[00:00:00] Speaker 05:
All right, our final case for today is 22-2124, Takeda Pharmaceutical versus Zydus Pharmaceuticals.

[00:00:13] Speaker 05:
Mr. Moore, please proceed whenever you're ready.

[00:00:15] Speaker 05:
That's all right.

[00:00:31] Speaker 01:
May it please the court, Steve Moore representing Zydus Pharmaceutical and Cadila Healthcare.

[00:00:36] Speaker 01:
As the Supreme Court found in the Highmark case, 572 U.S.

[00:00:39] Speaker 01:
559, a district court necessarily would abuse its discretion if it bases its ruling on an erroneous view of law or clearly erroneous assessment of evidence.

[00:00:53] Speaker 01:
The question before this court is whether the district court committed legal or factual errors that affected its exercise of discretion and the determination of attorney fees by, one, permitting the claims in the 546 patent to read upon admitted conventional granules of more than 440 microns.

[00:01:13] Speaker 02:
How do you distinguish the new wedge case?

[00:01:16] Speaker 02:
Are you familiar with that case?

[00:01:18] Speaker 02:
Or SFA systems, LLC versus US?

[00:01:22] Speaker 02:
Oh, the system.

[00:01:23] Speaker ?:
Yeah.

[00:01:24] Speaker 02:
Can you distinguish that?

[00:01:33] Speaker 01:
No, Your Honor, I don't.

[00:01:35] Speaker 01:
Oh yes, right here.

[00:01:37] Speaker 01:
In that case, the court found the district court's construction to require a salesperson as being reasonable.

[00:01:42] Speaker 01:
So the court itself said, hey look, the district court found it twice that a salesperson could be reasonable.

[00:01:50] Speaker 01:
And so they couldn't find, you know, it had been construed twice.

[00:01:54] Speaker 01:
There was no proof of litigation misconduct in terms of them bringing cases against multiple defendants.

[00:02:03] Speaker 01:
So this was not a situation where this had not already been preinterpreted.

[00:02:07] Speaker 01:
And again, what I'd like to do, I think it would make the court a lot easier,

[00:02:12] Speaker 01:
if, and I did talk to counsel before, is that I actually just hand this, the K to one opinion to you, which is highlighted, so you can see.

[00:02:21] Speaker 01:
Yeah, thank you.

[00:02:22] Speaker 01:
Okay, if you don't need it, that's fine.

[00:02:23] Speaker 01:
I'll give it to counsel.

[00:02:24] Speaker 01:
You know, it's, okay.

[00:02:28] Speaker 01:
The decision was, was pretty clear as to what was going on.

[00:02:34] Speaker 01:
So what we have is the judge permitting claims in the 546, which is a continuation application, same specification.

[00:02:42] Speaker 01:
to read upon admitted conventional granules inside the patent, and finding the background of the invention in an application not to be part of the specification, which is a new one to me.

[00:02:56] Speaker 01:
And in three, finding as the 546 patent claims do not recite a particular numerical medium diameter, that the Federal Circuit's opinion in Takeda 1 was obviated to the effect of its findings

[00:03:12] Speaker 04:
There are different claims of issuing K-1 versus the claims of issuing this case, right?

[00:03:19] Speaker 01:
That is correct.

[00:03:20] Speaker 04:
And what is the standard of review that we apply to the district court's determination that the case below the claim instruction asserted was not so far afield as to make the case exceptional?

[00:03:33] Speaker 04:
What is the standard of review?

[00:03:35] Speaker 01:
Well, if it's based as the Supreme Court says in Highmark.

[00:03:39] Speaker 04:
Well, it's abusive discretion.

[00:03:41] Speaker 04:
It's abusive discretion.

[00:03:42] Speaker 04:
The Supreme Court in Highmark specifically said, hey, Federal Circuit, don't second-guess what the District Court has done here in these attorney fees cases.

