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UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS
) AMGEN INC., ) ) Plaintiff, ) ) Civil Action No.: 05-12237 WGY v. ) ) ) F. HOFFMANN-LA ROCHE ) LTD., a Swiss Company, ROCHE ) DIAGNOSTICS GmbH, a German ) Company and HOFFMANN-LA ROCHE ) INC., a New Jersey Corporation, ) ) Defendants. ) __________________________________________)
AMGEN’S POST-TRIAL BRIEF FOR THE REMEDY PHASE AND RESPONSE TO DEFENDANTS’ JANUARY 28, 2008 PROPOSAL
901658_4
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TABLE OF CONTENTS
Page No.
I. INTRODUCTION .............................................................................................................. 1
II. AMGEN PROVED AT TRIAL THAT A PERMANENT INJUNCTION SHOULD BE ENTERED BECAUSE THE FOUR FACTORS WEIGH HEAVILY IN FAVOR OF AN INJUNCTION. ................................................................ 8
A. Overview of the evidence and legal standard. ........................................................ 8
B. Amgen will suffer from irreparable injury unless a permanent injunction is granted.............................................................................................. 12
C. Remedies available at law are inadequate to compensate for Amgen’s irreparable injury................................................................................................... 15
D. The balance of hardships weighs in Amgen’s favor............................................. 17
E. The public interest would not be disserved by an injunction................................ 19
1. The public interest is best served by a result that honors a robust and predictable patent system that rewards innovation. ........................... 19
2. There is no assurance that permitting the infringement of Amgen’s patents under terms compelled by the Court will reduce public health care spending. .......................................................... 24
3. The public interest would not be disserved by an injunction where peg-EPO does not address an unmet medical need and is not clinically superior to currently available ESAs. ................................. 28
a. The public interest is in gaining access to therapies that address unmet medical needs and peg-EPO does not. .................. 29
b. There is no evidence that Roche’s product is clinically superior to established ESAs. ....................................................... 35
F. A permanent injunction is not precluded by Roche’s unclean hands or patent misuse defenses.......................................................................................... 36
1. Amgen’s agreement with Fresenius — voluntarily negotiated and entered into without coercion — is lawful and does not support Roche’s unclean hands defense. .................................................. 38
2. Amgen does not and cannot incentivize overuse of ESAs. ...................... 40
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3. Amgen’s pro-competitive, multi-product rebates in oncology do not constitute unclean hands or patent misuse. ......................................... 41
4. Amgen is entitled to enforce Dr. Lin’s Patents and is not obligated to guarantee discounts in perpetuity.......................................... 42
5. Amgen does not withhold products from dialysis providers .................... 44
III. RESPONSE TO ROCHE’S JANUARY 28, 2008 PROPOSAL...................................... 45
A. Roche’s Proposal would exact a higher reimbursement from Medicare. ............. 46
B. Roche’s proposed 20% royalty will not adequately compensate Amgen for even its economic losses. ................................................................................ 49
C. Roche is asking the Court to take the profits of Amgen, the proven innovator, and award them to Roche for its infringement — all in the name of the public interest. ................................................................................... 53
IV. CONCLUSION................................................................................................................. 53
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TABLE OF AUTHORITIES
Page No. CASES
Abbott Lab. v. Sandoz, Inc., 500 F. Supp. 2d 807 (N.D. Ill. 2007) .................................................................................. 20, 22
AG v. SciMed Life Sys., Inc., 852 F. Supp. 813 (D. Minn. 1994)............................................................................................ 28
Allan Block Corp. v. E. Dillon & Co., No. 04-3511, 2005 U.S. Dist. LEXIS 13566 (D. Minn. July 1, 2005)............................................................................................................. 40
ALM Surgical Equip., Inc. v. Kirschner Med. Corp., No. 6:89-1622-3, 1990 U.S. Dist. LEXIS 14584 (D.S.C. Apr. 23, 1990) .............. 11, 28, 33, 34
Aptix Corp. v. Quickturn Design Sys., Inc., 269 F.3d 1369 (Fed. Cir. 2001) ................................................................................................ 37
Bell & Howell Document Mgmt. Prods. Co. v. Altek Sys. 132 F.3d 701 (Fed. Cir. 1997) .................................................................................................. 16
Bio-Tech. Gen. Corp. v. Genentech, Inc., 80 F.3d 1553 (Fed. Cir. 1996) ............................................................................................ 39, 41
Boehringer Ingelheim Vetmedica, Inc. v. Schering-Plough Corp., 106 F. Supp. 2d 696 (D.N.J. 2000) ........................................................................................... 17
C.R. Bard, Inc. v. M3 Sys., Inc., 157 F.3d 1340 (Fed. Cir. 1998) ................................................................................................ 41
Carl Schenek, A.G. v. Nortron Corp., 713 F.2d 782 (Fed. Cir. 1983) .................................................................................................... 2
Commonwealth Sci. & Indus. Research Org. v. Buffalo Tech, Inc., 492 F. Supp. 2d 600 (E.D. Tex. 2007).................................................................... 10, 17, 18, 28
Cordis Corp. v. Boston Scientific Corp., No. 03-238, 2003 U.S. Dist. LEXIS 21338 (D. Del. Nov. 21, 2003)....................................... 11
Cordis Corp. v. Boston Scientific Corp., No. 04-1098, 2004 U.S. App. LEXIS 11557 (Fed. Cir. May 28, 2004)................................... 16
Critikon, Inc. v. Becton Dickinson Vascular Access, Inc., No. 93-108-JJF, 1993 U.S. Dist. LEXIS 19959 (D. Del. July 16, 1993) ........................... 11, 28
iii
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Deweese v. Reinhard, 165 U.S. 386 (1897).................................................................................................................. 36
Dr. José S. Belaval, Inc. v. Perez-Perdomo, 488 F.3d 11 (1st Cir. 2007)................................................................................................. 39, 41
E.I. duPont deNemours & Co. v. Polaroid Graphics Imaging, Inc.. 706 F. Supp. 1135 (D. Del. 1989)............................................................................................. 21
eBay Inc. v. MercExchange, L.L.C., 126 S. Ct. 1837 (2006).................................................................................................... 8, 10, 16
Eli Lilly & Co. v. Premo Pharm. Labs., Inc., 630 F.2d 120 (3d Cir. 1980) ......................................................................................... 10, 18, 21
Gaudiosi v. Mellon, 269 F.2d 873 (3d. Cir. 1959) .................................................................................................... 37
Hybritech Inc. v. Abbott Labs., 4 U.S.P.Q. 2d (BNA) 1001, 1987 WL 123997 (C.D. Cal. 1987), aff’d, 849 F.2d 1446 (Fed. Cir. 1988)................................................................................................................ 11
Hybritech Inc. v. Abbott Labs., 849 F.2d 1446 (Fed. Cir. 1988) .......................................................................................... 10, 22
ICU Med. Inc. v. Alaris Med. Sys., Inc., 2004 U.S. Dist. LEXIS 19949 (C.D. Cal. July 30, 2004) .......................................................................................................... 11
In re New Valley Corp., 181 F.3d 517 (3d Cir. 1999) ..................................................................................................... 37
Johns Hopkins Univ. v. Datascope Corp., 513 F.Supp. 2d 578 (D. Md. 2007) ........................... 22
Johns Hopkins Univ. v. Datascope Corp., Nos. WDQ-05-0759, WDQ-06-2711, 2007 U.S. Dist. LEXIS 68972 (D. Md. Aug. 9, 2007) ...................................................................................................................... 10, 28
Keystone Driller Co. v. General Excavator Co., 290 U.S. 240 (1933)................................................................................................ 36, 37, 39, 41
MercExchange, L.L.C. v. eBay, Inc., 500 F. Supp. 2d 556 (E.D. Va. 2007) ................................................................................... 9, 17
Novozymes A/S v. Genencor Int’l, Inc., 474 F. Supp. 2d 592 (D. Del. 2007)............................................................................................ 8
iv
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Ortho Pharm. Corp. v. Smith, No. 90-0242, 1990 U.S. Dist. LEXIS 1951 (E.D. Pa. Feb. 23, 1990) ...................................... 21
Patlex Corp. v. Mossinghoff, 758 F.2d 594 (Fed. Cir. 1985) .................................................................................................. 21
Payless Shoesource, Inc. v. Reebok Int’l Ltd., 998 F.2d 985 (Fed. Cir. 1993) .................................................................................................. 10
Pfaff v. Wells Elecs., Inc., 525 U.S. 55 (1998).......................................................................................................... 4, 18, 19
Pfizer, Inc. v. Teva Pharms. USA, Inc., 429 F.3d 1364 (Fed. Cir. 2005) .......................................................................................... 10, 21
Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806 (1945)...................................................................................................... 37, 39, 41
Proveris Sci. Corp. v. InnovaSystems, Inc., No. 05-12424-WGY, 2007 U.S. Dist. LEXIS 48475 (D. Mass. May 11, 2007)................ 10, 28
Sanofi-Synthelabo v. Apotex, Inc., 470 F.3d 1368 (Fed. Cir. 2006) .............................................................................. 12, 13, 18, 20
Sanofi-Synthelabo v. Apotex, Inc., 488 F. Supp. 2d 317 (S.D.N.Y. 2006) .......................................................................... 10, 20, 21
Sanofi-Synthelabo v. Apotex, Inc., 492 F. Supp. 2d 353 (S.D.N.Y. 2007) ........................................................................................ 9
Schneider (Eur.) AG v. SciMed Life Sys., Inc., 852 F. Supp. 813 (D. Minn. 1994).......................................................................... 10, 11, 28, 34
Seymour v. Osborne, 78 U.S. (II Wall.) 516 (1870).................................................................................................... 19
Shiley, Inc. v. Bentley Labs., Inc., 601 F. Supp. 964 (C.D. Cal. 1985) ............................................................................... 11, 28, 34
Smith & Nephew, Inc. v. Synthes (U.S.A.), 466 F. Supp. 2d 978 (W.D. Tenn. 2006) .................................................................. 9, 10, 19, 28
Smith Int’l, Inc. v. Hughes Tool Co., 718 F.2d 1573 (Fed. Cir. 1983) ................................................................................................ 21
Southwire Co. v. Essex Group, Inc., No. 81 C 3313, 1983 U.S. Dist. LEXIS 16724 (N.D. Ill. May 24, 1983) ................................ 37
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Transocean Offshore Deepwater Drilling, Inc. v. GlobalSantaFe Corp., No. H-03-2910, 2006 U.S. Dist. LEXIS 93408 (S.D. Tex. Dec. 27, 2006) ............................... 8
United States v. Dubilier Condenser Corp., 289 U.S. 178 (1933).................................................................................................................... 4
Verizon Servs. Corp. v. Vonage Holdings Corp., 503 F.3d 1295 (Fed. Cir. 2007) ................................................................................................ 14
Virginia Panel Corp. v. MAC Panel Co., 133 F.3d 860 (Fed. Cir. 1997) .................................................................................................. 42
Vitamin Technologists, Inc. v. Wis. Alumni Res. Found., 146 F.2d 941 (9th Cir. 1945) .................................................................................................... 44
Windsurfing Int’l Inc. v. AMF, Inc., 782 F.2d 995 (Fed. Cir. 1986) ............................................................................................ 17, 18
STATUTES
35 U.S.C. § 271(d)(3) (2007)........................................................................................................ 44
35 U.S.C. § 284 (2007) ................................................................................................................. 50
OTHER AUTHORITIES
U.S. Const. art. I, § 8, cl. 8............................................................................................................ 19
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I. INTRODUCTION
The evidence introduced at trial in the remedy phase convincingly established that
Amgen is entitled to an injunction to prevent Roche from importing, using, and selling any peg-
EPO product in the United States for the term of the four patents Roche was held to infringe.
There can be no doubt that Amgen will suffer irreparable injury for which monetary damages are
inadequate to compensate and that the balance of hardships weighs in Amgen’s favor. Whatever
hardship Roche bears it brought on itself, for it knew about Amgen’s proven patent rights before
it began development of peg-EPO. Entry of an injunction will serve the public interest in
upholding the basic premise of the patent system — to give the patent owner the right to exclude
others from using the claimed inventions during the term of the patent. In fact, denial of an
injunction in this case would greatly disserve that public interest.
Although Roche talks of the great economic and public health benefits that its “new and
different medicine” could bring, in an attempt to conjure up some countervailing public interest,
the evidence at trial disproved any basis for these assertions. Roche’s product is not some new
and different molecule that meets some unmet medical need. Rather, Roche’s product is EPO —
the same EPO that Dr. Lin invented and Amgen brought to patients around the world to treat
their anemia — with the addition of a peg to it. As demonstrated in the results of Roche’s
clinical trials, peg-EPO has no clinical benefit over Amgen’s products and is associated with a
higher incidence of serious side effects.
Likewise, Roche’s bold assertions of saving billions of dollars for the government and
taxpayers are false as the evidence showed that Roche’s peg-EPO will actually increase the cost
to Medicare for treating anemia in patients with chronic renal failure. From Roche’s own
marketing plans it was clear that peg-EPO’s initial price as well as its price three years after it
enters will be significantly higher than what Medicare pays today for Amgen’s EPOGEN®.
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Roche’s recent proposal that would slightly lower peg-EPO’s initial price does nothing to change
this result as the peg-EPO launch price (which would be the basis for its reimbursed price as a
new entrant in the ASP system) would still be significantly higher than EPOGEN’s reimbursed
price.
