaker 06:
There is a provision there that gives Takeda the power to decide what patents it wants or does not want to assert.

[00:34:58] Speaker 06:
That's what they carved out for themselves in the contract.

[00:35:01] Speaker 06:
But once they dismiss those voluntarily, then they are no longer asserted.

[00:35:07] Speaker 06:
And the only relevant patents are those that are both asserting and adjudicating.

[00:35:14] Speaker 06:
You know, faced with the plain language, what does Takeda argue?

[00:35:18] Speaker 06:
They start making intent arguments.

[00:35:20] Speaker 06:
As Judge Newman herself noted, these are really intent arguments that are being advanced to try to persuade the panel that what the words in the contract say should not be read at their face value.

[00:35:34] Speaker 06:
Let me give you a few examples of their intent argument.

[00:35:38] Speaker 06:
First, they argue, and argue again this morning, that

[00:35:42] Speaker 06:
You know, oh, this was intended for a change in the status quo in the Colchicine market.

[00:35:48] Speaker 06:
Well, that argument was properly rejected by the district court.

[00:35:51] Speaker 06:
First, there is nothing whatsoever in the text of Section 1.2D that even remotely suggests that the third-party action must involve a generic equivalent to Colchrist.

[00:36:03] Speaker 01:
Well, let me interrupt here at this point because I think it really is quite important.

[00:36:12] Speaker 01:
The position, my land position now is that all of these provisions, these elaborate conditions that went into this section of the contract really are meaningless because of an arrangement that was made two years earlier

[00:36:32] Speaker 01:
that everyone knew about that now is being called on as negating the face of the terms that were in the contract.

[00:36:44] Speaker 01:
How could we reconcile that?

[00:36:46] Speaker 01:
It would be different if the Westward Agreement came later.

[00:36:50] Speaker 01:
It would be different if Mitigar wasn't on the market.

[00:36:54] Speaker 01:
But all of these conditions

[00:36:56] Speaker 01:
were already there and was just to cut through everything.

[00:37:03] Speaker 01:
What Milan eventually did is they said, never mind, we're going to launch.

[00:37:07] Speaker 01:
The contract doesn't count because, and they can't say that things have changed because they hadn't changed.

[00:37:16] Speaker 01:
Everything was the same as it had been before.

[00:37:18] Speaker 01:
Now, what's wrong with that?

[00:37:22] Speaker 06:
Yeah, so Judge Newman, I think those are fair and important questions.

[00:37:26] Speaker 06:
And I have two answers, if you'll indulge me.

[00:37:29] Speaker 06:
The first is, and I know I sound like a broken record, but this is a sophisticated party with experienced counsel.

[00:37:37] Speaker 06:
And if they wanted to limit the contract in some way, either to change in status quo or generic equivalent, they could have done so in the contract.

[00:37:46] Speaker 06:
And let me just address.

[00:37:48] Speaker 06:
Isn't that what they do?

[00:37:49] Speaker 06:
Then I'll get back to Mitigar.

[00:37:51] Speaker 06:
I'm going to address them both.

[00:37:53] Speaker 06:
With respect to whether 1.2D should be read to cover only generic equivalence, the only thing I want to point out to the panel is that the parties knew precisely how to do that.

[00:38:06] Speaker 06:
In other subsections of section 1.2 itself, they did do just that.

[00:38:11] Speaker 06:
For example, 1.2B is specifically limited to generic equivalence.

[00:38:17] Speaker 06:
So is 1.2S.

[00:38:19] Speaker 06:
In other words, they knew how to do this.

[00:38:21] Speaker 06:
But in 1.2D and in 1.2G, the parties negotiated and did not include a limitation on generic equivalence.

[00:38:31] Speaker 06:
And Judge Newman, to your point about Mitigari, the fact that Takeda is arguing, oh, there has to be some change in the status quo.

[00:38:40] Speaker 06:
And they argue, well, Mitigari was already on the market.

[00:38:43] Speaker 06:
But the fact that Mitigari was on the market when the license agreement with Milan was consummated

[00:38:48] Speaker 06:
does not in any way alter the impact of the westward litigation for purposes of Section 1.2D.