[00:03:51] Speaker 04:
You need to give deference, right?

[00:03:53] Speaker 04:
You do give deference, but... I understand there needs to be a clear... I understand your assertion is that there's a clear legal error.

[00:04:01] Speaker 04:
Right?

[00:04:01] Speaker 04:
That's correct.

[00:04:02] Speaker 04:
Is your clear legal error because the court said that their claim destruction was not so far afield?

[00:04:07] Speaker 04:
I mean, I think what he said was the claim destruction is plausible.

[00:04:11] Speaker 01:
I think that was the word he used.

[00:04:14] Speaker 01:
What we have here is... Is it a she?

[00:04:16] Speaker 01:
Just so I know.

[00:04:17] Speaker 01:
Yes, it is.

[00:04:18] Speaker 01:
I didn't know.

[00:04:20] Speaker 01:
What we do know there was he there.

[00:04:22] Speaker 04:
It's a she.

[00:04:23] Speaker 04:
She.

[00:04:25] Speaker 04:
All she said was plausible, and therefore the litigation position was not acceptable.

[00:04:31] Speaker 01:
She's basing it to be plausible based on what she understands the law to be.

[00:04:38] Speaker 03:
But you agree that construction doesn't have to be absolutely correct to not get fees, right?

[00:04:43] Speaker 03:
You agree with that statement?

[00:04:45] Speaker 03:
It doesn't have to be correct.

[00:04:48] Speaker 03:
Plausible's okay.

[00:04:49] Speaker 01:
if it's plausible, but this is not even plausible.

[00:04:53] Speaker 01:
I mean, this is looking just, if your opinions mean anything, somebody should bet, you know, you write these things, you tell us what is the invention.

[00:05:05] Speaker 04:
This is not, this... So did I agree with you that the claim construction

[00:05:11] Speaker 04:
that I would have ultimately agreed with you on the claim destruction.

[00:05:14] Speaker 04:
Let's assume that for a hypothetical.

[00:05:17] Speaker 04:
But that wasn't the question that was before the district court.

[00:05:20] Speaker 04:
The district court said, was this litigation position advocating this other claim destruction so crazy that it's an exceptional case?

[00:05:30] Speaker 01:
And we disagree with the district court because it's very clear that she was basing it on errors of law.

[00:05:38] Speaker 01:
Just the simple one.

[00:05:40] Speaker 01:
Background of the invention at the end of specification.

[00:05:42] Speaker 04:
What are the errors of law?

[00:05:44] Speaker 04:
Her claim construction?

[00:05:45] Speaker 01:
The errors of law.

[00:05:46] Speaker 01:
First of all, what she's done is to allow the 546 package to read on conventional granules.

[00:05:52] Speaker 04:
She didn't interpret the claims?

[00:05:54] Speaker 01:
No, but she said that, that clearly you could... She said it's plausible.

[00:05:59] Speaker 01:
Plausible doesn't even think about the words.

[00:06:01] Speaker 01:
Fine granules.

[00:06:03] Speaker 01:
If you're a baker, you go out and you buy fine flour.

[00:06:06] Speaker 01:
We all know that means it's a size.

[00:06:08] Speaker 03:
It's different between the two patterns, right?

[00:06:11] Speaker 03:
If you go look at that claim language, it reads differently.

[00:06:15] Speaker 01:
If you agree with me on that, you can see that.

[00:06:16] Speaker 01:
They dump the limitation as to the size, but anything that's fine has a size.

[00:06:24] Speaker 01:
If I'm a mason and I'm buying fine sand,

[00:06:29] Speaker 01:
It's the size.

[00:06:30] Speaker 01:
That's how you sell it.

[00:06:32] Speaker 04:
Can I ask you something again, going back to my question?

[00:06:34] Speaker 04:
If I agree with you on the claim construction, say I say you're right, but ultimately it's up to the district court judge to say whether she thought that that construction was plausible or not, or whether the case was acceptable because the litigation position was so crazy, right?