On Amgen’s side, the facts could not be more compelling in favor of an injunction. As
the evidence demonstrated, Dr. Lin invented and patented breakthrough recombinant human
EPO products and processes for making them. Amgen conducted the clinical trials that
supported FDA approval for EPOGEN and made this novel medicine available to anemic
patients desperately in need of a treatment. Dr. Lin’s inventions have dramatically improved and
continue to improve the lives of hundreds of thousands of patients throughout the world. Amgen
built a company around these inventions and created thousands of new jobs in manufacturing,
quality control and assurance, development, distribution, sales, and research — all much to the
benefit of the U.S. economy. In recognition of his inventive contributions, the Patent Office
awarded Dr. Lin seven patents. Time and again, courts, and now a jury, have agreed that Dr.
Lin’s patents are valid and enforceable. These inventions and the legal protection afforded them
under the patent system largely made possible Amgen’s success as an innovator in a highly
valuable but risky industry.
By every measure, the creation, validation, and enforcement of the legal rights protecting
Dr. Lin’s pioneering inventions exemplify the patent system working at its best.1 As provided in
the Constitution, the principle underlying the Patent Act is to promote the progress of science
1 Carl Schenek, A.G. v. Nortron Corp., 713 F.2d 782, 784 (Fed. Cir. 1983) (“Disclosure of an invention found to have revolutionized an industry is but a classic example of the ideal working of the patent system. If a patentee or licensee enjoys widespread sales, that too is but an example of the incentive-useful arts promoting element in the patent system.” (emphasis added)).
2
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and the useful arts by securing for limited times to inventors the exclusive right to their
discoveries. Enforcing that exclusivity in the instant case serves to insure that the incentives as
originally intended continue to remain in place so as to encourage individuals to make
extraordinary sacrifices and brilliant advances — like those of Dr. Lin’s — as well as make
available the significant risk and human capital required to make miracle products — like
EPOGEN — available to the public.
Failing to enforce such exclusivity here would seriously undermine the incentive
structure of the patent system. The evidence presented at trial showed that Amgen’s core
business of pursuing high risk research and innovation that propel the discovery and
development of new therapeutic products, Amgen’s product revenues that sustain this discovery
and development, and Amgen’s customer relationships would be irretrievably damaged if a
permanent injunction against Roche’s continued infringement were denied. Amgen’s very
existence as an independent company could be threatened. The jobs built on these patented
inventions could be lost. And, the impact would not just be on Amgen, but all similarly situated
companies that invest heavily in research and development and rely on the patent system to
protect that investment would have their business models threatened by the denial of an
injunction in this case. If not in this case, then what patent owner would feel confident that its
rights would be enforced?
Roche can point to nothing to counter the great harm that will be caused to Amgen. And
Roche brought on its own problems. Long before the jury’s verdict and this Court’s judgment,
Roche was well aware of its infringement and made a business decision to take the risk of
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pursuing the U.S. market anyway.2 Indeed, as it expressly stated, it was developing and would
launch its infringing product “at risk.”3 Desperate to deflect attention from its theft, Roche went
so far as to impugn Dr. Lin’s integrity and accomplishments by asserting he did not invent
anything at all and that his patents served to give rise to an illegal “monopoly.” And, Roche
went on to spin a tale of fanciful benefits that would befall the public if only it would close an
eye to its theft. With all the sincerity of a snake-oil salesman, Roche hyped its infringing product
as a purportedly “new” medicine conferring a different medical benefit, whose market entry
would increase choice, drive down prices, and save the government and taxpayers billions of
dollars.
But Roche’s own documents show that the needs of patients, and their doctors, suffering
from anemia associated with chronic renal failure are already satisfied by currently available
ESAs and that its infringing product delivers at best “non-inferior” or “comparable” results.
Moreover, its internal forecasts reveal a truth starkly different from its tale of lowering prices and
reducing taxes — namely a scheme in which Roche will maintain a high price to the government
in order to fund discounts and rebates which it intends to use in order to take share from
Amgen.4
Hardly the champion of public interest that it purports to be, Roche’s true interest was
2 See, e.g., TX 67 (May 2001 Research and Development Committee Development Plan) at R10-004305819 (providing that the risk of entering the U.S. market in light of Amgen’s patents was “justifiable”). 3 3/22/07 Abercrombie Dep. Tr. at 32:24-33:2 (the Abercrombie deposition testimony cited herein was submitted to the Court by Amgen as remedy-related deposition designations on 12/14/07). 4 United States v. Dubilier Condenser Corp., 289 U.S. 178, 186 (1933) (“Though often so characterized, a patent is not, accurately speaking, a monopoly, for it is not created by the executive authority at the expense and to the prejudice of all the community except the grantee of the patent.”); Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 63-64 (1998).
4
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laid bare at trial. As Roche’s Vice President of Marketing and Sales, Barbara Senich, candidly
conceded, despite its yarn about making available to patients a “new” medicine and saving
billions in tax dollars, Roche is only interested in entering the U.S. marketplace if it can be
assured that it can enjoy the financial benefits of Dr. Lin’s exclusivity rights:
I don’t believe [Roche] would enter the market at all if the value were only after generics came into the marketplace.5
And, lest there be any doubt, the Court’s questioning made Roche’s true intent ever so clear:
THE COURT: You’re telling me that if I enjoin and I’m upheld, that’s sort of an end of it in the United States, we’re not going to see Mircera in the United States, generics will be on the field in 2013.
But you’re also telling me that if I let you into the market but make it so uneconomic, you won’t come in anyway because the, the market share you want is the market share from the entry of my order, we’ll assume my orders are all upheld, to 2013.
Have I got that right?
THE WITNESS: Pretty much.6
The only thing more astonishing than Roche’s false assertions of its public interests is its
chutzpah now in proposing that the Court order a license at a royalty rate of 20%. But Roche’s
recent proposal adds nothing new and cannot be considered a serious proposal because the
royalty is grossly inadequate to compensate Amgen for Roche’s infringement and it still results
in peg-EPO having a higher price to the government by up to 45% than Amgen’s EPOGEN.
5 12/7/07 Remedy Hr’g Tr. at 597:18-20 (Senich); see also 12/7/07 Remedy Hr’g Tr. at 598:6-12 (Young, J.; Senich). 6 12/7/07 Remedy Hr’g Tr. at 598:6-12 (Young, J.; Senich); see also 12/7/07 Remedy Hr’g Tr. at 562:9 (Senich) (admitting that all of Roche’s public interest arguments are subject to whether peg-EPO would “ultimately provide a return to the company.”); 12/7/07 Remedy Hr’g Tr. at 567:17-18 (Senich); 12/7/07 Remedy Hr’g Tr. at 683:19-24 (Young, J.) (“But here’s what I heard [Senich] say. Well, in order for us to enter into these negotiations, they have to be economically viable for Roche. Because we’re not particularly interested in the after-patent generics market. We want to get into the market which is protected by valid and upheld Amgen patents. We want a piece of that market, and it has to be economically worthwhile to us.”).
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Indeed, the proposal seems more intended to deliver the message that despite the jury verdict and
the Court’s decisions that Roche intends to launch peg-EPO in the U.S. next month. Besides
exposing themselves to willful infringement and treble damages, Roche’s disdain for the jury
verdict and the decisions of this Court only serve to reinforce the need for an injunction to stop
Roche’s attempts to irreparably harm Amgen.
Roche’s recent proposal would compensate Amgen only about 20 cents for every dollar
of Amgen lost sales. If Roche’s economic incentives produce a precipitous shift for EPOGEN to
peg-EPO, Amgen faces both the risk of market share and price erosion resulting in further injury
to Amgen not compensated for by the payment of royalties on Roche’s sales. Even if the Court
assumes that Roche’s future infringement of Amgen’s patents would reduce the total cost of EPO
therapy (an assumption that Roche’s own evidence disproves), ironically it would be the price
reductions (and lower profit) of Amgen, the patent innovator, not Roche, which would account
for any savings. Roche still would enjoy the profits Ms. Senich testified Roche insists upon for it
to come into the marketplace. Roche’s profits and Amgen’s loss, would result from what
amounts to an unfair and inappropriate taking of property rightfully belonging to the party who
took all the risk and devoted all the resources needed to create the market opportunity in the first
place.
The legal precedent fully supports the entry of an injunction in this case. There is no
court decision post eBay that would support the denial of an injunction. The factual paradigm
presented the Court in the instant case is not one in which the patentee, in lieu of practicing the
inventions or selling a patented product in the market, merely collects a royalty. Rather, this is a
case in which the patentee not only invented and commercially developed the pioneering
inventions into a blockbuster product but also literally created the market by means of its
6
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inventions. The paradigm here involves a demand by an infringer that its infringing product be
allowed to take sales away from the patentee’s product in return for a royalty rate that will not
fully compensate the patentee for the profits it would have received from the sales of its own
patented product, much less compensate it for all of the other irreparable harm it would suffer as
a result of the government reneging on the promise of exclusivity it made in granting the patents
in the first place.
Indeed, failing to grant injunctive relief here would broadcast a signal to all would-be
infringers to flat out copy the few patented products that are proven successes, and then have the
courts revise the patentees’ rights. But the point of patents is exclusivity and the point of
injunctive relief is deterrence. In one fell swoop, Roche asks this Court to legislate an end to all
of that. There is no precedent for such relief, and certainly none fitting the facts of this case.
As Dr. Bernheim’s declaration (submitted herewith) details, Roche’s recent proposal
changes nothing from his analysis and conclusions presented at trial. The evidence fully
confirms the need for an injunction in this case. Thus, Amgen respectfully submits that the
Court should permanently enjoin Roche against any future infringement of Amgen’s patents in
accordance with the jury’s verdict and this Court’s prior rulings.
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II.
AMGEN PROVED AT TRIAL THAT A PERMANENT INJUNCTION SHOULD BE ENTERED BECAUSE THE FOUR FACTORS WEIGH HEAVILY IN FAVOR OF AN INJUNCTION.7
A. OVERVIEW OF THE EVIDENCE AND LEGAL STANDARD.
At the remedy trial, Amgen submitted evidence, both through its own witnesses as well
as from Roche witnesses, which demonstrated that the four-factor test set forth by the Supreme
Court in eBay Inc. v. MercExchange, L.L.C., weighs decidedly in favor of an injunction.
Specifically, Amgen has demonstrated:
(1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the [parties], a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.8
As the innovator of a product that has proven to be hugely beneficial to patients, Amgen has
developed a market that Roche now seeks to misappropriate for itself while offering only a
nominal royalty. Because Amgen markets EPOGEN for use in dialysis patients — one of the
main indications for which Roche’s peg-EPO product was approved — every sale by Roche is a
lost sale to Amgen. The evidence of record leaves little doubt that Roche’s infringement will
cause irreparable injury to Amgen, that monetary damages are inadequate to compensate for the
injury, and that the balance of harm tips heavily in Amgen’s direction.
Applying the eBay standard, a vast majority of courts have confirmed that a permanent
injunction is the appropriate relief for a patent holder against a patent infringer in the
7 Amgen refers the Court to its 11/21/07 Mem. in Supp. of Amgen’s Req. for a Permanent Inj. (D.N. 1578) (hereinafter Amgen’s Inj. Mem.), setting forth the evidence presented through the November 15, 2007 Remedy Hearing as it applies to the four injunction factors. This Brief summarizes the facts set forth therein and adds additional evidence adduced during the remainder of the Remedy Hearing on December 5-7, 2007 and any exhibits admitted thereafter by the Court.
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circumstances presented here. Courts routinely find that the traditional four-factor test is met
and grant injunctive relief where the patent-holder practices its invention, the infringer’s product
would directly compete for sales with the patentee’s own products, the infringer usurps the core
functionality and commercial appeal of the patented invention, and the patented invention is not
an inconsequential component of the infringing product.9 These principles apply with equal
force in the context of medical and pharmaceutical patents, and take on added weight where the
patented inventions are pioneering breakthroughs.10
In its briefing and at trial, Roche focused on the public interest factor as the justification
for avoiding an injunction citing purported public health and economic benefits of its infringing
product. But the evidence at trial disproved a claim of such benefits. As demonstrated, Roche’s
peg-EPO provides no clinical or medical benefit and will actually cost more than Amgen’s
EPOGEN. Roche’s assertions that peg-EPO meets the market need for an extended dosing
product ignores the evidence that both Amgen’s Aranesp and Ortho’s Procrit are routinely used
at dosing intervals up to once a month.
Although wrong in its positions, Roche acts as if the only public interests were treatment
costs and patient convenience, but in fact, neither of those reasons has been recognized as a
justification for denying an injunction and allowing an infringer on the market. Rather, Roche
ignores the most significant public interest factor: the strong public interest in enforcing patent
8 eBay Inc. v. MercExchange, L.L.C., 126 S. Ct. 1837, 1839 (2006). 9 See, e.g., Novozymes A/S v. Genencor Int’l, Inc., 474 F. Supp. 2d 592, 612 (D. Del. 2007); Transocean Offshore Deepwater Drilling, Inc. v. GlobalSantaFe Corp., No. H-03-2910, 2006 U.S. Dist. LEXIS 93408, at *12 (S.D. Tex. Dec. 27, 2006). 10 See, e.g., Sanofi-Synthelabo v. Apotex, Inc., 492 F. Supp. 2d 353, 397-98 (S.D.N.Y. 2007) (pharmaceutical); Smith & Nephew, Inc. v. Synthes (U.S.A.), 466 F. Supp. 2d 978 (W.D. Tenn. 2006) (medical).
9
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rights.11 This interest resulted in courts routinely issuing injunctions in patent cases for over 200
years. As Justice Roberts noted in his concurring opinion in eBay: “This ‘long tradition of
equity practice’” in the “vast majority of patent cases” is “not surprising,” in that the
fundamental right of a patent holder is “a right to exclude . . . an infringer” from practicing the
patent “against the patentee’s wishes.”12 Further, Justice Kennedy cautioned that damages may
be a sufficient remedy without an injunction only in limited situations, such as where: (1) a
patentee is primarily concerned with licensing; (2) a patent covers only a small component of the
infringing product; (3) the patentee uses the threat of an injunction for negotiation leverage; or
(4) a business method patent of suspect validity is asserted.13 None of these factors are present
in this case.
