[00:00:00] Speaker 02:
21054 Vectura Limited versus GlaxoSmithKline.

[00:00:04] Speaker 02:
Mr. Lee, whenever you're ready.

[00:00:07] Speaker 00:
Thank you, Your Honor.

[00:00:08] Speaker 00:
May it please the court?

[00:00:10] Speaker 00:
This is Bill Lee, and together with my partner, Tom Saunders, I represent GlaxoSmithKline.

[00:00:16] Speaker 00:
Vectura secured a $106 million judgment without ever conducting dispersion testing on the actual FDA approved products accused of infringement.

[00:00:27] Speaker 00:
The district court expressly articulated the testing that would be required to satisfy the critical limitation, and Vectora had all the materials required to test the actual product accused of infringement, but it did not, and it offered no evidence of dispersion testing of that actual product.

[00:00:47] Speaker 00:
Instead, Vectora chose to try to prove infringement based on, as you know, an older study of experimental blends which had

[00:00:55] Speaker 03:
Mr. Lay, I'm sorry to interrupt so early, but just to clarify something.

[00:01:00] Speaker 03:
I take it that GSK also didn't provide evidence of a test?

[00:01:11] Speaker 00:
GSK did not test the FDA approved products for the purpose of demonstrating the improved dispersion.

[00:01:17] Speaker 00:
Yes, Your Honor.

[00:01:18] Speaker 03:
Both sides kind of dodged actually testing the product.

[00:01:22] Speaker 03:
I recognize that the other side has the burden of proof on infringement, but neither side, it seems like, wanted to take that step for whatever reason.

[00:01:34] Speaker 00:
That's correct, Your Honor.

[00:01:35] Speaker 00:
And I think that I can't comment on Victoria's perspective, but from ours, the question of the burden of proof was important, and the fact that we were responding to their proof, Victoria's proof, was important to us.

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And that's why, Your Honor,

[00:01:51] Speaker 00:
if I were to pick up where I left off, the fact that the older study had uniformity problems that was made in a different way using different equipment and in fact didn't even include one of the active ingredients of one of the accused products, all are critically important to the appeal.

[00:02:12] Speaker 00:
In my time this morning, I'd like to focus on three issues quickly.

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First, the dispersion limitation and the dispersion limitation specifically.

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Then I will turn quickly, if I have time, to two issues on damages.

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One, the repeated attempt to minimize the damages by comparing GSA's billions of dollars of sales to the requested release.

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And the decision to jettison the royalty cap of the allegedly comparable license.

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So if I move directly to non-infringement, claim three is the only asserted claim.

[00:02:47] Speaker 00:
And it had two critical limitations.

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One is composite active particles.

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But there was an additional limitation, a separate limitation with separate requirements, which is critical.

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And that is that that composite active particle, the composite active particles, pardon me, promotes the dispersion of composite active particles, the dispersion limitation.

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The district court construed that claim limitation specifically

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neither Victoria nor GSK disputes that claim construction.

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And that claim construction required proof of increased dispersion of the active material as compared to the same composition where unmodified particles are substituted for the composite active particles.

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And in articulating that claim construction, the district court made two things clear.

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One is that proof would have to control for all variables that may contribute to dispersion.

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And that proof would have to isolate the impact of the composite active particles on the overall dispersion of the composition.

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The question, therefore, and this is where the briefs to some extent were like ships passing in the night, the question was not whether coding a particle with magnesium stearate can promote dispersion in the abstract.

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GSK had already licensed Vector's 224 patent covering coating lactose carrier particles with magnesium stearate.

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It had paid for that license substantially.

[00:04:26] Speaker 03:
That patent covering... Mr. Lee, that, as I understand it, did not encompass the coating of the active, which is the contribution of the new patent, right?

[00:04:40] Speaker 00:
Well, actually, Your Honor, the contribution of the new patent is two things.

[00:04:44] Speaker 00:
First, you are correct that the 224 patent covered coding the lactose carrier particles with magnesium stearate.

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The 991 patent adds two things.

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It has the composite active particles, but it has the additional limitation, the incremental innovation, that requires that that coding have a functional effect.

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And that functional effect is to increase dispersion beyond that achieved by coating the lactose with magnesium stearate.

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So that is why, when I said earlier that there are two limitations, composite active particles and improved dispersion, those two limitations have to be considered separately.

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They each required construction separately.

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And critically importantly, they each required proof separately.

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And they did in part because,

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All of the technical folks on both sides agreed that this dry inhalation of powders for use in treating humans and patients were known to be complex and unpredictable.

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Vectora's inventor said so, GSK's product developer said so.

[00:05:58] Speaker 00:
As Your Honor said, Judge Bryson, neither Vectora nor GSK actually tested the FDA approved product.