[00:38:56] Speaker 06:
First, as Takeda itself has admitted, Section 1.2D was to address a change in the status of the licensed patents, not a change in the market due to product entry.

[00:39:08] Speaker 06:
Takeda has conceded that.

[00:39:10] Speaker 06:
Second, before the litigation, Mitigare and its authorized generic were in the market at risk.

[00:39:17] Speaker 06:
As a result of that litigation, that was a seismic change.

[00:39:21] Speaker 06:
Remember, Takeda took the position in the litigation that Mitigare posed a cosmic threat to its cold crisp business because the products were so similar.

[00:39:34] Speaker 06:
So now you have a finding that it's non-infringing.

[00:39:39] Speaker 06:
So Mitigare is no longer at risk.

[00:39:42] Speaker 06:
And third, the Westward litigation

[00:39:44] Speaker 06:
to CAIDA's inability to enforce the three license patents against potential future Mitigari generic competitors, which of course again impacts the culture scene market.

[00:39:56] Speaker 06:
So all three of those changes were very significant to the status quo, but I really urge that the first answer is if they wanted to put that in the contract, they should have put it in there and it shouldn't be part of an appellate court argument where they're asking it now to be asserted.

[00:40:14] Speaker 06:
There was also reference to the earlier filers in Mr. Fleming's argument.

[00:40:19] Speaker 06:
I'll briefly address that.

[00:40:22] Speaker 06:
Takeda is arguing that, you know, the fact that these so-called early filers give some new gloss to the agreement.

[00:40:30] Speaker 06:
Again, there is no such guarantee in the contract that the early filers can launch first.

[00:40:35] Speaker 06:
It does not exist.

[00:40:37] Speaker 06:
If Takeda wanted that, they should have negotiated for that and they didn't.

[00:40:42] Speaker 06:
The district court's confirmation of the clear words of Section 1.2D does not in any way prevent Takeda from accomplishing that objective.

[00:40:53] Speaker 06:
In other words, Section 1.2D requires Mylan to wait a certain number of days after the final court decision before it can launch.

[00:41:01] Speaker 06:
Presumably, Takeda agreed that the earlier filers could launch immediately.

[00:41:06] Speaker 06:
We made that argument.

[00:41:07] Speaker 06:
There was no response in their reply brief.

[00:41:10] Speaker 06:
So the earlier filers argument is really beside the point.

[00:41:15] Speaker 06:
I would like to get briefly to the irreparable harm.

[00:41:18] Speaker 06:
I'm going to pause for a second to see if the panel has any further questions on the likelihood of success problem.

[00:41:28] Speaker 00:
OK.

[00:41:28] Speaker 00:
Proceed.

[00:41:30] Speaker 06:
Thank you, Judge.

[00:41:31] Speaker 06:
So first, Chief Judge, let me just answer your question.

[00:41:35] Speaker 06:
You asked the question, hey, is there any authority out there

[00:41:39] Speaker 06:
These stipulations really absolved the court of making a determination of irreparable harm.

[00:41:46] Speaker 06:
And counsel acknowledged there were none in the Federal Circuit.

[00:41:50] Speaker 06:
He did point to the TP Group Delaware case.

[00:41:55] Speaker 06:
I will point out to the panel, and I'm sure you know this already, that irreparable harm was found in that case.

[00:42:01] Speaker 06:
But it was not on the basis of a stipulation.

[00:42:04] Speaker 06:
There is not a single decision of this court or any other court that we have identified

[00:42:09] Speaker 06:
where stipulation as to irreparable harm has been sufficient in the absence of a finding of likelihood of success on the merits.

[00:42:19] Speaker 06:
I think, Judge Burst, you were correct when you first put to counsel, look, you're relying solely on section 1.10.

[00:42:27] Speaker 06:
And that is right because the CAIDA has not come forward with any evidence that could possibly support a finding of irreparable injury in the absence of

[00:42:39] Speaker 06:
that section of the contract, and if we didn't breach, it's not relevant.

[00:42:45] Speaker 06:
They do suggest some type of price erosion or loss of market share, but there's no evidence in this record to support that.