Only under “rare and limited circumstances”14 has an injunction been denied on public
interest grounds — such as where there is some “critical public interest that would be injured” by
the grant of an injunction.15 Allegedly promoting competition and lowering prices at the cost of
destroying the property of another is not such a critical public interest.16 Likewise, the fact that
11 Sanofi-Synthelabo v. Apotex, Inc., 470 F.3d 1368, 1383-84 (Fed. Cir. 2006); MercExchange, L.L.C. v. eBay, Inc., 500 F. Supp. 2d 556, 586 (E.D. Va. 2007). 12 eBay, 126 S. Ct. at 1841 (Roberts, J., concurring, joined by Scalia and Ginsburg, JJ.). 13 Id. at 1842 (Kennedy, J., concurring, joined by Stevens, Souter, and Bryer, JJ.). 14 Commonwealth Sci. & Indus. Research Org. v. Buffalo Tech, Inc., 492 F. Supp. 2d 600, 607 (E.D. Tex. 2007). 15 Hybritech Inc. v. Abbott Labs., 849 F.2d 1446, 1458 (Fed. Cir. 1988). 16 See Pfizer, Inc. v. Teva Pharms. USA, Inc., 429 F.3d 1364, 1382 (Fed. Cir. 2005); Payless Shoesource, Inc. v. Reebok Int’l Ltd., 998 F.2d 985, 991 (Fed. Cir. 1993) (“Selling a lower priced product does not justify infringing a patent.”); see also Eli Lilly & Co. v. Premo Pharm. Labs., Inc., 630 F.2d 120, 138 (3d Cir. 1980) (“Congress has determined that it is better for the nation in the long-run to afford the inventors of novel, useful, and nonobvious products short-term monopolies on such products than it is to permit free competition in such goods.”); Sanofi-Synthelabo, 488 F. Supp. 2d 317, 345 (S.D.N.Y. 2006) (“[T]he public interest in lower-priced drugs is balanced by a significant public interest in encouraging the massive investment in
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an injunction might affect medical treatments or tests or denied medicines to patients, as argued
by Roche, have not been recognized as reasons to deny injunctions.17 In a few cases, courts have
denied an injunction for a limited set of public health reasons — but none are analogous to the
facts of this case. Those limited circumstances include where: (1) the patentee cannot ensure
adequate supply to the public;18 (2) there is lag-time in training of medical staff or other
interruption of medical care;19 (3) no treatment alternatives are available;20 or (4) there are
research and development that is required before a new drug can be developed and brought to market.”). 17 Proveris Sci. Corp. v. InnovaSystems, Inc., No. 05-12424-WGY, 2007 U.S. Dist. LEXIS 48475 (D. Mass. May 11, 2007) (permanently enjoining solutions that increased the accuracy of the testing of pharmaceutical spray drug products); Johns Hopkins Univ. v. Datascope Corp., Nos. WDQ-05-0759, WDQ-06-2711, 2007 U.S. Dist. LEXIS 68972 (D. Md. Aug. 9, 2007) (permanently enjoining treatments for fragmenting clots within hemodialysis grafts); Sanofi-Synthelabo v. Apotex, Inc., 492 F. Supp. 2d 353 (S.D.N.Y. 2007) (permanently enjoining generic platelet aggregation-inhibiting agent); Smith & Nephew, Inc. v. Synthes (U.S.A.), 466 F. Supp. 2d 978 (W.D. Tenn. 2006) (permanently enjoining use of intramedullary nails and methods to treat femoral fractures); Schneider (Eur.) AG v. SciMed Life Sys., Inc., 852 F. Supp. 813 (D. Minn. 1994) (permanently enjoining balloon dilation catheter for treating coronary heart disease); Critikon, Inc. v. Becton Dickinson Vascular Access, Inc., No. 93-108-JJF, 1993 U.S. Dist. LEXIS 19959 (D. Del. July 16, 1993) (preliminarily enjoining safety catheters designed to eliminate risk to healthcare professionals of accidental exposure to AIDS); ALM Surgical Equip., Inc. v. Kirschner Med. Corp., No. 6:89-1622-3, 1990 U.S. Dist. LEXIS 14584 (D.S.C. Apr. 23, 1990) (permanently enjoining use of prismatic surgical light system); Shiley, Inc. v. Bentley Labs., Inc., 601 F. Supp. 964 (C.D. Cal. 1985) (permanently enjoining bubble blood oxygenator for use in open heart surgery). 18 See, e.g., Cordis Corp. v. Boston Scientific Corp., No. 03-238, 2003 U.S. Dist. LEXIS 21338 (D. Del. Nov. 21, 2003) (finding patentee could not ensure an adequate supply of drug-eluting stents); Shiley, 601 F. Supp. at 964 (finding short-term supply problems). In contrast, injunctions have been granted where there the public will have an adequate supply of the patented medical device or therapy. See, e.g., ALM, 1990 U.S. Dist. LEXIS 14584, at *52 (finding there would be “no delay in supplying prismatic surgical lights to the public”). 19 Shiley, 601 F. Supp. 964 (staying injunction to provide efficient and non-disruptive changeover for practitioners due to lag time in training staff). 20 Hybritech Inc. v. Abbott Labs., 4 U.S.P.Q. 2d (BNA) 1001, 1015, 1987 WL 123997 (C.D. Cal. 1987), aff’d, 849 F.2d 1446 (Fed. Cir. 1988) (excluding cancer patients from the effects of a preliminary injunction because the court “will not cut off the supply of monoclonal test kits for
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significant safety issues associated with the patented invention not present in the infringing
product.21 Even if Roche’s claimed product benefits were true, which they are not, the purported
medical and economic benefits are simply not the type of sufficient public interests to justify
denial of an injunction.
B. AMGEN WILL SUFFER FROM IRREPARABLE INJURY UNLESS A PERMANENT INJUNCTION IS GRANTED.
At its core, Amgen’s business is based on innovation and the development, marketing,
and selling of medicines based on the company’s innovations.22 Research and development of
these medicines are extremely risky and expensive, with few products ever successfully
developed and marketed.23 To successfully innovate and compete, Amgen has consistently
taken the revenues from its successful products and reinvested them into discovery and clinical
research.24 To continue with this model, and as a corollary, to attract investors to continue to
invest in Amgen, there must be sufficient protection for those products that succeed.25 Thus, as
cancer patients”); ICU Med. Inc. v. Alaris Med. Sys., Inc., 2004 U.S. Dist. LEXIS 19949 (C.D. Cal. July 30, 2004) (denying preliminary injunction where needleless valves would be suddenly absent from the marketplace). 21 Hybritech, 4 U.S.P.Q. 2d (BNA) at 1015 (denying preliminary injunction against hepatitis test kits because “the public interest is served by the availability of safe, sure reliable tests kits for hepatitis”). Injunctions, however, are granted where the infringing product is not superior or has similar safety issues associated with the patented invention. See, e.g., Schneider, 852 F. Supp. at 851 (granting injunction where infringing catheter was not “significantly objectively superior to other catheters in performance or that all other catheters are defective, unsafe, or incapable of performing as intended”); Shiley, 601 F. Supp. at 970 (granting injunction where infringing catheter was not “objectively superior in performance or that either is defective or unsafe in any way or does not properly perform as intended and required in the operating room”). 22 11/15/07 Remedy Hr’g Tr. at 26:11-21 (Sharer). As Mr. Sharer also noted, Amgen is not in the business of licensing its inventions to its competitors. Id. at 34:12-19. 23 Amgen’s Inj. Mem. (D.N. 1578) at 13-14; 11/15/07 Remedy Hr’g Tr. at 28:9-19, 35:11-20 (Sharer). 24 11/15/07 Remedy Hr’g Tr. at 76:3-77:12 (Sharer). 25 Sanofi-Synthelabo v. Apotex, Inc., 470 F.3d 1368, 1383 (Fed. Cir. 2006).
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Amgen’s Chief Executive Officer testified, if a party found to infringe a patent was allowed to
enter the market for some fee, investors would be reluctant to invest in Amgen due to fear that
the patent system would fail to protect their investments and Amgen’s way of doing business
would be irreparably harmed.26
In addition to inexorably changing Amgen’s business model, if Roche were allowed to
commercialize pre-EPO in the United States, Amgen would suffer an immediate drop in revenue
because every Roche sale in dialysis is a lost sale to Amgen. Amgen’s business operations
would be dramatically altered, likely requiring a reduction in its workforce,27 as well as a shift in
how resources (in terms of personnel and money) are applied to research and product
development.28 Similarly, Amgen will suffer irreparable injuries to its customer relationships,
including dialysis providers, since Roche has frequently stated its goal of disrupting customer
satisfaction with current ESAs to sell its pegylated EPO product, MIRCERA.29 As its
documents show, Roche repeatedly has attempted to harm the reputation of Amgen’s products.30
In addition to impairing Amgen’s research and development on a broader scale, Roche’s
potential market entry will also have the effect of stifling Amgen’s further innovation in the
26 Amgen’s Inj. Mem. (D.N. 1578) at 9; 11/15/07 Remedy Hr’g Tr. at 29:7-30:11, 32:16-33:10 (Sharer) (testifying that if the security provided by the patent system is removed, the risk of investing will no longer be worthwhile). 27 Amgen’s Inj. Mem. (D.N. 1578) at 8; 11/15/07 Remedy Hr’g Tr. at 30:23-24 (Sharer). See Sanofi-Synthelabo, 470 F.3d at 1382-83 (noting potential reduction in workforce as a factor in establishing irreparable harm). 28 Amgen’s Inj. Mem. (D.N. 1578) at 8-9; 11/15/07 Remedy Hr’g Tr. at 38:9-39:3 (Sharer); 2/15/08 Bernheim Decl. ¶ 19. 29 See, e.g., RTX 100 (MIRCERA Business Plan 2007) at R003905826; RTX 119 (MIRCERA Pricing and Contracting Recommendation) at R003907912. 30 See, e.g., RTX 100 (MIRCERA Business Plan 2007) at R003905826; RTX 119 (MIRCERA Pricing and Contracting Recommendation) at R003907912.
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treatment of kidney patients with anemia.31 For example, Amgen’s agreement with Fresenius
affords Amgen access to important medical and market information and data32 and lays out plans
to develop new products and engage in joint research for better inventory management.33 Such
information and opportunities spur innovation. But if Amgen loses the customer relationships
built on the basis of its patented product to Roche’s infringing product, such opportunities will
also be lost and Amgen’s ability to innovate stifled.
Finally, in addition to market share loses, Roche’s entry may also result in some price
erosion, and would represent further irreparable harm to Amgen to the extent that it does occur.34
In the short-term, the evidence shows that because of economic considerations (to increase
profits), Roche expects that some dialysis providers immediately will begin switching to peg-
EPO and this will necessarily result in a lowering of Amgen’s ASP over time (even if Amgen
does not change its pricing) because of rebate and discount overhang.35 The long-term effect of
this price erosion is especially harmful since, not only will Amgen lose revenue now, but when
its patents expire it will be in a worse position than it would have been had Roche not
infringed.36 On the other hand, when Amgen’s patents expire, Roche will be in a better position
than it would have been had it not marketed peg-EPO as an infringer, placing Roche in a position
to take even more sales away from Amgen.37 To the extent that such erosion occurs, Amgen will
31 11/15/07 Remedy Hr’g Tr. at 191:10-192:3 (Bernheim). 32 RTX 20 (Sourcing and Supply Agreement between Amgen and Fresenius) at FMCNA000010, 25, 28, 32. 33 Id. at FMCNA000010-11. 34 2/15/08 Bernheim Decl. ¶¶ 18-19. See Verizon Servs. Corp. v. Vonage Holdings Corp., 503 F.3d 1295, 1310 (Fed. Cir. 2007) (finding price erosion to be an area of irreparable harm). 35 11/15/07 Remedy Hr’g Tr. at 178:21-188:6 (Bernheim). 36 Id. at 196:24-197:5 (Bernheim). 37 Id. at 196:24-197:5 (Bernheim).
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be irreparably harmed.
C. REMEDIES AVAILABLE AT LAW ARE INADEQUATE TO COMPENSATE FOR AMGEN’S IRREPARABLE INJURY.
The evidence shows that no prospective damages award would be adequate
compensation for Roche’s infringement. Even if Roche were ordered to pay Amgen all of
Amgen’s lost profits on the sales made by Roche, the award would be inadequate. A simple
transfer of profits would not make up for Roche displacing Amgen in the marketplace.
No amount of money damages can repay Amgen for the damage to its reputation, the loss
of investor confidence, or the loss of further research opportunities.38 Thus, as even Dr. Steven
Schwartz, Roche’s own economics expert, acknowledges, a patent holder cannot be made whole
for the effects of infringement by a royalty.39
This is in part because it is impossible to know prospectively the extent that Amgen will
be damaged. For example, it is impossible to know how much share Roche may capture —
Roche’s own estimations vary by more than 100% among its different scenarios.40 Likewise,
there is no way to know how Roche’s entry will affect the price for ESAs.41 While Roche argues
that prices may decrease as the parties compete for share, as evidenced by Roche’s own internal
38 Amgen’s Inj. Mem. (D.N. 1578) at 10. 39 6/7/07 Schwartz Dep. Tr. at 127:5-24 (“[A]s a practical matter in patent damages cases, when a reasonable royalty is awarded, that royalty may not fully compensate the patent holder for the effects of infringement. . . . In a royalty situation, I think that’s almost a given. It’s almost a tautology that the patent holder may not be made whole for the effects of infringement.”) (the Schwartz deposition testimony cited herein was submitted to the Court by Amgen as remedy-related deposition designations on 12/14/07). 40 See id. at 237:17-238:2 (noting Roche’s net sales projections for 2007 vary from $49 million to $113 million). 41 See id. at 102:22-103:4.