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The record is clear that GSK did provide samples of the commercial products to Vectora.

[00:06:11] Speaker 00:
It's clear that if Vectora had the equipment necessary to do that testing, and the record is clear that the district court suggested that that example four of the patent, I'm referring to the patent now, not the study two, provided a template for testing whether a composite active particle promotes dispersion.

[00:06:31] Speaker 00:
The district court said, here's the requirements, here's what you have to do,

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Example four tells you how to do it.

[00:06:38] Speaker 00:
Instead, all we have is study two, and they claim that it satisfies, it is substantial evidence of infringement, but it's not for three reasons.

[00:06:49] Speaker 00:
First, study two never tested Eumaclidium, or EUMEC for short.

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EUMEC is the sole active ingredient in the increased product, and one of the two active ingredients in the anoral product.

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Despite the need for testing under the court's claim construction, there is no dispersion data at all from study two or anything else on composite active particles containing UMEC.

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And again, this is a place where I think the record is relatively clear.

[00:07:24] Speaker 00:
UMEC is a different compound with a different chemical structure, with a different formula, with different properties and different mechanisms of action.

[00:07:35] Speaker 03:
Taking study two off the table for a moment, aren't there several exhibits in which the conclusion from the exhibits is that magnesium stearate, when blended with the lactose and the active drug, coat the UMEC or the valandrol and produce fine particle dose stability?

[00:08:02] Speaker 03:
I'm thinking of PTX 37 and PTX 158, which relate respectively to UMEC and Villanuevo.

[00:08:12] Speaker 00:
And Your Honor, this is the collection of documents that are at the Victoria brief, I think, beginning at page 11.

[00:08:18] Speaker 00:
And actually, if we look at them closely, they really fall into three categories.

[00:08:25] Speaker 00:
The first is a set of documents that talk about the formation of composite active particles

[00:08:31] Speaker 00:
without any suggestion that they increase dispersion.

[00:08:35] Speaker 00:
That's the 2008 and 2009 GSK technical memos.

[00:08:39] Speaker 00:
A second category is technical memorandum from GSK that does talk about increased dispersion from coding lactose with magnesium stearate.

[00:08:50] Speaker 00:
This is at appendix 1311 and appendix 5001.

[00:08:56] Speaker 00:
They're not referring to the composite active particles, which, as Your Honor pointed out, is a difference from the 224 patent.

[00:09:03] Speaker 00:
They're referring to coding lactose with magnesium stearate.

[00:09:08] Speaker 00:
And then the last category, Your Honor, which is the 2013 GSK technical memorandum, is actually what you would call is a summary paper, if it had been published, and it includes

[00:09:23] Speaker 00:
a summary of one paper by the inventors of the 9-1 patent talking about what might be achieved, but without referring at all to the actual product, the actual GSK product, and actually not even referring to study two.

[00:09:43] Speaker 00:
So study two doesn't test UMAC, and the record actually is undisputed that UMAC reacts differently

[00:09:53] Speaker 00:
with lactose than the other active ingredients.

[00:09:58] Speaker 03:
Secondly... I'm sorry to interrupt again.

[00:10:02] Speaker 00:
No, no, no problem.

[00:10:03] Speaker 03:
I wanted to make sure I understood where in your set of different categories of documents, and I'm focused really on the documents other than the study two documents.

[00:10:16] Speaker 03:
Would you put

[00:10:18] Speaker 03:
Plaintiff's Trial Exhibit 35, and I direct your attention in particular to Appendix 5014, where we are talking about coding the actives, the minor component in the formulation provides better drug delivery in giving higher far and fine particle dose than coding the matrix particles, i.e.

[00:10:46] Speaker 03:
the lactose.

[00:10:47] Speaker 03:
That sounds like it's saying that you get better dispersion if you coat the active.

[00:10:53] Speaker 00:
Yeah.

[00:10:54] Speaker 00:
Your honor, that falls into my category three.

[00:10:57] Speaker 00:
And that actually is the technical memorandum summarizing several papers, including a paper by the inventors of 9.1.1 patents.

[00:11:06] Speaker 00:
And what you're referring to is actually their summary of that.

[00:11:10] Speaker 00:
So your honor, it is.

[00:11:13] Speaker 00:
If I were to go back now to the testing, in addition to the fact there's no dispersion testing of the commercial product, no testing of UMEC, there were problems which we've described in detail with the study to testing.

[00:11:31] Speaker 00:
And stated simply in part because I'm close to the end of my time, the comparison of Blend 5 to Blend 6 just doesn't satisfy

[00:11:42] Speaker 00:
the district court's admonition that you have to control for all variables that could contribute to dispersion.