[00:06:51] Speaker 01:
I mean, that I have to review with discretion.

[00:06:55] Speaker 01:
It's not a legal determination.

[00:06:58] Speaker 04:
It's a discretionary determination.

[00:07:00] Speaker 04:
How plausible is the litigation procession?

[00:07:07] Speaker 01:
But we've said it.

[00:07:08] Speaker 01:
We've been saying it's objectively unreasonable.

[00:07:11] Speaker 04:
Yet that's your assertion.

[00:07:12] Speaker 01:
And we've been saying that over and over.

[00:07:13] Speaker 04:
Your assertion, I understand.

[00:07:15] Speaker 04:
So she didn't think it was objectively reasonable.

[00:07:17] Speaker 04:
But that I'm supposed to review with discretion, right?

[00:07:20] Speaker 01:
You have to review it with discretion, looking to see if there were errors of law made.

[00:07:26] Speaker 01:
And if there were errors of law.

[00:07:27] Speaker 04:
And so the error of law is what?

[00:07:29] Speaker 04:
That the claim destruction she said was possible is actually incorrect?

[00:07:34] Speaker 01:
Well, we certainly know the background of an invention in an application is part of the specification, regardless of the fact of what.

[00:07:42] Speaker 01:
plaintiff's assertion.

[00:07:43] Speaker 03:
You didn't answer Judge Solt's question.

[00:07:44] Speaker 03:
Can you answer the question she posed to you?

[00:07:46] Speaker 04:
I thought that was... No, I'm asking... I don't even know what my question was.

[00:07:51] Speaker 04:
I'm sorry.

[00:07:53] Speaker 03:
I'm not trying to... I think you were talking about the error of law, right?

[00:07:56] Speaker 04:
Yes, I was trying to say, what is the error of law that you think the district court made in determining that the claim construction proffered by the plaintiff was plausible?

[00:08:09] Speaker 01:
What the judge said was that

[00:08:12] Speaker 01:
because the 546 patent does not recite a particular numerical median diameter that basically the Federal Circuit opinion in Takeda won was obviated to the effect of its saying that there was a disavowal of certain sizes

[00:08:36] Speaker 01:
that there was a definition of fine granules within the specification, the exact same specification, that there was a definition of orally disintegratable tablets in that specification, which is the exact same specification, in finding prosecution history estoppel, so it's not the

[00:08:57] Speaker 04:
Your arguments sound like they go to an error, a legal error, had she in fact interpreted the claims.

[00:09:04] Speaker 04:
Whereas what's being reviewed here is whether there's an abuse of discretion and finding that the litigation position was plausible.

[00:09:15] Speaker 01:
And there is an abuse of discretion.

[00:09:17] Speaker 01:
Just think on the prosecution history.

[00:09:19] Speaker 01:
She looked only at the five-four

[00:09:22] Speaker 01:
six.

[00:09:23] Speaker 05:
So let me just tell you, I'm going to start with something that will make you happy and something that will make you unhappy.

[00:09:29] Speaker 05:
I'm just going to telegraph where I'm going.

[00:09:31] Speaker 05:
Parts that are going to make you happy is, I agree with you.

[00:09:33] Speaker 05:
The construction of five grand rules has got to be limited in the way in which you assert it.

[00:09:38] Speaker 05:
And had I been the district court judge, I'd have given you these.

[00:09:41] Speaker 05:
Okay?

[00:09:41] Speaker 05:
So that's the part that's gonna make you happy.

[00:09:42] Speaker 05:
The part that's gonna make you unhappy is what you argued to Judge Wilson is collateral estoppel.

[00:09:47] Speaker 05:
And you were wrong.

[00:09:48] Speaker 05:
There is no collateral estoppel here because these two claim terms have different words in them.

[00:09:53] Speaker 05:
They are not identical.