[00:42:54] Speaker 06:
Zero.

[00:42:55] Speaker 02:
Well, let me ask you about your first legal... Excuse me.

[00:42:58] Speaker 02:
Let me ask you about your first legal point.

[00:43:00] Speaker 02:
I just argue against myself all of the time.

[00:43:04] Speaker 02:
So even though it is odd to me that the parties would be able to

[00:43:09] Speaker 02:
adjudicate on behalf of whether there was irreparable harm.

[00:43:13] Speaker 02:
Certainly, if the parties went further than irreparable harm and contractually agreed that if they are found to breach Part A, then they agree that, um, and effectively enjoin itself, that would be appropriate.

[00:43:32] Speaker 02:
They wouldn't be transcending the role of the judiciary if the parties stipulated doing that, right?

[00:43:38] Speaker 02:
So if that's true, then what's the problem with them stipulating to irreparable harm?

[00:43:45] Speaker 06:
Well, first of all, you're not going to persuade me to say anything other than you should be guided by the party's agreement because these are sophisticated parties.

[00:43:54] Speaker 06:
But more directly to your answer, Judge, yeah, they could have done that.

[00:44:00] Speaker 06:
But my only point is, without a finding of likelihood of success on the merits,

[00:44:07] Speaker 06:
A stipulation on irreparable harm has never carried the day on the preliminary injunction.

[00:44:13] Speaker 06:
That's my point.

[00:44:14] Speaker 06:
That's what the law says.

[00:44:16] Speaker 06:
And even the cases cited by Decata do not say otherwise.

[00:44:21] Speaker 02:
OK.

[00:44:22] Speaker 02:
I think your time is up.

[00:44:23] Speaker 02:
I'm sorry.

[00:44:24] Speaker 06:
Then I will stop talking.

[00:44:25] Speaker 06:
Thank you, members of the panel.

[00:44:27] Speaker 02:
OK.

[00:44:28] Speaker 02:
And Michael, how much more time is left on the 20 minutes for Ms.

[00:44:31] Speaker 02:
Summers?

[00:44:31] Speaker 02:
I'm not sure how we were dividing it up.

[00:44:34] Speaker 05:
Sure.

[00:44:34] Speaker 05:
So that was the full 20 minutes.

[00:44:36] Speaker 05:
The idea was that for her to jump in, she would just contribute to the 20.

[00:44:41] Speaker 02:
All right.

[00:44:41] Speaker 02:
So why don't you just take a couple minutes if you can, Ms.

[00:44:44] Speaker 02:
Summers, and first we answer the question that we're all thinking about, which is how is, how have all of your case different in terms of what our job is here than the Milan appeal?

[00:44:58] Speaker 03:
Thank you, Chief Judge Prost.

[00:45:00] Speaker 03:
May I please the court to introduce Ms.

[00:45:02] Speaker 03:
Summers?

[00:45:03] Speaker 03:
It is our view that the contract provision at issue is essentially the same between the cases, so we do not see any significant difference that would cause any different opinion to come out between the two sides.

[00:45:26] Speaker 02:
Okay, and no other additional issues that we need to be,

[00:45:31] Speaker 02:
taken care of in your appeal?

[00:45:34] Speaker 02:
Just controlled by whatever we decide on the other case?

[00:45:38] Speaker 03:
Yes, that is correct, Your Honor.

[00:45:39] Speaker 03:
But if I may add, just take just a few seconds to highlight a couple of things that came out through the discussion that we've had so far this morning.

[00:45:51] Speaker 03:
If I may please have a minute or two?

[00:45:54] Speaker 02:
Yes.

[00:45:54] Speaker 02:
And we'll also give the other side comparable time.

[00:45:57] Speaker 02:
So yes, that's fine.

[00:45:59] Speaker 03:
OK.

[00:46:00] Speaker 03:
Thank you very much.

[00:46:01] Speaker 03:
So the first point I wanted to make with respect to section 1.2 and the various provisions that are set forth therein for launching, there are several, of course, as you know, 1.2A all the way to G. And none of these have any sort of primacy or priority.