[00:11:50] Speaker 00:
Blend 5 had substantial uniformity problems, and uniformity problems are lumpiness.

[00:11:55] Speaker 00:
And if you have an inhaler, lumpiness is a problem.

[00:11:59] Speaker 00:
Blend 5 had the lower the content uniformity, the better.

[00:12:04] Speaker 00:
Blend 5 had a 25% uniformity, Blend 6 an 8% uniformity, the FDA approved product a 5% uniformity.

[00:12:14] Speaker 00:
If I could just finish this thought, Chief Justice Prost, that is why study two itself at A6194 says it is not possible to draw any conclusions regarding dispersion due to the poor content uniformity of the blends.

[00:12:37] Speaker 00:
So the single piece of evidence that's relied upon says in black and white,

[00:12:43] Speaker 00:
that the comparisons that are being drawn are not ones that could be drawn because of poor content uniformity.

[00:12:51] Speaker 00:
And when you combine that with the fact that Blend 5 and Blend 6 were made with different equipment in a different way, in different formulations than the Q's product, there is no substantial evidence to support the infringement verdict.

[00:13:08] Speaker 00:
And with that, Your Honor, I'll reserve my remaining time for rebuttal.

[00:13:11] Speaker 02:
No, I will restore your rebuttal time, but I just want to spend a couple minutes talking about the damages question and your argument for a new trial.

[00:13:23] Speaker 02:
My understanding is, I mean, the number came in.

[00:13:26] Speaker 02:
Your side didn't object to the domestic number, and it was used in the context of the comparable license.

[00:13:33] Speaker 02:
which at least the jury could have assumed satisfied the apportionment requirement.

[00:13:39] Speaker 02:
And the profits number came in.

[00:13:41] Speaker 02:
It came in in a chart that your side didn't object to.

[00:13:45] Speaker 02:
So I think what we're left with is what the judge called out on several occasions his concern about this pennies on the dollar argument.

[00:13:57] Speaker 02:
So assuming that's true, and that's what we're left with,

[00:14:02] Speaker 02:
It's hard for me to see why that's enough, or at least enough so that we should not rely on the district court's judgment under an abuse of discretion standard and say it was not sufficiently prejudicial to require a new trial.

[00:14:17] Speaker 00:
So let me answer the question this way, Your Honor.

[00:14:21] Speaker 00:
The contention here is that there is a comparable license.

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And for that comparable license, apportionment is built into that comparable license.

[00:14:31] Speaker 00:
In that context, you can use, as the district court said, the same revenue base as is used in the comparable license.

[00:14:41] Speaker 00:
The problem here is that as the district court found, and I'm referring to appendix 22 to 23, the 10 references that we have cited to your honor were not, and I'm quoting the district court, were not focused on proving the value of the patented invention

[00:15:00] Speaker 00:
but rather on advancing the pennies on the dollar argument that Vectorra was told not to make.

[00:15:06] Speaker 00:
Now, we objected on the second day of the trial.

[00:15:09] Speaker 00:
The district court objected itself.

[00:15:12] Speaker 00:
Importantly, the district court said, A, 1339 to 1340, there's clearly no waiver here.

[00:15:19] Speaker 00:
So I think, Your Honor, if you take this court's decisions on comparable licenses, built-in apportionment, yes, the total revenues are going to go in.

[00:15:30] Speaker 00:
but they go in for that purpose.

[00:15:32] Speaker 00:
They don't go in as the first line of the opening.

[00:15:36] Speaker 00:
They don't go in in cross-examining every witness who testified.

[00:15:41] Speaker 00:
And then they certainly don't go in to make, as the district court said, the pennies on the dollar argument.

[00:15:50] Speaker 00:
This is one of those rare circumstances where we don't have to guess at what the purpose was, because at A, 1961, counsel said when

[00:15:59] Speaker 02:
I'm sorry to interrupt, but the question isn't what the purpose was.

[00:16:04] Speaker 02:
The question is the district court's judgment that these statements were not significantly prejudicial to require a new trial.

[00:16:13] Speaker 00:
And Your Honor, I can answer it this way, I hope precisely.

[00:16:17] Speaker 00:
The district court made findings and agreed with us all the way up to the question that Your Honor posed now, which is, was there prejudice?

[00:16:26] Speaker 00:
The district court said

[00:16:28] Speaker 00:
There was no prejudice because the number was going to go in.

[00:16:30] Speaker 00:
Our argument, to be as precise as I can, is yes, the number is going to go in, but it doesn't justify what happened.

[00:16:38] Speaker 00:
And it doesn't justify using it repeatedly.