[00:09:55] Speaker 05:
And so your main argument to her was a motion to dismiss for collateral estoppel.

[00:09:59] Speaker 05:
So out of the gate, your main argument to her wasn't

[00:10:02] Speaker 05:
just based on what the words fine granules mean.

[00:10:05] Speaker 05:
It was based on collateral estoppel.

[00:10:07] Speaker 05:
And you were wrong there.

[00:10:08] Speaker 05:
And I agree with her 100% that you were wrong on collateral estoppel.

[00:10:11] Speaker 05:
So then you come in and you ask for fees.

[00:10:13] Speaker 05:
And what do you lead with in your fee motion?

[00:10:17] Speaker 05:
You lead with she got it wrong when she said you shouldn't get collateral estoppel.

[00:10:20] Speaker 01:
No, we did not say that.

[00:10:22] Speaker 05:
You basically did.

[00:10:22] Speaker 05:
We accept it.

[00:10:24] Speaker 05:
With all due respect, so when I read your motion, I said I understand why Judge Wilson came out the way she did because

[00:10:32] Speaker 05:
You led your opposition to this case, your motion to dismiss, with collateral estoppel, which you were wrong about as a matter of law.

[00:10:42] Speaker 05:
And with all due respect, when you're a district court judge deciding attorney's fees, you look at the strength and the merits of both sides' positions.

[00:10:48] Speaker 05:
And that's why we have such a differential standard review, is because that's not our specialty, right?

[00:10:54] Speaker 05:
Like, she's looking at this whole litigation that you all did and making a decision about it.

[00:10:59] Speaker 05:
And so that's why she came out the way she did.

[00:11:02] Speaker 05:
I have no doubt.

[00:11:03] Speaker 05:
It's because, I mean, you're just not right about collateral estoppel at all.

[00:11:06] Speaker 05:
I think you're right about client construction.

[00:11:08] Speaker 05:
But it's not her job to go forward and have an entire trial on something that she didn't need to have a trial on or make decisions she didn't need to make.

[00:11:15] Speaker 05:
At the end of the day, she said, is this case exceptional?

[00:11:19] Speaker 05:
No.

[00:11:20] Speaker 05:
Both parties got something wrong in it.

[00:11:22] Speaker 05:
That's kind of the way she weighed it.

[00:11:24] Speaker 05:
And that's why you're at a disadvantage with us.

[00:11:26] Speaker 01:
Well, I mean, the fact of the matter is we don't dispute with her on collateral stoppable.

[00:11:31] Speaker 01:
That's not the basis of the motion.

[00:11:33] Speaker 01:
But that was your motion.

[00:11:34] Speaker 05:
You made a motion to dismiss.

[00:11:36] Speaker 01:
We made an initial motion.

[00:11:37] Speaker 01:
to dismiss, which was denied.

[00:11:40] Speaker 05:
Right, but do you not understand?

[00:11:41] Speaker 05:
This is a very short case.

[00:11:42] Speaker 05:
She didn't even get to claim construction, right?

[00:11:44] Speaker 05:
So what she's got is their complaint, your motion to dismiss.

[00:11:48] Speaker 05:
Their complaint is probably no what-o.

[00:11:51] Speaker 05:
Your motion to dismiss, equally no what-o.

[00:11:53] Speaker 05:
She says, yeah, no attorneys needs for anybody.

[00:11:55] Speaker 01:
But by the way, I do disagree that there is not an argument on Kalata-Wolsapa.

[00:12:00] Speaker 01:
There are cases that go beyond saying that has to be the exact issue.

[00:12:05] Speaker 05:
And there are case statements that, you know... This examiner allowed them to take that limiting 400 micrometer language out.

[00:12:14] Speaker 05:
He shouldn't have or she shouldn't have, but did.

[00:12:17] Speaker 05:
So, you know, Judge Wilson's like, well, you know, I got a patent now, we're an examiner, let them take it out.