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documents, prices could just as easily rise upon Roche’s entry.42 In either event, Amgen’s
damages cannot be quantified with any reasonable certainty because actual price (including dose
conversion, discounts and rebates) and market share cannot be accurately predicted, and in turn,
the effect of an eroding price (and the rebate overhang) on Amgen’s ASP cannot be calculated.43
Finally, future events such as the entry of new competitive products44 or changes in the Centers
for Medicare and Medicaid Services’ (CMS) regulations45 cannot be predicted with any
reasonable certainty and thus any impact Roche’s entry could have on such events is
incalculable.
As Justice Kennedy noted in eBay, damages may be sufficient remedy for infringement in
place of an injunction in only such cases as where the patentee is not in the market itself but has
licensed the invention to multiple parties or the invention is but a small part of a larger product.46
In such cases, the patentee is made whole by the grant of a reasonable royalty in place of an
injunction. As demonstrated above, those are not the circumstances here.
42 Roche’s 2007 Business Plan lays out an expected 1.5% increase in price every six months. RTX 131 (2007 MIRCERA Business Plan) at R11-000638012. 43 See, e.g., 11/5/07 Remedy Hr’g Tr. at 181:18-182:22, 188:8-18 (Bernheim); RTX 5 (4/6/07 Bernheim Report) ¶ 66; 6/7/07 Schwartz Dep. Tr. at 102:22-103:21, 187:12-190:7. 44 See RTX 130 (2007 MIRCERA Business Plan) at R10-001303069 (Roche expects new non-infringing product on the market in 2010). 45 12/07/07 Remedy Hr’g. Tr. at 585:14-22 (Senich) (testifying that Roche anticipates changes to the regulatory framework in 2010). 46 eBay Inc. v. MercExchange, L.L.C., 126 S. Ct. 1837, 1842 (2006) (Kennedy, J., concurring).
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D. THE BALANCE OF HARDSHIPS WEIGHS IN AMGEN’S FAVOR.
The third prong of the four-factor test considers the balance of the relative hardships.47
When Amgen’s and Roche’s hardships are compared, the balance clearly weighs in Amgen’s
favor.
First, in balancing the hardships, the parties’ relative market effects should be
considered.48 Amgen has a large share of sales for the treatment of anemia associated with
chronic renal failure. Additionally, almost half of Amgen’s total pharmaceutical sales come
from EPOGEN and Aranesp49 and these sales will be at risk if Roche is permitted to
commercialize peg-EPO in the U.S. Unlike Amgen, Roche does not stand to lose any market
share and its current sales will be unaffected because it does not sell peg-EPO in the United
States.
Second, because Roche elected to “build a business on a product found to infringe,” any
purported harm to Roche is self-inflicted and should not serve as a basis for denying Amgen an
injunction.50 Roche knowingly sought to enter the market despite Dr. Lin’s Patents. After
litigation ensued, Roche’s CEO George Abercrombie said that Roche would continue to proceed
47 Id. at 1839 (majority opinion). 48 See, e.g., Bell & Howell Document Mgmt. Prods. Co. v. Altek Sys. 132 F.3d 701, 708 (Fed. Cir. 1997) (considering the relative impact on both parties in balancing the relative hardships); Cordis Corp. v. Boston Scientific Corp., No. 04-1098, 2004 U.S. App. LEXIS 11557, at *12 (Fed. Cir. May 28, 2004) (unpublished) (“[R]elative market effects may factor into balancing the relative hardships.”). 49 See RTX 67 (Amgen 10-Q filing) at 26. 50 MercExchange, L.L.C. v. eBay, Inc., 500 F. Supp 2d 556, 584 (E.D. Va. 2007) (citing Windsurfing Int’l Inc. v. AMF, Inc., 782 F.2d 995, 1003 (Fed. Cir. 1986)). Through its designations, Roche attempts to introduce testimony regarding the “harms” that Roche will suffer if an injunction is granted. See generally 3/15/07 Kokino Dep. Tr. (the Kokino deposition testimony cited herein was submitted to the Court by Roche as remedy-related deposition designations on 12/14/07).
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to the market.51 After having made the business decision to seek U.S. regulatory approval and
undertake steps needed to sell peg-EPO in the U.S. “at risk,” any harm incurred now that it must
cease its activities does not outweigh Amgen’s harm.52 Furthermore, Roche’s clinical trials
supported both U.S. and overseas registrations, thus mitigating Roche’s alleged harm.
Moreover, any attempt by Roche to “better” its situation, as it threatens to do in its January 28
Proposal by launching peg-EPO in the United States despite the jury’s verdict, should not serve
to shift the balance.
Finally, damage to Roche’s reputation if it is not allowed to infringe Amgen’s products is
not a cognizable hardship.53 Since Roche is not yet selling ESAs in the U.S., it is unlikely that it
will suffer any damage to its reputation except the loss of face suffered by an infringer who
sought to launch by its own admission “at risk.” Roche has previously claimed that it will suffer
harm to its reputation because it has promised to launch peg-EPO and failure to do so will cause
skepticism towards Roche and any new Roche product entry.54 Roche’s argument that it should
be allowed to infringe because it has promised that it will infringe fails to hold water. If every
infringer could use this argument, the patent laws would be meaningless.
51 3/22/07 Abercrombie Dep. Tr. at 32:24-33:2. 52 See Commonwealth Sci. & Indus. Research Org. v. Buffalo Tech, Inc., 492 F. Supp. 2d 600, 606 (E.D. Tex. 2007) (“Mere hardship incurred in the process of ceasing operations is not sufficient.”). See also TX 67 (May 2001 Research and Development Committee Development Plan) at R10-004305819 (providing that the risk of entering the U.S. market in light of Amgen’s patents was “justifiable”). 53 See Boehringer Ingelheim Vetmedica, Inc. v. Schering-Plough Corp., 106 F. Supp. 2d 696, 707 (D.N.J. 2000) (finding that despite any harm to the infringer’s reputation as a result of an injunction, “one who elects to build a business on a product found to infringe cannot be heard to complain if an injunction against continuing infringement destroys the business so elected” (quoting Windsurfing, 782 F.2d at 1003, n.12 (Fed. Cir. 1986))). 54 See Defs.’ Mem. in Opp’n to Amgen’s Req. for a Permanent Inj. (D.N. 1589) at 42 [hereinafter Roche’s Opp’n to Amgen’s Inj. Mem.].
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E. THE PUBLIC INTEREST WOULD NOT BE DISSERVED BY AN INJUNCTION.
1. The public interest is best served by a result that honors a robust and predictable patent system that rewards innovation.
At the core of the Patent Act is the public interest in promoting innovation and the
progress of science and the useful arts.55 The patent system represents a carefully crafted
bargain that advocates both the creation and the public disclosure of new and useful advances in
technology, in exchange for an exclusive monopoly for a limited period of time.56
[Patents are to be regarded] as public franchises granted to the inventors of new and useful improvements for the purpose of securing to them, as such inventors, for the limited term therein mentioned, the exclusive right and liberty to make and use and vend to others to be used their own inventions, as tending to promote the progress of science and the useful arts, and as matter of compensation to the inventors for their labor, toil, and expense in making the inventions, and reducing the same to practice for the public benefit, as contemplated by the Constitution and sanctioned by the laws of Congress.57
Thus, courts consistently grant injunctive relief in medical product cases because the public’s
short-term interest in choice is outweighed by its long-term interest in promoting the
development of new and potentially life-saving products.58
This bargain is at the core of the modern biotechnological and pharmaceutical arts.
Amgen is an innovation company and it operates on the riskiest and most costly edge of
55 Buffalo Tech., 492 F. Supp. 2d at 607. 56 Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 63 (1998); see also U.S. Const. art. I, § 8, cl. 8 (directing Congress to “promote the Progress of Science” by granting inventors exclusivity); Sanofi-Synthelabo v. Apotex, Inc., 470 F.3d 1368, 1383 (Fed. Cir. 2006) (“[T]he patent system provides incentive to the innovative drug companies to continue costly development efforts.”); Eli Lilly & Co. v. Premo Pharm. Lab., Inc., 630 F.2d 120, 138 (3d Cir. 1980). 57 Pfaff, 525 U.S. at 63-64 (quoting Seymour v. Osborne, 78 U.S. (11 Wall.) 516, 533-534 (1870). 58 See, e.g., Sanofi-Synthelabo, 470 F. 3d at 1383.
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innovation. As such, “[p]atents are central to Amgen’s business.”59 Kevin Sharer, Amgen’s
Chairman and CEO, testified that Amgen’s success depends in part on its ability to obtain and
defend intellectual property rights crucial to the commercialization of Amgen’s products and
product candidates:
Patents make the investment we make in research and development and innovation justified. Patents allow us to have confidence that if we bring an innovation to market that we’ll be able to practice that. Patents allow us to go to investors and say your investment dollars, here, if we’re able to make the advances we hope to, will be protected and rewarded. Without patents, our business model just falls apart.60
Nowhere is the public interest in protecting the rights of patent holders and enforcing
adequate remedies for patent infringement more critical than in the development of biological
pharmaceuticals.
[T]he development and perfection of new drugs frequently requires the devotion of years of research time and the expenditure of millions of dollars. . . . Unless this type of an investment of human and capital resources is rewarded by some form of patent protection, companies such as Eli Lilly might well choose not to undertake such large expenditures and instead devote themselves to other endeavors. To the extent this occurs, resources would be diverted from activity that is socially beneficial — the development of new drugs. 61
Courts continue to acknowledge the immense cost involved in this process.62 Today, it takes
approximately $1 billion and 15 years to develop a single drug.63 Not surprisingly, Amgen
increased its research and development budget in 2006 by 45% to $3.36 billion; in 2007, it
59 11/15/07 Remedy Hr’g Tr. at 30:4 (Sharer). 60 Id. at 30:4-11 (Sharer); see also id. at 29:11-15 (Sharer); RTX 55 (Amgen 10-K filing at 29; RTX 10 (Amgen 10-Q filing) at 56. 61 Premo Pharm., 630 F.2d at 137 (emphasis added). 62 Abbott Lab. v. Sandoz, Inc., 500 F. Supp. 2d 807, 846 (N.D. Ill. 2007); Sanofi-Synthelabo, 470 F.3d at 1383 (noting that the “average cost of developing a blockbuster drug is $800 million”).
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invested 24% of its annual revenues in research and development.64 Since 2000, Amgen has
invested $15 billion in research and development.65 But sustained long-term development of
drugs requires more than resources. It requires an incentive for these resources to be
systematically reinvested.66 Patents, therefore, anchor the entire business model.67
Nor is it guaranteed that an investment of $1 billion and 15 years will produce a
commercial medicine. In fact, the likelihood of any single product making it from research to
market is very small.68 For example, since 2000, Amgen has had over 100 products close to or
actually in human testing, but only six have successfully made it to market.69 That these
therapies appeared promising and progressed successfully through preclinical and earlier clinical
trials speaks to the inherently unpredictable nature of modern drug discovery.70
63 11/15/07 Remedy Hr’g Tr. at 27:4-11 (Sharer); RTX 68 (Tr. of Sharer and Dolan of Forbes Magazine) at 9. 64 RTX 1 (Amgen 2006 Annual Report) at 28. Amgen’s research and development costs have tripled since 2002. 11/15/07 Remedy Hr’g Tr. at 35:4-7 (Sharer). 65 11/15/07 Remedy Hr’g Tr. at 35:8-10 (Sharer). 66 See id. at 77:10-12 (Sharer) (“So it’s the winners have to pay for the losers. And most of the things, unfortunately, we invest in don’t reach market.”). 67 See id. at 30:11 (Sharer) (“Without patents, our business model just falls apart.”). 68 See id. at 27:1-28:19, 35:4-20 (Sharer); Sanofi-Synthelabo, 488 F. Supp. 2d at 346 (noting that despite the average cost of $800 million to bring a drug to market, “for every drug that does make it to market many others do not”), aff’d, 470 F.3d 1368 (Fed. Cir. 2006). 69 11/15/07 Remedy Hr’g Tr. at 35:11-20 (Sharer). See id. at 77:6-10 (Sharer) (“Most of the things we invest in do not work. . . . So it’s the winners have to pay for the losers.”). 70 See 11/15/07 Remedy Hr’g Tr. at 27:19-28:8 (Sharer); RTX 55 (Amgen 10-K filing) at 37 (“Product candidates that appear promising the early phases of development . . . may fail to reach the market for a number of reasons. . . .”).
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The promise of a secure financial reward is essential if any project is to be pursued.71
“The encouragement of investment-based risk is the fundamental purpose of the patent grant, and
is based directly on the right to exclude.”72 The premise on which Amgen and others make the
enormous investments to search for and develop new, path-breaking therapeutics rests on the
promise that future competitors will be excluded from practicing those inventions without the
patentee’s permission. If patent infringers, such as Roche, are allowed to copy and appropriate
such path-breaking therapeutic inventions notwithstanding the inventor’s patents, there would be
no reason or incentive for companies such as Amgen to continue to fund the huge investment and
incur the enormous risk required to discover and develop new, breakthrough therapies. And
patients with unmet medical needs and no alternatives will be ignored in favor of offering
patients choice between two or more products that already meet their medical needs.