[00:16:41] Speaker 00:
And to the extent that plaintiff's patentees are going to rely upon built-in apportionment, baked-in apportionment, and revenue bases from comparable licenses,

[00:16:54] Speaker 00:
the total revenues are going to come in in many cases.

[00:16:57] Speaker 00:
It can't be, we suggest, that that fact justifies the type of repeated references to the billions of dollars of sales.

[00:17:09] Speaker 00:
So we agree with everything the district court said right up to the conclusion on prejudice, but his conclusion on prejudice was predicated upon only the fact the number was going to come in.

[00:17:21] Speaker 00:
And as this court said in Erickson, the number can come in, but it can come in in a way that isn't for what the court there characterized as illegitimate purposes or pending on the dollar.

[00:17:36] Speaker 02:
All right.

[00:17:36] Speaker 02:
Thank you.

[00:17:37] Speaker 02:
Well, let's hear from the other side.

[00:17:41] Speaker 01:
Yes, may it please the court.

[00:17:45] Speaker 01:
The compositions of the accused formulations are quite straightforward.

[00:17:48] Speaker 01:
They each contain magnesium stearate-coated lactose and magnesium stearate-coated active.

[00:17:54] Speaker 01:
Nothing more.

[00:17:56] Speaker 01:
And the jury heard undisputed evidence about the properties of magnesium stearate.

[00:18:00] Speaker 03:
There are other excipients, aren't there, besides those two components?

[00:18:05] Speaker 01:
No, it's just magnesium stearate-coated lactose and magnesium stearate-coated active.

[00:18:09] Speaker 01:
That's it.

[00:18:10] Speaker 03:
No other excipient at all?

[00:18:11] Speaker 01:
No other excipients at all.

[00:18:14] Speaker 01:
And the jury heard undisputed evidence about the properties of magnesium stearate.

[00:18:19] Speaker 01:
For example, GSK's expert conceded that magnesium stearate prevents particles from sticking to one another.

[00:18:25] Speaker 04:
And that's... Mr. Borrello?

[00:18:26] Speaker 01:
Yes.

[00:18:27] Speaker 04:
Can you hear me?

[00:18:28] Speaker 04:
This is Judge Wallach.

[00:18:29] Speaker 01:
Yes.

[00:18:31] Speaker 04:
Yes, Your Honor.

[00:18:32] Speaker 01:
Yes, Your Honor.

[00:18:33] Speaker 01:
I apologize.

[00:18:34] Speaker 01:
I wasn't sure if I was hearing you correctly.

[00:18:36] Speaker 04:
Okay.

[00:18:38] Speaker 04:
I have some questions about the damages issue that Mr. Lee discussed at the end.

[00:18:44] Speaker 04:
On pages 40 to 41 of the brief, Victoria notes that at sidebar, the district court told Victoria not to talk anymore about the 3 billion figure and claims that Victoria complied and never mentioned GSK's sales again for the duration of the trial.

[00:19:03] Speaker 04:
In the very next question, however, Victoria asked its expert to confirm that his proposed damages were only 0.1

[00:19:12] Speaker 04:
187% of GSK's sales.

[00:19:18] Speaker 04:
Am I correct on that?

[00:19:21] Speaker 01:
It's correct that what we understood the judge, your honor, in this instance to be asking for is not to address the billion dollars in revenue, the billion dollars in sales.

[00:19:32] Speaker 01:
What we were addressing with respect to that was the concept that

[00:19:38] Speaker 01:
what GSK's expert there was arguing that 3% was holding GSK over a barrel.

[00:19:47] Speaker 01:
And so we were addressing the distinguishing between the two requests.

[00:19:51] Speaker 01:
So our view was that it was the sales figures themselves, the billion dollar sales figures themselves that were prohibited.

[00:20:00] Speaker 04:
The district court's warning during that sidebar was at least the second time Victor was warned not to make similar arguments, right?

[00:20:09] Speaker 01:
Right, and we understood that, again, to mean that I didn't want to hear the billion dollar sales figures anymore.

[00:20:17] Speaker 01:
Not that it was, in fact, to discussing what the actual percentage of, because we did need to address profitability of GSK's products and a comparison of what the proposed royalty rates were and the impact on that profitability.

[00:20:34] Speaker 04:
Counsel, did you ask the court to clarify its warnings to you?

[00:20:40] Speaker 01:
No, Your Honor, we did not.

[00:20:45] Speaker 04:
Victor was previously warned that, and I'm quoting, sales should not be in any way emphasized beyond what's strictly required by the law.

[00:20:56] Speaker 04:
And also about appealing to the jury's emotions through pennies on the dollar arguments, right?

[00:21:04] Speaker 01:
You're correct, Your Honor, in terms of what the judge said there.