[00:12:21] Speaker 05:
So, you know, I can understand why she came out, where she especially gave me the early stage of this process.

[00:12:26] Speaker 05:
So, the bottom line is, I don't see how you can prevail, but I do think that you should have won on the merits, and I do think you're right about the claim construction for whatever that's worth.

[00:12:35] Speaker 05:
I think you're 100% right.

[00:12:38] Speaker 01:
It's not just a claim construction issue.

[00:12:40] Speaker 01:
This is, it's, when she looked at the filed history,

[00:12:45] Speaker 01:
That's an error of law to look only at the 546 patent history and to forget about all of the parental history.

[00:12:52] Speaker 01:
The Federal Circuit very clearly said, I mean, there's error after error being made here, and that's a big one, is that there was a patent that clearly said we cannot be above 400 microns, because it used the words within 400 microns.

[00:13:12] Speaker 01:
That was said right in the Federal Circuit opinion.

[00:13:15] Speaker 05:
Because that's what the claim term said.

[00:13:17] Speaker 05:
The claim term in the Federal Circuit opinion was fine granules having an average particle diameter of 400 microns or less.

[00:13:26] Speaker 05:
So that's why the Federal Circuit, they were construing an entire claim term.

[00:13:30] Speaker 05:
They weren't construing the word fine granules.

[00:13:32] Speaker 05:
They were construing a claim term which in itself had a size limit.

[00:13:35] Speaker 05:
And that's the difference here.

[00:13:37] Speaker 05:
Why don't you save some time for a bottle at this point?

[00:13:50] Speaker 00:
Good afternoon, Your Honors.

[00:13:51] Speaker 00:
Eric Lobenfeld for Takeda.

[00:13:58] Speaker 00:
The standard is abusive discretion.

[00:14:00] Speaker 00:
She wrote a 15-page opinion.

[00:14:03] Speaker 00:
She reviewed the arguments on both sides, whether at the end of the day she would have come out agreeing with Citus or not.

[00:14:13] Speaker 00:
Judge Moore, I think you put your finger on an important point here, which is they filed a patent with a limitation in it, and then they took it out.

[00:14:23] Speaker 00:
The examiner didn't dispute it, didn't say there was no support for a broad claim without a particle size limitation, didn't ask why they took it out, and at the end of the day there was nothing in the prosecution of this patent dealing with particle size.

[00:14:37] Speaker 00:
The reasons for allowance don't mention it.

[00:14:40] Speaker 00:
The whole prosecution revolved around

[00:14:42] Speaker 00:
whether it was a disintegrable tablet or an effervescent tablet, that's what the issue was with the examiner.

[00:14:51] Speaker 00:
They made the collateral estoppel motion which was denied.

[00:14:55] Speaker 00:
We decided to withdraw the claim for business reasons that I put in the brief and aren't really germane to this.

[00:15:01] Speaker 00:
They opposed our doing that and we had to make a motion.

[00:15:05] Speaker 00:
She granted the motion.

[00:15:06] Speaker 00:
We withdrew the claims.

[00:15:07] Speaker 00:
Then we said, well, now your counterclaims are moved.

[00:15:11] Speaker 00:
There's no justiciable controversy.

[00:15:13] Speaker 00:
There's no infringement.

[00:15:14] Speaker 00:
The patent has expired.

[00:15:15] Speaker 00:
Will you drop your claims?

[00:15:17] Speaker 00:
No.

[00:15:17] Speaker 00:
So then we had to make another motion to dismiss.

[00:15:21] Speaker 00:
So obviously, we're not seeking fees, but this is a- Well, that's very generous of you.

[00:15:28] Speaker 05:
Since you asserted a claim construction that's completely wrong, it's very generous of you not to seek fees.

[00:15:34] Speaker 00:
Well, respectfully, we never had an abarkment here.

[00:15:38] Speaker 00:
The claim doesn't have the language.