In the face of this extreme risk and long-term competition, Roche argues that Amgen
“already has made profits” in excess of the amount it originally invested in EPOGEN.73
However, Roche’s myopic argument ignores, and undermines virtually every role that the patent
system plays in encouraging modern drug discovery. A denial of a permanent injunction would
promote the exact opposite incentives by undermining “the public interest in creating beneficial
71 Pfizer, Inc. v. Teva Pharms. USA, Inc., 429 F.3d 1364, 1382 (Fed. Cir. 2005); Smith Int’l, Inc. v. Hughes Tool Co., 718 F.2d 1573, 1578 (Fed. Cir. 1983); Eli Lilly & Co. v. Premo Pharm. Lab., Inc., 630 F.2d 120, 137 (3d Cir. 1980); Sanofi-Synthelabo, 488 F. Supp. 2d at 346; Ortho Pharm. Corp. v. Smith, No. 90-0242, 1990 U.S. Dist. LEXIS 1951, at *28 (E.D. Pa. Feb. 23, 1990) (“If a patent holder cannot rely on its patent to exclude others then ‘research and development budgets in the science and technology based industries would shrink, resulting in the public no longer benefiting from the labors of these talented people.’”) (quoting E.I. duPont deNemours & Co. v. Polaroid Graphics Imaging, Inc., 706 F. Supp. 1135, 1146 (D. Del. 1989)). 72 Patlex Corp. v. Mossinghoff, 758 F.2d 594, 599 (Fed. Cir. 1985). 73 Roche’s Opp’n to Amgen’s Inj. Mem. (D.N. 1589) at 4-5.
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and useful products and the cost involved in that process.”74 First, innovators would have no
hope or certainty that even their investments could be recovered because competitors could copy
and sell the patented inventions of true pioneers, thereby reducing if not eliminating the incentive
to discover and develop new, life-saving therapies.75 Additionally, external investors would lack
confidence in Amgen’s intellectual property.76 Besides, the prize is not simply recouping the
original investment, but doing so many times over to allow for investment and risk in hundreds
of other product opportunities most of which will fail.
Denial of an injunction against Roche puts Amgen’s entire product portfolio at risk. It
would create a powerful incentive to copy a successful product and simply pay a tax to get onto
the market.77 As Amgen’s Chief Executive Officer testified at trial, such denial would
tell others in the world the only thing you have to worry about when you come on the market, even if you infringe Amgen’s patents, . . . you don’t have to invest all the money and research and development, you don’t have to take all of the risks, you can infringe and just kind of pay a tax to come on the market[.]78
A free-loader could significantly reduce its own risk by waiting and seeing which drugs —
researched and developed by Amgen — are the most lucrative to usurp.79 Instead of having the
74 Abbott Lab. v. Sandoz, Inc., 500 F. Supp. 2d 807, 846 (N.D. Ill. 2007). 75 See Premo Pharm., 630 F.2d. at 137; see also 11/15/07 Remedy Hr’g Tr. at 32:2-33:10, 37:15-39:3 (Sharer), 189:21-190:18 (Bernheim). 76 See 11/15/07 Remedy Hr’g Tr. at 190:6-18 (Bernheim). 77 Id. at 30:12-25, 37:15-21 (Sharer); see also Hybritech Inc. v. Abbott Labs., 849 F.2d 1446, 1456 (Fed. Cir. 1988) (noting that “in the absence of the injunction, other potential infringers will be encouraged to infringe”); Johns Hopkins Univ. v. Datascope Corp., 513 F. Supp. 2d 578, 586 (D. Md. 2007) (“[O]thers may be encouraged to infringe their patents and risk litigation, thus devaluing the Plaintiffs’ property.”). 78 11/15/07 Remedy Hr’g Tr. at 32:19-33:1 (Sharer). 79 In fact, a lack of adequate patent enforcement has affected Amgen’s business in the past. For example, Amgen attempted to introduce its products in China. The government, however, chose
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incentive to take on the tough medical problems we face, such as cancer, Alzheimer’s, heart
disease, etc., pharmaceutical companies would have greater incentive to simply copy the
successful products of others at little risk. Innovation would be replaced by copying.
2. There is no assurance that permitting the infringement of Amgen’s patents under terms compelled by the Court will reduce public health care spending.
Contrary to Roche’s unsubstantiated promises, permitting the continued infringement of
Amgen’s patent rights provides no assurance that health care spending on anemia treatment will
be reduced — let alone result in taxpayer savings so significant that they justify usurping the
innovation incentives embodied in the patent system. The evidence demonstrates that Roche is
not truly interested in reducing health care spending or offering the choice of a novel biologic.
Instead, as even its recent proposal shows, Roche’s driving interest is to take advantage of
incentives created for new entrants in the ASP-based reimbursement system to attract providers
with higher prices (not an innovative new medicine) — to the detriment of Amgen and Medicare,
and for the benefit of Roche and its chosen providers.
Roche’s February 2007 WAC Pricing and Contracting Strategies Review Meeting
presentation80 makes it plain that Roche’s entry will drive Medicare’s costs up — not down. In
that presentation, Roche compares its intended ASP for Mircera with the ASP for an equivalent
dose of EPOGEN.81 Assuming its peg-EPO product would enter the U.S. marketplace in third
quarter 2007, Roche planned to launch with a reimbursement rate over $16. By contrast
Medicare’s cost for an equivalent dose of EPOGEN was $9.10 at that time (EPOGEN’s ASP for
not to enforce Amgen’s patents and a number of copyists immediately entered the market, forcing Amgen to withdraw. 11/15/07 Remedy Hr’g Tr. at 29:16-30:1 (Sharer). 80 RTX 6 (MIRCERA WAC Pricing). 81 Id. at R10-004975195; 11/15/07 Remedy Hr’g Tr. at 205:11-206:21 (Bernheim).
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the current quarter is $8.46).82 Medicare would pay nearly double the current reimbursement
rate for the same therapeutic response. As business shifts from Amgen to Roche, Medicare
reimbursement rates will increase; the public will pay more.83
Surprisingly, even after three years of Roche’s forecasted competitive response,
Medicare will pay more for Roche’s infringing product than it currently pays for an equivalent
dose of EPOGEN today. Factoring in a competitive response, Roche anticipated that Mircera’s
ASP would be approximately $11 in the third quarter of 2010. And without a competitive
response — and it has been shown that a price-cutting competitive response may be disfavored
by businesses with a longer term competitive view — Roche forecasts that its infringing product
will have an ASP of almost $13.84 Under either circumstance, Medicare will pay significantly
more for an equivalent therapeutic response with Roche’s infringing product than for EPOGEN.
Roche recognizes the tension between payers and providers and is reliant on both for
success.85 Roche’s analysis of ASP’s dynamics observed that a “price increase can be good for
both providers and manufacturers in the long run.”86 It was also Roche’s view that excessive
price competition would result in an undesirable downward price spiral.87 From Roche’s point
of view, an advantageous pricing and contracting strategy “[a]voids downward pricing spiral in
ESRD from Epogen contracting wars that would then effect [sic] the value of the ESA
82 For Medicare Part B reimbursement rates, see Medicare’s ASP Pricing Files, organized by year and by quarter at http://www.cms.hhs.gov/McrPartBDrugAvgSalesPrice/. The J-code for EPOGEN (Epoetin-alfa) is J0886; Aranesp (Darbepoetin) is J0881. 83 11/15/07 Remedy Hr’g Tr. at 205:11-206:21 (Bernheim). 84 RTX 6 (MIRCERA WAC Pricing) at R10-004975195. 85 Id. at R10-004974846. 86 RTX 115 (CERA update regarding ASP Reimbursement) at R001619971. 87 Id. at R001619973-974.
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market.”88 To this end, Roche concluded, “we will not discount competitively in order to gain
share in the ESRD business.”89
By pricing its infringing EPO product at a premium to established ESAs, Roche intends
to take advantage of the unique incentives offered to new entrants under the ASP system and
exploit the uncertainties of dose conversion to give providers a compelling economic
justification to switch ESAs all the while promote “on label” monthly dosing as a differentiator
over existing ESAs (which also happens to be the dosing interval with the least dose efficiency).
And by avoiding heavy discounting, Roche has come up with a plan to avoid a “race to the
bottom” and prolong the economic advantage conferred to new entrants — a strategy it calls the
“Glide Path.”90 The Glide Path will preserve Roche’s new entrant advantage providing Roche
with substantial net revenues and providers will receive superior cost recovery. But all of this
occurs at Medicare’s expense.91
Recognizing that “the Glide Path does not initially address the issue of Budget
Minimization for the payers,”92 Roche explored ways to obscure the increased cost to Medicare
that will result from the entry of its infringing product. First, Roche planned to launch at a 12%
premium to Aranesp.93 But, by the time of trial, Roche planned to launch at a 12% “discount” to
Aranesp.94 Importantly, however, that “discount,” was based on a comparison of WAC prices,
88 RTX 112 (CERA 5 Year Business Plan) at R000228589. 89 Id. at R000228626 (emphasis added); R000228616 (“Roche will not discount to gain share with these chains.”). 90 RTX 6 (MIRCERA WAC Pricing) at R10-004974887. 91 Id. at R10-004974960-963. 92 Id. at R10-004974963. 93 RTX 99 (CERA NAOC Update) at R003917523. 94 RTX 6 (MIRCERA WAC Pricing) at R10-004975031; 12/7/07 Remedy Hr’g Tr. at 584:2-7 (Senich).
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which of course masks the true cost to Medicare. Established ESAs, such as Aranesp and
EPOGEN, are not reimbursed based on WAC. WAC prices, therefore, are inappropriate for
comparison — a fact Roche admits in its documents: “With the introduction of ASP, the
Aranesp WAC becomes a less meaningful comparator . . . .”95
Roche’s various “discount” pricing schemes to preserve new entrant advantages all
translate to substantial increases in reimbursement costs for Medicare. Aranesp is reimbursed
ASP+6%, which is considerably lower than its list price (WAC). Since Roche’s infringing
product would be reimbursed based on its WAC at launch, it pricing scheme at trial of 12%
“discount” relative to Aranesp actually provides a basis for reimbursement that is higher than
Aranesp’s ASP. Indeed, Roche conceded such was the case in its own planning documents, “[a]t
launch, MIRCERA will be priced higher than Aranesp ASP.”96 According to Roche’s
calculations, a “12% discount off WAC” translates to a 38% premium over Medicare’s
reimbursement rate for Aranesp.97 Although Roche’s January 28 Proposal purports to abandon
efforts to peg the price of its infringing product relative Aranesp’s WAC, as Dr. Bernheim
explains in his declaration accompanying this brief, the cost of Roche’s infringing product would
still be significantly greater than that of EPOGEN — the product primarily used to treat dialysis
patients.98 If Roche is allowed to launch its infringing product, Medicare (and patients) will pay
substantially more for an infringing product than is currently paid for Amgen’s established
ESAs. Under every scenario uttered by Roche to date, the entry of Roche’s infringing product
will increase — not decrease — Medicare’s costs.
95 RTX 6 (MIRCERA WAC Pricing) at R10-004975055 (emphasis added). 96 Id. at R10-004975033. 97 Id. 98 2/15/08 Bernheim Decl. ¶¶ 10-17.
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When the government shifted to ASP-based reimbursement, Roche viewed the change as
a tremendous profit-making opportunity for it as a new entrant. Roche’s entry in the U.S. market
is premised on its ability to extract an immediate and significant premium. Roche seeks to offer
sufficient cash recoveries to providers so as to drown out the attraction of EPOGEN — namely
its well-proven efficacy and safety. Roche’s documents show that with such new entrant
economics, it can convince DaVita to choose Mircera at the formulary level. Roche bragged that
given a compelling economic incentive, DaVita would choose its product and that it had
previously shifted 95% of its patients to a new therapeutic in a 90 day window.99 In the final
analysis, it is highly revealing that if the opportunity for a large windfall is removed, Roche will
choose to withhold its product from the U.S. market.100
3. The public interest would not be disserved by an injunction where peg-EPO does not address an unmet medical need and is not clinically superior to currently available ESAs.
There are two questions properly at the center of whether the public interest would be
disserved by the issuance of an injunction in this case:
(1) Does peg-EPO serve a significant medical need unmet by currently available medicines and medical practices; and
(2) Is peg-EPO so medically superior to currently available medicines, so that the medical benefits to the public outweigh the public’s other (non-medical) interests, as well as the other injunction prongs set forth in eBay?
As discussed above, this calculus must be considered against the background that
injunctions have only been denied in “rare and limited” circumstances for public health and
99 RTX 17 (Hickman Voicemail) at R001587133. 100 12/7/07 Remedy Hr’g Tr. at 597:18-24 (Senich); RTX 115 (CERA Update ASP Reimbursement) at R001619985, R001620039 (Roche will walk away from LDO contract if price war ensues).
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safety concerns.101 Thus, courts have held that the impact on public health interests alone has
been insufficient to warrant a denial of an injunction.102
a. The public interest is in gaining access to therapies that address unmet medical needs and peg-EPO does not.