[00:21:10] Speaker 01:
Again, our understanding, the reason why we did not seek clarification is our understanding is that at various points what had been discussed was the billion dollars in sales and not a comparison of what each proposed royalty rate was being suggested by the experts themselves and how they

[00:21:31] Speaker 01:
were impacted or not by GSK's profitability.

[00:21:34] Speaker 01:
So it went to our understanding being that the judge's instructions were directed towards the billions issue.

[00:21:42] Speaker 04:
On page 42 of the red brief, Vector argues, I'm quoting from your brief, that district court's objection did not eliminate GSK's objection, obligation to object, and then you say in fact that district court

[00:22:00] Speaker 04:
quote, told GSK three times that GSK still needed to make objections.

[00:22:08] Speaker 04:
Let me drill down on that.

[00:22:09] Speaker 04:
The district court informed the parties that the court would make its own objection to arguments that emphasize sales beyond what is strictly required by law and those that appeal to the pennies on the dollar emotions.

[00:22:26] Speaker 04:
But the district court's instruction that GSK still needed to make objections, as I see it, at J 1437 and 1440, was about Delberry issues and other particular points.

[00:22:42] Speaker 04:
Where in the record did the district court explicitly instruct GSK that it would still need to make objections to arguments that emphasize the sales and the pennies on the dollar?

[00:22:57] Speaker 01:
Our understanding, Your Honor, was that at page appendix 1440, that's what the court was getting at.

[00:23:04] Speaker 01:
So that the court clarified twice with GSK's counsel that you still need to make objections, not limiting that to the context of the discussion.

[00:23:16] Speaker 01:
had just ended with the pennies on the dollar and the billions, et cetera.

[00:23:21] Speaker 01:
So those two clarifications to GSK's counsel said you still need to argue, you still need to object, and if things can be corrected, for example, if Victoria's counsel could modify one of its slides or demonstratives, then you need to continue to object.

[00:23:41] Speaker 01:
So our understanding was that GSK was obligated to object.

[00:23:47] Speaker 02:
Can I ask you, and we will make sure you have a few minutes to respond to Mr. Lee's argument with regard to infringement and Judge Bryson's questions in that regard.

[00:23:56] Speaker 02:
But let me ask you one more question about the damages.

[00:23:58] Speaker 02:
I'm looking at Appendix 26, 23, I'm sorry, where the district court resolves this issue.

[00:24:05] Speaker 02:
And I think Mr. Lee was correct.

[00:24:08] Speaker 02:
What I see him saying is that he didn't find the introduction of the total revenue figure to be so prejudicial.

[00:24:18] Speaker 02:
And then he has a footnote, and I don't purport to understand it, but he says from either the record that any error involving the damages case would have infected the remainder of the trial such as infringement and invalidity.

[00:24:35] Speaker 02:
So I'm not looking at whether it infected infringement and validity.

[00:24:38] Speaker 02:
We're dealing with the question of a new trial on damages.

[00:24:42] Speaker 02:
So he never, what I'm missing is he never deals with an issue that he thought was really relevant throughout the trial was his concern about the pennies on the dollar question and the repeated and unnecessary emphasis of the billion dollar figure, not simply the introduction of the total revenue figure.

[00:25:04] Speaker 02:
So where is the analysis that I'm looking for on why this wasn't sufficiently prejudicial

[00:25:11] Speaker 02:
to warrant a new trial.

[00:25:12] Speaker 02:
What does the district court give us on that point?

[00:25:16] Speaker 01:
Well, the district court did address at page appendix 22 that plaintiff emphasized the relative smallness of the damages award it was requesting in comparison to defendant's sales and profits on the accused product.

[00:25:29] Speaker 01:
So there, you know, the district court was addressing this issue that was at hand and ultimately what the judge decided was that

[00:25:39] Speaker 01:
there was no prejudice here.

[00:25:41] Speaker 01:
So certainly the judge down below did address the issue as to whether he addressed it in his ultimate conclusion at Appendix 23.

[00:25:51] Speaker 01:
You know, it's not mentioned there, but it's mentioned in his analysis.

[00:25:59] Speaker 02:
Okay.

[00:25:59] Speaker 02:
Do you want to go back to where you... Sorry.

[00:26:02] Speaker 04:
I'd like to pick up with your citation that you gave me to the record

[00:26:09] Speaker 04:
in 1940, where you say, you told me that the judge referenced the pennies on the dollar and so on.

[00:26:23] Speaker 04:
Right before he said, you still have to make a particular point.

[00:26:29] Speaker 04:
That is, if there's some particular point, you need to make an objection.

[00:26:32] Speaker 04:
Do you recall telling me that?

[00:26:34] Speaker 01:
Yes, Your Honor.

[00:26:36] Speaker 04:
OK, well, I'm looking at it.