[00:46:21] Speaker 03:
None of them are really exceptions.

[00:46:23] Speaker 03:
They're all set forth.

[00:46:25] Speaker 03:
OK, I'm back.

[00:46:27] Speaker 02:
I think you hear me?

[00:46:29] Speaker 02:
This is Sharon Post.

[00:46:30] Speaker 02:
Yes, thank you, Your Honor.

[00:46:33] Speaker 03:
So just a very short, simple point, which is that the provisions set forth in section 1.2 are all independent.

[00:46:41] Speaker 03:
None of them is really an exception.

[00:46:43] Speaker 03:
There's just different triggering points.

[00:46:47] Speaker 03:
So that's the one point I wanted to make with respect to the likelihood of success on the merits.

[00:46:55] Speaker 03:
Then with respect to irreparable harm,

[00:46:58] Speaker 03:
I did want to point out that section 1.10 states that in this particular case, ALCOM acknowledges that marketing is and the product in breach of paragraph 1.2 would cause to cater irreparable harm.

[00:47:15] Speaker 03:
So that ties into the point where if there's a likelihood that there is no breach of paragraph 1.2, then that takes care of the irreparable harm.

[00:47:25] Speaker 02:
OK.

[00:47:25] Speaker 02:
Thank you.

[00:47:27] Speaker 02:
Mr. Fleming, Mr. Luxembourg, how much time did Mr. Fleming have remaining on his rebuttal?

[00:47:33] Speaker 05:
So I had added originally two additional minutes based on your initial conversation with him.

[00:47:38] Speaker 05:
And so in total, out of the 22 minutes he had, he only had eight seconds remaining.

[00:47:43] Speaker 05:
In addition to the 20 minutes that Appellees had, Ms.

[00:47:47] Speaker 05:
Summers also took about three minutes.

[00:47:50] Speaker 02:
Okay.

[00:47:51] Speaker 02:
Well, why don't we'll give you an additional five minutes, Mr. We'll give you five minutes of rebuttal time, Mr. Fleming, just to keep it even and to make sure you have enough opportunity.

[00:47:59] Speaker 02:
So please proceed on rebuttal.

[00:48:01] Speaker 04:
Thank you, Your Honours.

[00:48:04] Speaker 04:
First of all, I want to be very clear.

[00:48:08] Speaker 04:
there was allegations that either we have that decay is either waived or changed its position.

[00:48:14] Speaker 04:
That could not be more incorrect.

[00:48:18] Speaker 04:
And it was the reason why when I initially made my comments with respect to the five patents that were voluntarily dismissed, I cited to the opening brief and the PI brief where

[00:48:32] Speaker 04:
Indisputably, Takeda makes statements that a voluntary dismissal is an adjudication.

[00:48:37] Speaker 04:
That has always been our position.

[00:48:39] Speaker 04:
We've cited the Levi-Strauss case, which states that 719 F.3.1373, a stipulated dismissal with prejudice operates as an adjudication on the merits for claim preclusion purposes.

[00:48:56] Speaker 04:
So, for claim preclusion purposes, the voluntary dismissal did adjudicate those five patents.

[00:49:04] Speaker 04:
I do agree that the summary judgment decision did adjudicate the three remaining patents on the issue of non-infringement.

[00:49:20] Speaker 04:
The language of 1.2D, however, requires that you have to look at all the patents that were asserted and adjudicated.

[00:49:28] Speaker 04:
So yes, only three patents were adjudicated to a holding of non-infringement.

[00:49:34] Speaker 04:
I agree with that.

[00:49:35] Speaker 04:
However,

[00:49:36] Speaker 04:
The holding that's required to satisfy 1.2D requires that you look at all.

[00:49:42] Speaker 04:
And as Mr. Summers correctly says, you have to look at all the words.

[00:49:46] Speaker 04:
And all is in there.

[00:49:48] Speaker 04:
And with respect to all the licensed patents that were asserted and adjudicated, that includes eight patents.

[00:49:55] Speaker 04:
There was no holding that adjudicated all eight patents.

[00:50:01] Speaker 04:
The voluntary dismissal was an adjudication.