Patients with chronic renal failure, and especially those on dialysis, suffer from a wide
range of ailments for which there are inadequate treatments.103 For example, currently unmet
medical needs include the need for improved arteriovenous access devices to reduce infection,
and the need to develop therapies to reduce mortality in these patients.104 In contrast, the one
medical need that most patients and doctors agree has been addressed is the treatment of anemia
associated with chronic renal failure with currently available ESAs.105
101 Commonwealth Sci. & Indus. Research Org. v. Buffalo Tech., Inc., 492 F. Supp 2d 600, 607 (E.D. Tex. 2007). 102 Proveris Sci. Corp. v. InnovaSystems, Inc., No. 05-12424-WGY, 2007 U.S. Dist. LEXIS 48475 (D. Mass. May 11, 2007) (permanently enjoining solutions that increased the accuracy of the testing of pharmaceutical spray drug products); Johns Hopkins Univ. v. Datascope Corp., Nos. WDQ-05-0759, WDQ-06-2711, 2007 U.S. Dist. LEXIS 68972 (D. Md. Aug. 9, 2007) (permanently enjoining treatments for fragmenting clots within hemodialysis grafts); Sanofi-Synthelabo v. Apotex, Inc., 492 F. Supp. 2d 353 (S.D.N.Y. 2007) (permanently enjoining generic platelet aggregation-inhibiting agent); Smith & Nephew, Inc. v. Synthes (U.S.A.), 466 F. Supp. 2d 978 (W.D. Tenn. 2006) (permanently enjoining use of intramedullary nails and methods to treat femoral fractures); Schneider (Eur.) AG v. SciMed Life Sys., Inc., 852 F. Supp. 813 (D. Minn. 1994) (permanently enjoining balloon dilation catheter for treating coronary heart disease); Critikon, Inc. v. Becton Dickinson Vascular Access, Inc., No. 93-108-JJF, 1993 U.S. Dist. LEXIS 19959 (D. Del. July 16, 1993) (preliminarily enjoining safety catheters designed to eliminate risk to healthcare professionals of accidental exposure to AIDS); ALM Surgical Equip., Inc. v. Kirschner Med. Corp., No. 6:89-1622-3, 1990 U.S. Dist. LEXIS 14584 (D.S.C. Apr. 23, 1990) (permanently enjoining use of prismatic surgical light system); Shiley, Inc. v. Bentley Labs., Inc., 601 F. Supp. 964 (C.D. Cal. 1985) (permanently enjoining bubble blood oxygenator for use in open heart surgery). 103 12/6/07 Remedy Hr’g Tr. at 422:7-24 (Chertow). 104 See RTX 23 (4/6/07 Chertow Report) ¶ 25; 12/6/07 Remedy Hr’g Tr. at 422:7-16 (Chertow). 105 12/6/07 Remedy Hr’g Tr. at 421:23-422:6, 422:21-24 (Chertow) (“So, in general there are immense unmet [medical] needs in this population, but the need of anemia correction has been fully met in my opinion.”).
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As its own documents and filings with the FDA acknowledge, Roche’s pegylated EPO
product does not treat any medical need other than the correction of anemia associated with
chronic renal failure.106 As the label approved by the FDA plainly states, peg-EPO is an
“erythropoiesis-stimulating agent (ESA) indicated for the treatment of anemia associated with
chronic renal failure, including patients on dialysis and patients not on dialysis[.]”107 It is
particularly telling that Roche has neither asserted nor identified in its regulatory documents any
medical need addressed by peg-EPO that currently available ESAs do not.108 Thus, as Dr.
Chertow testified, peg-EPO does not address or satisfy any unmet medical need.109 Rather,
Roche’s ESA product is merely a me-too product and its availability to the public is not
necessary to satisfy any unmet medical need.
In stark contrast, acting as if the jury has not already determined that its product infringes
Dr. Lin’s patents, Roche asserts that its pegylated EPO product must provide “substantial health
and medical benefits” because it is a “new and different medicine” that has a “significantly
longer half-life.”110 As a result, Roche argues to this Court that its “new” medicine allows for
less frequent dosing and shots, fewer doctor visits, greater patient compliance, and a slower rate
106 See RTX 4 (FDA Approval Letter for MIRCERA) at R008892352. 107 Id. 108 Roche has asserted that there is a benefit to “fewer shots.” Roche’s Opp’n to Amgen’s Inj. Mem. (D.N. 1589) at 15. The “convenience” of fewer injections is founded on a number of false premises, including that the number of administrations is relevant to dialysis patients, that EPO and Aranesp cannot be administered according to the same dosing scheduled as peg-EPO, and that the so-called convenience of fewer administrations should be considered in isolation, without regard for its effect. 109 12/6/07 Remedy Hr’g Tr. at 421:10-424:22 (Chertow). 110 Roche’s Opp’n to Amgen’s Inj. Mem. (D.N. 1589) at 1.
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of hemoglobin rise in patients, characterizing each of these differences as “unmet medical needs”
or matters of “patient choice.”111 The evidence does not support Roche’s claims.
As an initial matter, none of the so-called differences between peg-EPO and the currently
available ESAs address an unmet medical need. Rather, they are, at best, matters of
convenience. And, as matters of convenience, their significance is grossly overstated.
First, Roche’s arguments that its pegylated EPO product would be more convenient to
use because fewer injections would be required ignores the realities of the vast majority of the
lives of chronic renal failure patients. Most patients on dialysis (who are usually dosed three
times per week) receive medications through an IV line, delivered through the dialysis
machine.112 They therefore do not receive “shots” at all. And, patients with ESRD are required
to undergo dialysis to have their blood cleaned, whether or not they receive epoetin therapy.
Extended dosing does not reduce the need to visit a dialysis center.113 EPOGEN’s recommended
dosing regimen aligns with patients’ visits to dialysis centers, and allows for dosing adjustments
as needed. EPOGEN is administered to nearly all dialysis patients via the IV tubing, and IV
administration is recommended in the FDA-approved label.114
Second, Roche’s “convenience” arguments fail to recognize that Amgen’s second ESA
product, Aranesp, is also available to CKD patients (those patients who are not dialyzed). For
doctors, patients, or providers who prefer less-frequent dosing, Aranesp delivers anemia
management with extended dosing intervals, and is FDA approved for dosing intervals up to
111 See id. at 13-20. 112 12/6/07 Remedy Hr’g Tr. at 449:16-450:7 (Chertow); 12/5/07 Remedy Hr’g Tr. at 227:8-24 (Bernheim). 113 12/7/07 Remedy Hr’g Tr. at 655:22-656:3 (Fishbane). 114 RTX 53 (EPOGEN Label) at 26 (“In patients on hemodialysis, the IV route is recommended.”).
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once-every-three-weeks.115 Aranesp is used in some dialysis centers, but is more commonly
used for the treatment of patients with CKD who do not receive dialysis, and in oncology
patients.116 Patients are not even required to visit doctors in order to receive an injection, as
patients may self-inject Aranesp at home.117 Moreover, there are multiple publications that teach
that EPO and Aranesp may be used as infrequently as every two weeks to once a month to
achieve stable hemoglobin levels within an appropriate target range.118 Indeed, Dr. Schmidt, the
doctor Roche presented at trial in support of its convenience argument, acknowledged that she
had used either EPO or Aranesp according to a once-monthly dosing protocol.119 Dr. Fishbane,
another doctor who testified for Roche, was a member of an editorial board that published an
article teaching physicians that Epoetin alfa and Aranesp can be effectively used to treat CKD
patients once every four weeks.120 This testimony stands in stark contrast to Roche’s attorney
arguments regarding patient compliance. If, according to such evidence, currently available
115 The FDA-approved label for Aranesp includes once-weekly and once-every-three-week dosing intervals for the treatment of cancer patients receiving chemotherapy, and once-weekly or once-every-two-weeks for patients with anemia due to CKD or ESRD. RTX 50 (Aranesp Label) at 16, 18. 116 Note that peg-EPO is not FDA approved for the treatment of oncology-related anemia, as its clinical trials were terminated due to safety concerns. RTX 4 (MIRCERA Label) at R008892352. 117 RTX 50 (Aranesp Label) at 1, 18-21. Aranesp is available in prefilled SureClick™ autoinjectors for patient convenience. 118 RTX 105 (Spinowitz poster) (“Initiation of epoetin alfa using extended dosing regimens of 10,000 U QW, 20,000 U Q2W, 20,000 U Q4W, or 40,000 U Q4W was effective for the treatment of anemia in patients with CKD not receiving dialysis. . . . Q4W dosing of epoetin alfa may provide added flexibility and convenience for patients and providers.”). See also RTX 34 (Benz publication) at 215 (“In this study, results demonstrated that epoetin alfa can be initiated safely and effectively at an extended dosing interval of 20,000 IU every 2 [weeks] in patients with [chronic kidney disease who are not on dialysis].”); id at 219 (“Extended [epoetin alfa] dosing intervals of every 2 wk to once every 4 wk have shown to be effective in maintaining Hb levels. . . .”). 119 12/7/07 Remedy Hr’g Tr. at 626:9-18 (Schmidt).
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ESAs already can be administered once every two- or four-weeks, if a doctor is truly worried
about patient compliance, they already have the ability to prescribe products with an extended
dosing interval. Simply put, the “convenience” that peg-EPO’s Q2W or Q4W dosing may offer
is not an unmet need in the marketplace, nor is it sufficient to override our patent laws.121
Third, Roche’s advocacy also ignores that an extended regimen carries with it additional
complications. As evidenced by the testimony of the person charged with monitoring what the
drug does to the body (a pharmacologist), the person charged with treating the kidney patient (a
nephrologist), and the person charged with providing the drug (the head administrator in a
dialysis center), peg-EPO’s purported extended dosing regimen results in higher degrees of
hemoglobin variability and less control over hemoglobin levels.122 Roche’s public statements,
however, obscure this fact.123 Importantly, Roche’s own expert witness has published his
findings that higher degrees of hemoglobin variability are associated with negative
consequences.124 Roche attempts to direct the Court’s attention away from these facts, however,
120 Id. at 659:17-660:14 (Fishbane). 121 Note that many patients will be required to use Q2W dosing regimens, and Roche’s forecasts suggest that almost all ESRD patients may be converted back to Q2W dosing if bundling is implemented — making peg-EPO no more convenient than other FDA-approved dosing regimens. See RTX 131 (2007 MIRCERA Business Plan) at R11-000637998. 122 10/15/07 Trial Tr. at 2641:13-2643:23 (Benet); 12/6/07 Remedy Hr’g Tr. at 425:22-426:7, 433:2-439:15 (Chertow); 12/5/07 Remedy Hr’g Tr. at 344:9-345:13 (Lipps). 123 Compare RTX 26 (Levin publication) at fig.3 (presenting mean monthly hemoglobin values for MAXIMA, one of Roche’s Phase III clinical trials), with RTX 31 (presenting mean weekly hemoglobin values for the same study). The data show much more variability when the weekly hemoglobin values are plotted. See also 12/6/07 Remedy Hr’g Tr. at 439:7-442:12, 443:17-445:12 (Chertow). 124 RTX 39 (Yang publication) at 3164 (analyzing data from a large national cohort of hemodialysis patients, the authors, including Roche’s Dr. Fishbane, concluded “that greater hemoglobin variability is independently associated with higher mortality”). See also 12/6/07 Remedy Hr’g Tr. at 511:5-16 (Lubina).
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by relying on a purported “slower rate of rise” in hemoglobin levels.125 Taken as true, this
phenomenon does not speak to the medically acceptable hemoglobin rate of rise of currently
available ESAs126 and certainly does not address the real world issue confronted by dialysis
providers, like Fresenius, who want the better hemoglobin control that comes with a shorter
acting agent.127
But even assuming that peg-EPO provides some marginal convenience or some
ephemeral value in the form of choice despite only a demonstration of non-inferiority in clinical
trials, its availability does not outweigh our nation’s patent laws and the innovation they
encourage. There is no precedent supporting Roche’s request that the rights of a practicing
patentee be trampled in the name of convenience. In fact, several courts have held otherwise,
even regarding medical devices. In Schneider (Europe) AG v. Scimed Life Systems, Inc., the
court observed: “It is undoubtedly true that some physicians strongly prefer the [infringing
device] . . . and it may be the catheter of choice among physicians, but mere personal preference
alone does not justify denying an injunction.”128 A similar conclusion was reached in ALM
Surgical Equipment, Inc. v. Kirschner Medical Corp., where the court held that the “incentive to
engage in the toils of scientific and technological research” outweighed “inconvenience to
customers.”129
125 Roche’s Opp’n to Amgen’s Inj. Mem. (D.N. 1589) at 16-17. 126 RTX 50 (Aranesp Label); RTX 53 (EPOGEN Label). 127 12/5/07 Remedy Hr’g Tr. at 344:9-18 (Lipps). 128 Schneider (Eur.) AG v. Scimed Life Sys., Inc., 852 F. Supp. 813, 851 (D. Minn. 1994). 129 ALM Surgical Equip., Inc. v. Kirschner Med. Corp., No. 6:89-1622-3, 1990 U.S. Dist. LEXIS 14584, at *49, *52-53 (D.S.C. Apr. 23, 1990); see also Shiley, Inc. v. Bentley Labs., Inc., 601 F. Supp. 964, 970 (C.D. Cal. 1985) (“[N]o credible evidence in the trial record supports any finding that either is objectively superior in performance or that either is defective or unsafe. . . . The evidence amounts to no more than a mere expression of preference.”).
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In truth, Roche asks this Court at Amgen’s and Medicare’s expense to allow Roche onto
the market so that it can increase its profits and those of select providers who are interested in
increased cost recovery.
b. There is no evidence that Roche’s product is clinically superior to established ESAs.