[00:26:40] Speaker 04:
to 1439 last paragraph, you know I don't think there's that much difference between saying it's 3% of sales and there's 45 million or 1.5 million and 3% of that is 45 million.

[00:26:56] Speaker 04:
But I think the key thing is what Mr. Black did say, which clearly is not waived at all, which is you can't appeal to life.

[00:27:05] Speaker 04:
It's just pennies on the dollar.

[00:27:07] Speaker 04:
So what's the big deal?

[00:27:09] Speaker 04:
And I certainly don't think the sale should be in any way emphasized beyond what's strictly required by the law.

[00:27:16] Speaker 04:
So if I hear that happening, I will make my own objection and I will sustain it because that shouldn't be an argument.

[00:27:23] Speaker 04:
And then he says, in an intervening paragraph, in terms of non-infringing alternatives, first I've heard about that.

[00:27:33] Speaker 04:
or I think that was mentioned by Mr. Black this morning.

[00:27:35] Speaker 04:
And again, I think that's best at this point dealt with in cross-examination.

[00:27:41] Speaker 04:
So one of the things, Mr. Black, something you understand already, I know, but if there's some particular point that comes up, you need to make an objection.

[00:27:49] Speaker 04:
But on this sort of general thing, I'm not going to proclaim the damages expert based on essentially arguments back and forth that should have been made a long time ago.

[00:27:58] Speaker 04:
How is all of that

[00:28:02] Speaker 04:
supported of your argument that the Council had to make particular objections about pennies on the dollar and the general appeal?

[00:28:16] Speaker 01:
Well, because in the context of this same exchange with the Court, one of the arguments that GSK's Council was making was that

[00:28:26] Speaker 01:
Miss Schenck here, Victoria's expert should not be permitted to rely on the billion dollars in sales.

[00:28:33] Speaker 01:
So there was back and forth about that aspect as well in terms of whether or not the billion dollars in sales ought to come in or not.

[00:28:43] Speaker 01:
And what the court had said was that, you know, you had a similar argument in your motion in Lemonay.

[00:28:50] Speaker 01:
And it was pretty close to what we had here.

[00:28:53] Speaker 01:
And, you know, I think it was waived.

[00:28:55] Speaker 01:
And in fact, he said that he thought it had been waived twice.

[00:28:59] Speaker 01:
So our understanding of this context about also the damages expert here, arguments back and forth that could have been made a long time ago,

[00:29:07] Speaker 01:
was inclusive of the arguments that GSK was raising about the billion dollar sales that they argued midway through trials should not come in.

[00:29:20] Speaker 04:
Go ahead.

[00:29:23] Speaker 01:
Okay, in terms of infringement turning back to that aspect, you know, so again, the jury heard undisputed evidence about the properties that GSXpert conceded that magnesium stearate prevents particles from sticking to one another and that the ability of magnesium stearate to increase dispersion in inhalers was known.

[00:29:42] Speaker 01:
And this document at Appendix 5001, it's a GSK 2014 formal technical document about magnesium stearate.

[00:29:51] Speaker 01:
And it's expressly intended to be used wherever GSK's elliptic products are approved.

[00:29:55] Speaker 01:
And it says that magnesium stearate was included to stabilize the size of the actives.

[00:30:00] Speaker 01:
That is to keep them small.

[00:30:01] Speaker 01:
So it's not about the lactose, it's about stabilizing the size of the actives.

[00:30:06] Speaker 01:
And that makes sense because GSK admits in its opening brief that unmodified active reaches

[00:30:11] Speaker 01:
an unmodified active small enough to reach the lungs becomes larger and it ultimately is prevented from reaching the lungs.

[00:30:19] Speaker 01:
And the result is lower dispersion.

[00:30:21] Speaker 01:
And that same 2014 document says that the mode of action of magnesium stearate is understood to coat particles and reduce inter-particle interactions.

[00:30:30] Speaker 01:
And then Victoria's expert testified that when used as a coating, magnesium stearate reduces inter-particle interactions and will improve dispersion.

[00:30:38] Speaker 01:
So, of course, that, too, makes sense because by preventing the sticky active from interacting, they stay small, permitting them to reach the deep lung, which increases dispersion.

[00:30:49] Speaker 01:
So, all of the foregoing applies to both GSK's Volandrol and Eumeclidinium formulations.

[00:30:54] Speaker 01:
GSK's internal magnesium CRA documents don't distinguish between the two additives.

[00:31:00] Speaker 01:
I do want to focus a little bit on the courts if I have time on the courts.

[00:31:06] Speaker 01:
dispersion test because there what the court had stated specifically in it is footnote nine at appendix 64 that if a poser wanted to determine whether composite active particles C2 increased dispersion compared to active particles C1 in a composition also containing particles A and B, she would not vary A and B during testing.