[00:50:04] Speaker 04:
We repeatedly said it.

[00:50:05] Speaker 04:
was an adjudication for claim preclusion purposes.

[00:50:09] Speaker 02:
The adjudication... Well, I just want to be clear, because I also, and I think it's at least several places, but look at your brief at page 24.

[00:50:20] Speaker 02:
You said, with respect to the remaining five patents, there was no adjudication at all.

[00:50:26] Speaker 02:
Do you stand by that statement this morning?

[00:50:29] Speaker 04:
The sentence goes on, let alone an adjudication one way or the either regarding infringement, invalidity, and unenforceability.

[00:50:37] Speaker 04:
So yes, I am standing by the statement that there was no adjudication holding non-infringement.

[00:50:43] Speaker 04:
I would direct you to page 18, Your Honor, where I state at the bottom, accordingly, irrespective of whether the voluntary dismissal is regarded as an, quote, adjudication, close quote,

[00:50:55] Speaker 04:
For claim-proclusion purposes, the voluntary smithil did not trigger Section 1.2d since it was not a quote holding that all the unexpired claims of the licensed patents are either one not infringed or a combination not infringed, invalid or unenforceable.

[00:51:14] Speaker 04:
The point is there was only three patents.

[00:51:18] Speaker 04:
Sorry.

[00:51:20] Speaker 04:
Go ahead.

[00:51:20] Speaker 04:
Go ahead.

[00:51:20] Speaker 04:
Sorry.

[00:51:21] Speaker 04:
My point, Your Honor, is that yes, only three patents were adjudicated on the issue of non-infringement.

[00:51:28] Speaker 04:
1.2D, you cannot ignore the five patents that were adjudicated for claim preclusion purposes.

[00:51:38] Speaker 04:
I've never said they were never adjudicated for claim preclusion purposes.

[00:51:42] Speaker 04:
We said and repeatedly cited the Levi-Strauss case, and interestingly,

[00:51:47] Speaker 04:
Mylan understood that, and I would direct your attention to page 55 of their brief where they actually make the statement, Takeda recognized that regardless of whether a stipulation of voluntary dismissal has the effect of an adjudication between the parties.

[00:52:04] Speaker 04:
They knew our position was that with respect to the five patents, there was an adjudication.

[00:52:11] Speaker 04:
That adjudication was to claim preclusion per the Levi-Strauss case.

[00:52:17] Speaker 04:
I would note also that in Mylan's response today that they have attempted to add words to 1.2D.

[00:52:27] Speaker 04:
They want to say that you only look at the patents at the time of the summary judgment.

[00:52:33] Speaker 04:
They called the five patents unasserted.

[00:52:36] Speaker 04:
They're reading words into 1.2D.

[00:52:39] Speaker 04:
1.2D is very clear that you need a holding that addresses all ALL unexpired claims of the patents.

[00:52:48] Speaker 04:
There were eight patents that were asserted and adjudicated.

[00:52:51] Speaker 04:
We've consistently said that those five patents that were voluntarily dismissed were adjudicated for claim preclusion purposes.

[00:53:00] Speaker 04:
We also said that only three patents were adjudicated for a holding of non-infringement.

[00:53:06] Speaker 04:
I think we've been consistent throughout our argument, Your Honor.

[00:53:11] Speaker 02:
Do my colleagues have anything further?

[00:53:14] Speaker 01:
No.

[00:53:14] Speaker 00:
Nothing further?

[00:53:16] Speaker 02:
No.

[00:53:18] Speaker 02:
Okay.

[00:53:18] Speaker 02:
Well, thank you.

[00:53:20] Speaker 02:
And we thank both sides.

[00:53:22] Speaker 02:
We appreciate your cooperation under these unusual circumstances and, of course, are very grateful to our staff for all of their heavy lifting.

[00:53:32] Speaker 02:
So the cases are submitted.

[00:53:34] Speaker 02:
Thank you all.

[00:53:35] Speaker 02:
That concludes the proceeding for this morning.

[00:53:39] Speaker 05:
The Honorable Court is adjourned from day to day.