Roche’s peg-EPO, by its own representations to the FDA, is at best non-inferior in
efficacy to the currently available ESAs.130 For example, in its Integrated Summary of Efficacy,
Roche specifically reported to FDA that in its Phase III clinical trials, the data showed only that
Roche’s peg-EPO product was “non-inferior” and “comparable.”131 Indeed Roche admitted as
much in its 2005 negotiations with LDOs. As Roche’s former Vice-President of Anemia
Products noted in an email following her discussions with DaVita, “CERA would need to appeal
to the LDOs on economic factors” because “CERA’s phase III clinical trials are not powered to
demonstrate . . . significant clinical differentiation.”132
Similarly, Roche simply has no evidence that its product is safer.133 Rather, as set forth
in FDA’s approval letter and the European regulatory agency’s scientific discussion of the Roche
clinical trials,134 more studies are needed to understand the full spectrum of health and safety
issues presented by peg-EPO. This is because patients receiving peg-EPO are statistically more
likely to suffer from sudden death throughout the study, death during the titration phase of the
study, gastrointestinal bleeding, and thrombocytopenia than patients receiving currently available
130 12/6/07 Remedy Hr’g Tr. at 426:23-427:5, 431:18-432:11 (Chertow); 512:2-8 (Lubina). 131 RTX 103 (Integrated Summary of Efficacy) at ITC-R-BLA-00040110. 132 RTX 108 (E-mail regarding economic considerations) at R001593762. 133 12/6/07 Remedy Hr’g Tr. at 512:2-8, 514:22-515:3 (Lubina). 134 See, e.g., RTX 4 (Mircera Label) at R008892361 (noting the increased likelihood of gastrointestinal bleeding in patients treated with peg-EPO); RTX 25 (11/13/07 Chertow Report) ¶¶ 12-15 (discussing the findings of the European Medical Association (EMEA)).
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ESAs.135
And, in stark contrast to Roche’s claim that peg-EPO provides a slower and steadier rate
of hemoglobin rise and control,136 as discussed above, even in the well-controlled environment
of clinical trials, the hemoglobin levels of patients receiving peg-EPO are more variable and
more likely to fall outside safe target ranges than patients receiving established ESAs.137 These
differences are significant. Roche’s expert has directly tied increased hemoglobin variability to
an increased likelihood of death.138 As Roche’s own clinical trials show, patients having one or
more excursions outside the target hemoglobin range were significantly more likely to suffer
from serious adverse events.139
F. A PERMANENT INJUNCTION IS NOT PRECLUDED BY ROCHE’S UNCLEAN HANDS OR PATENT MISUSE DEFENSES.
In its brief, Roche argues that Amgen is not entitled to an injunction because “Amgen has
committed misconduct in the ESA market which bears an ‘immediate and necessary relation to
the equity that [Amgen] seeks’ and amounts to unclean hands.’”140 While Roche did nothing to
develop these points at trial, Roche casts aspersions at Amgen regarding the following alleged
misconduct: (1) Amgen has entered into a long term agreement with Fresenius; (2) Amgen
promotes overdosing of ESAs; (3) Amgen offers multi-product rebates for Aranesp in oncology;
135 12/6/07 Remedy Hr’g Tr. at 451:23-460:4 (Chertow); 515:15-516:4 (Lubina); see also RTX 33 (Incidence of Specific Events). 136 Roche’s Opp’n to Amgen’s Inj. Mem. (D.N. 1589) at 2, 16. 137 12/6/07 Remedy Hr’g Tr. at 433:2-439:15, 443:17-446:3, 451:3-22 (Chertow); 508:15-509:16, 510:13-511:16, 515:15-516:4 (Lubina); see also RTX 31 (Mean Dose and Mean Hemoglobin BA16739 Maintenance Study); RTX 33 (Incidence of Specific Events). 138 RTX 39 (Yang publication) at 3167, tbl.2 (showing that hemoglobin variability of greater than 0.5 g/dL results in a 15% increased likelihood of death, and that variability of greater than 1.5 g/dL results in a 53% increased likelihood of death). 139 12/6/07 Remedy Hr’g Tr. at 424:10-13, 433:2-439:15 (Chertow); 508:15-511:16 (Lubina).
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(4) Amgen has refused to guarantee discounts to customers and has notified them of their
potential infringement liability; and (5) Amgen withholds Aranesp discounts and products from
dialysis centers.141 But Roche failed to prove that Amgen has engaged in any actions that are
either unlawful or otherwise rise to the level of unclean hands or patent misuse.142 No evidence
has been submitted and no argument advanced that justifies denying Amgen’s request for an
injunction based on any actions Amgen has taken in the ESA marketplace.
The doctrine of unclean hands provides a defense to an otherwise valid legal claim only if
Roche first proves that Amgen has performed “some unconscionable act,” which is an act that is
“offensive to the dictates of natural justice.”143 Courts have applied the doctrine of unclean
hands in patent cases involving fraud during the procurement or enforcement of a patent-in-suit
or where litigation misconduct was involved.144 Roche must next demonstrate that the alleged
unconscionable act bears an “immediate and necessary relation to the equity that [Amgen] seeks
in respect of the matter in litigation,” that is, the act must “affect the equitable relations between
140 Roche’s Opp’n to Amgen’s Inj. Mem. (D.N. 1589) at 30. 141 Id. at 30-33; Roche’s Opp’n to Amgen’s Bench Mem. to Prevent Roche from Introducing Alleged Antitrust Evidence to Supp. an Unclean Hands or Patent Misuse Defense (D.N. 1586) at 1-5. See infra Part II.F.3 (discussing Roche’s abandonment of its tying allegations in response to Amgen’s Bench Mem. Regarding the Inapplicability of Patent Misuse to the Facts of this Case (D.N. 1632) [hereinafter Amgen’s Patent Misuse Mem.]. 142 See Amgen’s Patent Misuse Mem. for a recitation of the law of patent misuse and the reasons why such defense should not preclude the issuance of an injunction. This brief primarily focuses on Roche’s unclean hands theory. Amgen also respectfully refers the Court to Amgen’s Mem. of Law in Supp. of Amgen’s Mot. for Summ. J. on Roche’s Antitrust and State Law Countercl. (D.N. 519). 143 Keystone Driller Co. v. General Excavator Co., 290 U.S. 240, 245 (1933) (quoting Deweese v. Reinhard, 165 U.S. 386, 390 (1897)). 144 See, e.g., Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 819 (1945); Aptix Corp. v. Quickturn Design Sys., Inc., 269 F.3d 1369, 1374-75 (Fed. Cir. 2001).
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the parties in respect of something brought before the court for adjudication.”145 Prior cases
have held that in the context of a patent infringement suit, the “immediate and necessary
relation” limitation means that a plaintiff must “have engaged in misconduct which bears upon
the validity of the patent or defendant’s infringement of the patent for the unclean hands defense
to be available.”146 Roche cites to no case law in support of its position that marketplace
activities of the type alleged can justify denying an injunction. But more importantly, as
described in further detail below, any actions that Amgen has taken have been completely lawful
and within its rights as a patent owner. Amgen has committed no misconduct and certainly
nothing that approaches an unconscionable act regarding the marketplace for ESAs.
1. Amgen’s agreement with Fresenius — voluntarily negotiated and entered into without coercion — is lawful and does not support Roche’s unclean hands defense.
Roche alleges that it is inequitable for Amgen to receive injunctive relief because Amgen
“artificially maintains high prices,” and defers competition and price decreases through its five-
year Fresenius agreement.147 At bottom, Roche complains that Amgen’s agreement with
Fresenius constitutes an unconscionable act sufficient to prohibit issuance of an injunction.
145 Keystone, 290 U.S. at 245. In contrast, Roche suggests that unclean hands “has nothing to do with the rights or liabilities of the parties” and that the defendant “need not be damaged” to assert unclean hands. See Roche’s Opp’n to Amgen’s Inj. Mem. (D.N. 1589) at 31 n.101; Roche’s Opp’n to Amgen’s Bench Mem. to Prevent Roche From Introducing Alleged Antitrust Evidence to Supp. an Unclean Hands or Patent Misuse Defense (D.N. 1586) at 2. Roche relies extensively on non-binding precedent in Gaudiosi v. Mellon, 269 F.2d 873, 882 (3d. Cir. 1959), for this proposition, but fails to disclose that the Third Circuit has limited its own holding in Gaudiosi: “In Gaudiosi, this court applied the doctrine of unclean hands in a proxy contest context. . . . [w]hile we explicitly stated that no injury needed to be shown, it is crystal clear from the facts of the case that Gaudiosi’s misconduct—the intimidation of shareholders—was directly related to the case before the court, which concerned the validity of a corporate election.” In re New Valley Corp., 181 F.3d 517, 526 (3d Cir. 1999) (emphasis added). 146 Southwire Co. v. Essex Group, Inc., No. 81 C 3313, 1983 U.S. Dist. LEXIS 16724, at *3 (N.D. Ill. May 24, 1983). 147 Roche’s Opp’n to Amgen’s Inj. Mem. (D.N. 1589) at 32-33.
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As more fully set forth in Amgen’s Patent Misuse Memo,148 however, there can be no
dispute that Fresenius entered into its agreement with Amgen because it preferred EPOGEN.149
Based on this fact alone, Roche cannot prove that Amgen’s agreement with Fresenius can legally
be considered an unconscionable act. Roche therefore focuses on the agreement’s “sole source”
provision, arguing that “there is no reason to require Fresenius to make a sole source
commitment.”150 This argument ignores that Fresenius desired a long-term contract with Amgen
because it preferred EPOGEN over peg-EPO for its dialysis patients,151 not because Amgen
required it or otherwise coerced Fresenius into an agreement. As set forth in Amgen’s Patent
Misuse Memo, Roche’s assertion that Amgen’s conduct artificially maintains high price fares no
better because all of the evidence shows that EPOGEN’s ASP has actually decreased over
time.152 In contrast, the evidence shows that Roche intends to enter the marketplace at a price
higher than the EPOGEN’s ASP to maximize cost-recovery for ESA providers and profits for
itself.153
Nor can Roche demonstrate how Amgen’s voluntarily negotiated contract with a willing
third party bears any “immediate and necessary relation” to the claim at issue or otherwise
148 Amgen’s Patent Misuse Mem. (D.N. 1632). 149 See 12/5/07 Remedy Hr’g Tr. at 318:4-320:9, 323:10-16, 344:4-346:15 (Lipps); 3/30/07 McGorty Dep. Tr. at 52:13-21 (the McGorty deposition testimony cited herein was submitted to the Court by Roche as remedy-related deposition designations on 12/14/07). Mr. McGorty is Fresenius Medical Services’ Vice President of Finance and Administration. 150 Roche’s Resp. to Amgen’s Bench Mem. Regarding the Inapplicability of Patent Misuse to the Facts of This Case (D.N. 1642) at 7 [hereinafter Roche’s Resp. to Amgen’s Patent Misuse Mem.]. 151 12/5/07 Remedy Hr’g Tr. at 319:8-320:9, 323:10-16, 344:4-346:15 (Lipps). 152 See Amgen Patent Misuse Mem. (D.N. 1632) at 2, 9-10. 153 See infra Part III.A.
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affects the equities between the parties before this Court.154 Roche attempts to satisfy its burden
by pointing to overlapping subject matter, arguing that Amgen’s alleged misconduct involves
“the ESA market” and that Amgen’s patents also relate to ESA products.155 The First Circuit,
however, has held that this argument fails as a matter of law: “The mere fact that the
‘misconduct’ arises from some overlapping facts is not enough.”156
2. Amgen does not and cannot incentivize overuse of ESAs.
Roche’s next allegation is that Amgen acted untoward because the Fresenius agreement
did not include a contractual “bounty to encourage lack of over-administration.”157 But Roche’s
conclusion that Fresenius “is more likely to over-administer ESA’s than if those contractual
incentives did not exist”158 is not only unsubstantiated by any evidence, but ignores the
countervailing evidence of disincentives for over-utilization provided by the government’s strict
reimbursement policy. As described by Fresenius’s CEO, Mr. Lipps, the government withholds
reimbursement for ESAs if patients’ hematocrit levels remain too high.159 Under these
circumstances, Amgen’s purported failure to provide another disincentive to the over-utilization
of its products is hardly an unconscionable act offensive to the dictates of natural justice.160
154 See Keystone Driller Co. v. General Excavator Co., 290 U.S. 240, 245 (1933); see also Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 814-15 (1945); Bio-Tech. Gen. Corp. v. Genentech, Inc., 80 F.3d 1553, 1565 (Fed. Cir. 1996). 155 Roche’s Opp’n to Amgen’s Inj. Mem. (D.N. 1589) at 30-33. 156 Dr. José S. Belaval, Inc. v. Perez-Perdomo, 488 F.3d 11, 15-16 (1st Cir. 2007). 157 Roche’s Resp. to Amgen’s Patent Misuse Mem. (D.N. 1642) at 9. 158 Id. 159 12/6/07 Remedy Hr’g Tr. at 413:2-6 (Lipps). 160 Roche’s theory is counter to the public interest in the enforcement of valid contractual agreements. In fact, by taking issue with the contractual terms of a contract (to which it is not a party), Roche presumably asks this Court to take the extraordinary step of reforming a valid contract to include such a bounty. This represents an unprecedented and unwarranted stretch of the doctrine of unclean hands. Allan Block Corp. v. E. Dillon & Co., No. 04-3511, 2005 U.S.
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3. Amgen’s pro-competitive, multi-product rebates in oncology do not constitute unclean hands or patent misuse.