[00:31:31] Speaker 01:
So it went to the composition

[00:31:33] Speaker 01:
And the composition should not be varied.

[00:31:35] Speaker 01:
And again, here to clarify, you know, study two in particular, it had magnesium stearate-coated active in blend six and magnesium stearate-coated lactose.

[00:31:47] Speaker 01:
And the commercial formulations also contained magnesium stearate-coated lactose and magnesium stearate-coated active.

[00:31:55] Speaker 01:
You know, so there are no additional, the additional ingredient that Mr. Lee, I believe was referring to, GSK's counsel was referring to,

[00:32:02] Speaker 01:
is in a separate blister.

[00:32:06] Speaker 01:
It's fluticasone in the Brio product, so these don't come in contact with one another inside the inhalers themselves.

[00:32:15] Speaker 01:
Further, in terms of blend one and five and the content uniformity, to measure content uniformity, you take a small sample from a blend and compare how much drug is in each one of those small samples.

[00:32:28] Speaker 01:
And ideally, you want consistency.

[00:32:31] Speaker 01:
And when you have just active and lactose in a blend, so blend one, the active sticks to the lactose and the mixture becomes ordered or homogenous.

[00:32:39] Speaker 01:
And that's discussed, for example, at appendix 5851.

[00:32:43] Speaker 01:
So it's no surprise that Blend 1, which contained just active and lactose, was homogenous and had adequate content uniformity.

[00:32:50] Speaker 01:
But when you turn to Blend 5, which is the same as Blend 1, except that the lactose is coated with magnesium stearate, well there, the magnesium stearate is a lubricant.

[00:32:59] Speaker 01:
GSK's expert admits that at appendix 1731 to 32.

[00:33:03] Speaker 01:
And now, the active can't stick to the lactose.

[00:33:06] Speaker 01:
And we know from GSK's opening brief that small particles are sticky.

[00:33:10] Speaker 01:
So instead of sticking to the lactose, they stick to each other.

[00:33:13] Speaker 01:
And the result is what GSK's fact witness called snowballs throughout the blend.

[00:33:17] Speaker 01:
So in terms of content uniformity, one small sample may have a snowball and another may not.

[00:33:21] Speaker 01:
And content uniformity is unacceptably high.

[00:33:24] Speaker 01:
And Victoria's expert testified that there was a correlation between poor dispersion and poor content uniformity.

[00:33:30] Speaker 01:
GSK calls it speculation, but GSK itself came to the same conclusion at Appendix 6193 and 6194.

[00:33:38] Speaker 01:
And GSK, in its reply, also argues that Blend 1 illustrates that even without any magnesium stereium, that improvements could be achieved with better content uniformity.

[00:33:48] Speaker 01:
And while that's besides the point, as GSK coats its lactose in its products, GSK is wrong.

[00:33:54] Speaker 01:
For example, at Figure 2 at Appendix 6193 shows that Blend 1

[00:34:00] Speaker 01:
dispersion dropped from greater than 30% to below 5% in order of magnitude in five short weeks, so the dispersion there was not stable, whereas Blend 6 dispersion was stable with no drop-off shown in that same figure.

[00:34:15] Speaker 01:
I did want to focus on claim construction if I still have time, and it goes to GSK's waiver.

[00:34:22] Speaker 01:
I want to clarify what they're requesting here on appeal versus what it argued below.

[00:34:27] Speaker 01:
is their proposed construction is simply meaningfully different.

[00:34:31] Speaker 01:
Their actual proposed construction down below is that Appendix 51 at Term 3.

[00:34:37] Speaker 01:
And it was particulate entities formed by milling a uniform blend of only additive particles and active particles using sufficient energy and duration to ensure sufficient breakup of agglomerates of both constituents, dispersal, and even distribution of additive over active of the particle.

[00:34:53] Speaker 01:
What's important there is that GSK argued that the energy should be sufficient energy and duration to achieve a particular purpose, which is articulated by GSK.

[00:35:03] Speaker 01:
for example, to sufficiently break up the agglomerates, whereas now GSK is arguing that a given process such as its TRV must be defined somehow as a high-energy mill regardless of what it achieves.

[00:35:15] Speaker 01:
So put another way, GSK is arguing that such a process as its TRV used in the commercial formulations must qualify as a high-energy mill regardless of what the end result actually is.

[00:35:33] Speaker 01:
I did want to circle back to the allegation of prejudice for a moment.

[00:35:41] Speaker 01:
Ultimately, the reference to GSK's sales and profits was proper.