[00:15:40] Speaker 00:
Your court's ruling in the first case, we've been living with this together since 2010, was focused on the meaning of 400 microns or less.

[00:15:50] Speaker 05:
No.

[00:15:51] Speaker 05:
Judge Prost's opinion, or the court's opinion, definitely focused on fine granules.

[00:15:56] Speaker 05:
I read that opinion and while it's not technically collateral estoppel,

[00:16:01] Speaker 05:
The writing was on the wall.

[00:16:02] Speaker 05:
You have no rights under this specification to find granules that don't fall within the 400 micron limitation on size.

[00:16:11] Speaker 05:
You do not.

[00:16:12] Speaker 05:
You do not have any basis for it.

[00:16:14] Speaker 05:
And part of the reason he's here is he's frustrated because you guys have been living with this for a long time.

[00:16:19] Speaker 05:
And it was not.

[00:16:21] Speaker 05:
great faith for you to assert this patent.

[00:16:23] Speaker 05:
So when you stand up here, I would not have come off at you like this, but when you say, Oh, well, we're not seeking fees here.

[00:16:28] Speaker 05:
I mean, that just was a step too far for my liking.

[00:16:30] Speaker 05:
Okay, my I can't let you get away with that.

[00:16:33] Speaker 05:
He's 100% right.

[00:16:35] Speaker 05:
You're 100% wrong.

[00:16:36] Speaker 05:
You shouldn't have asserted this patent.

[00:16:38] Speaker 05:
But I'm not going to second guess the district court judge on an abuse of discretion standard

[00:16:43] Speaker 05:
under these set of circumstances.

[00:16:44] Speaker 05:
So if you want to keep talking, you've got 12 minutes.

[00:16:47] Speaker 05:
But if I were you, since you started with something that provoked me, I would probably rest.

[00:16:54] Speaker 00:
Would Your Honor object if I rested?

[00:16:58] Speaker 02:
No objection.

[00:16:59] Speaker 02:
Good call.

[00:17:00] Speaker 02:
No questions.

[00:17:00] Speaker 00:
Thank you, Your Honor.

[00:17:04] Speaker 01:
Well, I can say that you cannot be, you're looking at that clean, you're only looking to find granules.

[00:17:11] Speaker 01:
It's specifically defined at column five, lines 44 through 49, that orally disintegratable tablets only have fine granules of 400.

[00:17:22] Speaker 01:
I feel your pain.

[00:17:27] Speaker 01:
I mean, we disagree that that is not an abuse of discretion under the Hard Rock standard.

[00:17:33] Speaker 01:
I'd like to just put that on the record.

[00:17:34] Speaker 05:
She didn't construe the claims contrary to you.

[00:17:37] Speaker 05:
She just said if they weren't completely implausible, the construction.

[00:17:40] Speaker 05:
I agree with you.

[00:17:41] Speaker 05:
Your construction is 100% right.

[00:17:44] Speaker 05:
Sorry, Mr. Warren.

[00:17:49] Speaker 01:
You understand that we were the only ones sued on these patents?

[00:17:52] Speaker 05:
Over and over.

[00:17:53] Speaker 01:
Over and over.

[00:17:53] Speaker 01:
I get it.

[00:17:54] Speaker 01:
Just because we were Zydus and we were the ones that opened the door.

[00:17:59] Speaker 01:
We got sued on four patents.

[00:18:03] Speaker 01:
And it was just done, you know.

[00:18:07] Speaker 01:
I guess the answer to it is... Abuse of discretion, standard of review.

[00:18:11] Speaker 01:
Justice doesn't always win.

[00:18:14] Speaker 05:
The law does.

[00:18:15] Speaker 05:
The law prevails.

[00:18:16] Speaker 05:
The law is not always just, my friend, but it is the law, and that's what we're forced to follow.

[00:18:21] Speaker 05:
Okay, I thank both counsel for the argument.