[00:35:47] Speaker 01:
in that we needed to address, through the Georgia-Pacific factors, a consideration of the profitability in evaluating the reasonable royalty, and particularly with respect to the jury instructions, which GSK doesn't allege were improper.

[00:36:00] Speaker 01:
We needed to establish the profitability of the infringing products, their commercial success, and we needed to address the amount that a prudent licensee would have been willing to pay as a royalty and yet be able to make a reasonable profit.

[00:36:13] Speaker 01:
So we did need to be able to compare what the request was, the reasonable royalty, to the actual profits of the accused products.

[00:36:22] Speaker 01:
And again, as GSK did not address or did not object to doing so.

[00:36:34] Speaker 01:
Anything further?

[00:36:37] Speaker 01:
The only last thing I'd point out is with respect to umeclidinium.

[00:36:42] Speaker 01:
Again, study two applies to umeclidinium because also the same excipients are present.

[00:36:49] Speaker 01:
It's lactose-coated magnesium, stearate, and lactose-coated active as well.

[00:36:55] Speaker 01:
Thank you, Your Honor.

[00:36:57] Speaker 02:
Thank you.

[00:36:59] Speaker 02:
Dr. Lee, we'll enjoy your three minutes.

[00:37:00] Speaker 00:
Yes, Your Honor.

[00:37:01] Speaker 00:
I'll be brief.

[00:37:02] Speaker 00:
I have three points.

[00:37:03] Speaker 00:
On this question of the proof of infringement,

[00:37:08] Speaker 00:
The evidence actually demonstrates that UMEC reacts differently to lactose than the other active ingredients, and that's an A1555.

[00:37:20] Speaker 00:
And the only evidence, the only evidence that Victoria offered was the concluding statement by its expert that UMEC is also a drug particle.

[00:37:33] Speaker 00:
That isn't enough to bridge the gap between

[00:37:37] Speaker 00:
study two, even if it was valid in UMEC.

[00:37:41] Speaker 00:
Secondly, on this issue of infringement, counsel has collapsed the issues of dispersion and stability.

[00:37:49] Speaker 00:
And if the court looks at the study two report, you'll see that one of the purposes, the primary purpose, was to test stability.

[00:37:58] Speaker 00:
And dispersion was also addressed.

[00:38:01] Speaker 00:
At age 6194, the study itself says you cannot reach any conclusions about dispersion for the reasons I've discussed earlier.

[00:38:11] Speaker 00:
But there are some conclusions reached about stability.

[00:38:14] Speaker 00:
And you might say to yourselves, well, how can that be?

[00:38:17] Speaker 00:
It's because, Your Honor, stability is within a particular sample, not comparing across samples.

[00:38:23] Speaker 00:
Dispersion is comparing blend five to blend six.

[00:38:27] Speaker 00:
The stability analysis were within a particular

[00:38:31] Speaker 00:
blend over time.

[00:38:34] Speaker 00:
So there are two different concepts which were collapsed during counsel's argument.

[00:38:39] Speaker 00:
It's only the dispersion that's relevant to us.

[00:38:42] Speaker 00:
Second point, as I hear the argument, it is that improved dispersion, the function of improved dispersion follows as night follows the day if you create a composite active particle.

[00:38:57] Speaker 00:
Or to go to Judge Bryson's first question, if you coat

[00:39:01] Speaker 00:
both the lactose and the active ingredient.

[00:39:04] Speaker 00:
But that can't be, because if improved dispersion followed as night follows the day, then the improved dispersion limitation, which was construed specifically by the court, would have no meaning.

[00:39:18] Speaker 00:
It would just be the natural consequence, and that's not what the court said, and that's not what the patent says.

[00:39:25] Speaker 00:
Last point on this issue of damages to go to Judge Wallach's questions,

[00:39:30] Speaker 00:
The district court itself said that there clearly was no waiver at all on these issues.

[00:39:36] Speaker 00:
And then at the end, at A1961, Victoria states when it was asked not to do this anymore, quote, I probably mentioned it enough today already that I think that they'll remember it.

[00:39:51] Speaker 00:
Well, the answer is they did.

[00:39:52] Speaker 00:
And it goes not just to validity and infringement, which is what the footnote at A23 is discussing,

[00:40:00] Speaker 00:
but also to justifying a damages claim that is outsized.

[00:40:05] Speaker 00:
And it's the pennies on the dollars argument that accomplishes that.

[00:40:10] Speaker 00:
Thank you, Your Honor.

[00:40:12] Speaker 02:
Thank you.

[00:40:12] Speaker 02:
We thank both sides and the cases submitted.

[00:40:15] Speaker 02:
That concludes our proceeding for this morning.

[00:40:21] Speaker 01:
The Honorable Court is adjourned until tomorrow morning at 10 a.m.