Roche has re-packaged its prior bundling contentions161 by arguing that Amgen “refuses”
to grant rebates on Aranesp to oncology providers unless they also agree to purchase Amgen’s
white-blood cell related products, Neulasta® and NEUPOGEN®.162 Amgen does provide lawful
discounts in oncology, but that fact has no bearing on an unclean hands defense because peg-
EPO is not approved by FDA for use in any oncology indication.163 The law is clear that this
cannot be the basis for unclean hands because the unclean hands doctrine does not apply to
conduct which is not related to the merits of the controversy between the parties.164 Indeed,
Roche’s approved label specifically includes a “black box” warning against use in oncology
since there was a statistically higher incidence of death for oncology patients using peg-EPO
than established ESAs.165
Dist. LEXIS 13566, at *25-26 (D. Minn. July 1, 2005) (“[T]he public interest is served by upholding the parties’ contractual obligations.”), aff’d without op., 170 Fed. Appx. 130 (Fed. Cir. 2006). 161 Until the remedy phase of trial, Roche’s antitrust claims and unclean hands defense focused on allegations that Amgen was impermissibly leveraging its patents covering its white-blood cell products to extract monopoly prices for Aranesp. See, e.g., Roche’s Answer and Countercls. to Pl.’s Compl. (D.N. 140) ¶ 56; Roche’s First Am. Answer and Countercls. to Pl.’s Compl. (D.N. 344) ¶ 75. Roche has belatedly flipped this argument on its head by arguing that Amgen’s practices extend its EPO patents into the white-blood cell-related product market in an attempt to conform its allegations to the elements required to show patent misuse. While Roche should not be allowed to change its allegations at the thirteenth hour, taken either way, Roche cannot meet its burden of showing that Amgen’s acts derive their force from the asserted EPO claims. 162 Roche’s Opp’n to Amgen’s Inj. Mem. (D.N. 1589) at 32-33. 163 Roche’s oncology clinical trials were terminated due to safety concerns. RTX 4 (MIRCERA Label) at R008892352. 164 See Dr. José S. Belaval, Inc. v. Perez-Perdomo, 488 F.3d 11, 16 (1st Cir. 2007). 165 RTX 4 (MIRCERA Label) at R008892353 (“Cancer: Mircera is not intended for the treatment of anemia due to cancer chemotherapy. A dose-ranging study of Mircera was terminated early because of significantly more deaths among patients receiving Mircera than another ESA.”).
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In the context of an unclean hands defense, Roche fails to establish that Amgen’s multi-
product rebates in oncology have in any way dirtied Amgen’s hands. The challenged discounts
are not improper because: (1) they are all above cost; (2) hospitals are not required to purchase
any Aranesp from Amgen; and (3) Amgen does not bar its customers from purchasing competing
products. The contracts complained of presented an option to customers by which they could
qualify for additional rebates on certain products if they meet or exceed a percentage-based
purchase threshold for Aranesp.166 Again, this hardly implicates conduct that is offensive to the
dictates of natural justice. Roche simply transforms the legitimate acts of a patentee “into an
open-ended pitfall for patent-supported commerce.”167
Roche also fails to demonstrate how offering pro-competitive multi-product rebates in
oncology to willing third parties bears any “immediate and necessary relation” to the claim at
issue or affects the equities between the parties before this Court.168 Moreover, Roche ignores
that NEUPOGEN, Neulasta, and Aranesp have been separately patented.169 Amgen’s actions are
all within the legitimate rights of a patent owner to market its various products, and Roche has
made no showing to the contrary.
4. Amgen is entitled to enforce Dr. Lin’s Patents and is not obligated to guarantee discounts in perpetuity.
Roche alleges that Amgen “threatened” customers by explaining their potential
infringement liability and informing them that they would not be guaranteed the same contract
166 3/28/07 Manak Dep. Tr. at 20:2-21:4 (the Manak deposition testimony cited herein was submitted to the Court by Roche as remedy-related deposition designations on 12/14/07). 167 C.R. Bard, Inc. v. M3 Sys., Inc., 157 F.3d 1340, 1373 (Fed. Cir. 1998). 168 See Keystone Driller Co. v. General Excavator Co., 290 U.S. 240, 245 (1933); see also Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 814-15 (1945); Bio-Tech. Gen. Corp. v. Genentech, Inc., 80 F.3d 1553, 1565 (Fed. Cir. 1996).
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price for EPOGEN if, after dropping EPOGEN for peg-EPO, they returned to negotiate a new
contract with Amgen. Specifically, of the hundreds of small dialysis organizations (SDOs) in the
United States, administrators from two, Tracey Mooney and Maureen Michael, testified that
Leslie Mirani, Amgen’s Vice President of Sales, told them that their clinics may not receive the
same contract if they switched to another product and came back, and that they could be subject
to legal liability if they switched to peg-EPO.170
As an initial matter, the fact that purchases of peg-EPO could create infringement liability
was independently confirmed by an attorney with whom Ms. Michael spoke.171 Again, these
actions are entirely lawful as Amgen must be allowed to make its rights known to all potential
infringers.172 Nor has Roche demonstrated how Amgen’s notifying third parties of their
potential liability bears an “immediate and necessary relation” to the equity sought before this
Court. A threat to third-party retailers or competitors (even where a communication did
constitute a threat) is not grounds for an unclean hands defense where the competitive product
was held to infringe valid and enforceable patent claims.
169 See, e.g., U.S. Patent Nos. 5,580,755 (covering NEUPOGEN and Neulasta), 5,824,784 (covering Neulasta) and 7,217,689 (covering Aranesp). 170 3/27/07 Mooney Dep. Tr. at 21:23-22:9; 3/9/07 Michael Dep. Tr. at 43:9-24, 45:16-23 (the Mooney and Michael deposition testimony cited herein was submitted to the Court by Roche as remedy-related deposition designations on 12/14/07). 171 3/9/07 Michael Dep. Tr. at 62:11-15, 62:20-64:3, 65:5-66:6; 3/20/07 Torley Dep. Tr. at 127:12-25; 4/2/07 Mirani Dep. Tr. at 129:20-130:5, 155:19-156:5 (the Torley and Mirani deposition testimony cited herein was submitted to the Court by Roche as remedy-related deposition designations on 12/14/07). 172 See Virginia Panel Corp. v. MAC Panel Co., 133 F.3d 860, 869 (Fed. Cir. 1997) (“[A] patentee must be allowed to make its rights known to a potential infringer so that the latter can determine whether to cease its allegedly infringing activities, negotiate a license if one is offered, or decide to run the risk of liability and/or the imposition of an injunction.”).
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Similarly, Amgen’s good-faith attempt to communicate with its customers about potential
infringement liability does not constitute patent misuse as a matter of law.173 The statements
made by Ms. Mirani were not threats at all, but factually correct statements made in an effort to
address customer concerns.174 Furthermore, Roche presented no evidence that any of Amgen’s
alleged statements adversely affected a single customer or otherwise had any anticompetitive
effect. There is also no basis for Roche’s argument that a failure to guarantee discounts in
perpetuity constitutes an unconscionable act. Amgen’s refusal to guarantee future discounts and
pricing is a matter of contract law based on the great uncertainty about what will happen to
Amgen’s pricing if peg-EPO comes to the U.S. marketplace.175 Still, Amgen has never refused
to sell its patented goods to any customer who also wishes to purchase Roche’s infringing
ESA.176 Roche cannot demonstrate how Amgen’s failure to guarantee discounts bears an
immediate and necessary relation to this case.
5. Amgen does not withhold products from dialysis providers
Roche alleges that Amgen “effectively” withholds Aranesp from dialysis providers and,
therefore, the public cannot be assured access to a longer-lasting ESA.177 Roche’s argument is
173 See 35 U.S.C. § 271(d)(3) (2007) (“No patent owner otherwise entitled to relief from infringement or contributory infringement of a patent should . . . deemed guilty of misuse . . . by reason of his having . . . sought to enforce his patent rights against infringement or contributory infringement.”). 174 4/2/07 Mirani Dep. Tr. at 125:12-126:11, 126:24-127:22, 129:6-130:5, 155:2-7, 155:19-156:8. In Roche’s Resp. to Amgen’s Patent Misuse Mem. (D.N. 1642), Roche characterizes Amgen’s communications as threats to its customers of having to pay “list prices,” without the benefit of rebates or discounts. The evidence does not support this characterization. 175 3/20/07 Torley Dep. Tr. at 180:17-182:7; 11/15/07 Remedy Hr’g Tr. at 38:9-39:7 (Sharer). 176 See 3/20/07 Torley Dep. Tr. at 180:17-182:7; 11/15/07 Remedy Hr’g Tr. at 38:9-39:7 (Sharer). 177 Roche’s Resp. to Amgen’s Patent Misuse Mem. (D.N. 1642) at 13; Roche’s Opp’n to Amgen’s Inj. Mem. (D.N. 1589) at 31.
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factually incorrect. Both of Amgen’s ESAs — EPOGEN and Aranesp — are available to all
dialysis providers.178 Lacking evidence and legal precedent, Roche next argues that Amgen
“effectively” refuses to market Aranesp presumably because its current discounts are not to
Roche’s satisfaction.179 This, however, is easily distinguishable from cases where a patentee
refuses to practice its invention to the detriment of the public.180
In summary, Roche’s assertions of misconduct were not proven at trial and form no basis
for denying an injunction to Amgen to prohibit Roche’s further infringement.
III.
RESPONSE TO ROCHE’S JANUARY 28, 2008 PROPOSAL
More than a month and a half after the injunction trial was completed (and more than two
months after the Court initially requested one), Roche filed a “proposal for economic terms”
under which it believes the Court should allow Roche to market its infringing EPO product in the
United States. This belated submission was not a serious proposal, however, because the terms
were grossly inadequate to compensate Amgen for Roche’s infringement, Roche’s peg-EPO still
does not meet any unmet medical need, and it is remains the case that Roche’s peg-EPO would
be priced such that it will cost Medicare more than it is currently paying for Amgen’s EPOGEN.
Except for a slightly lower launch price than it had previously planned, Roche’s Proposal
178 4/2/07 Kogod Dep. Tr. at 26:18-27:7, 28:10-18 (the Kogod deposition testimony cited herein was submitted to the Court by Roche as remedy-related deposition designations on 12/14/07). Mr. Kogod is the President of DaVita’s Western Operating Group. See also 11/15/07 Remedy Hr’g Tr. at 44:9-45:6 (Sharer). 179 Contrasting Roche’s allegations regarding the Fresenius agreement with its arguments here, it is clear that Roche’s theories are inconsistent and, indeed, nonsensical. Roche simultaneously argues that Amgen’s rebates to Fresenius constitutes a “bribe,” while faulting Amgen for not offering enough “essential rebates” to dialysis customers. Roche’s Resp. to Amgen’s Patent Misuse Mem. (D.N. 1642) at 1, 4. 180 See, e.g., Vitamin Technologists, Inc. v. Wis. Alumni Res. Found., 146 F.2d 941, 943-45 (9th Cir. 1945) (denying permanent injunction where patentee refused altogether to apply a new process of fortifying oleomargarine with vitamin D).
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changes nothing regarding the evidence presented to the Court during the trial; Roche will still
come in at a reimbursement advantage to Amgen’s EPOGEN (and Procrit which shares the same
ASP as EPOGEN) — thus allowing Roche to offer greater economic incentives to attract
customers — and the glide path analogy still describes the likely pricing scenario over time. If it
were otherwise, the Court should disregard Roche’s Proposal as coming too late and should
decide the injunction issue based on the evidence presented at trial rather than some
unsubstantiated and untested post-trial proposal by Roche.
While Roche waved its proposal in front of the press to generate attention, the real reason
for Roche filing it seems to be to alert the Court and Amgen that despite the jury verdict and
Court decisions to date upholding the patent as valid, enforceable, and infringed, Roche intends
to launch peg-EPO in the U.S. next month. Obviously, Roche is attempting to force its way onto
the market and cause immediate and irreparable harm to Amgen. Roche’s display of complete
disdain for the jury’s decision, this Court’s timely efforts, and Amgen’s validated patent rights
only reinforces the need for the issuance of an injunction at the earliest time possible to stop
Roche’s belligerent actions.
A. ROCHE’S PROPOSAL WOULD EXACT A HIGHER REIMBURSEMENT FROM MEDICARE.
Without providing any details of its analysis, Roche asserts that the savings to Medicare
under its Proposal “will be substantial, and easily in the billions of dollars.”181 As demonstrated
at trial, such assertions by Roche are completely without merit. Just as with its marketing plans
in place before trial, its recent “new” plan would still cost the government more than the current
expenditures on Amgen’s EPOGEN because both the price and dose of peg-EPO would be
181 Mem. In Supp. of Roche’s Proposal Pursuant to the Court’s Instruction of December 7, 2007 (D.N. 1651) at 2.
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higher than those for EPOGEN. According to Roche’s own documents and product label, even
under Roche’s new Proposal, peg-EPO’s use in dialysis will cost Medicare about 45% more than
EPOGEN.182 Consequently, Roche’s assertion that Roche’s Proposal will result in billions of
dollars in savings is completely unfounded.
Even though Roche is targeting dialysis providers and would be competing directly
against Amgen’s EPOGEN, Roche’s Proposal ties its launch price to the ASP of Aranesp, not to
EPOGEN.183 In so doing, Roche shows its true colors by obscuring the reality that peg-EPO
would cost Medicare up to 45% more than EPOGEN for the treatment of anemia in dialysis.
Dose conversion also drives a higher usage and higher costs for switching to peg-EPO
from EPOGEN. For example, taking the peg-EPO “starting doses” set forth in Roche’s FDA
label 184 and the average weekly EPOGEN dose (19,000 IUs per week), the cost of therapy for
peg-EPO under Roche’s Proposal would be approximately 45% higher than the weekly cost of
therapy for a patient currently receiving an EPOGEN dose of 19,000 IUs per week (the average
weekly EPOGEN dose).185 As further example, taking instead the dose conversion ratios
calculated by Dr. Lubina,186 if peg-EPO were utilized entirely on a once every four weeks
182 2/15/08 Bernheim Decl. ¶ 14; RTX 6 (MIRCERA WAC Pricing) at R10-004975068-69. 183 Roche’s Proposal for Entering the U.S. Market with Mircera, App. A (D.N. 1651-2) [hereafter Roche’s Proposal] (“[MIRCERA’s] per unit WAC would be calculated based on the conversion of monthly MIRCERA dosing to the equivalent monthly Aranesp dosing.”). While the real-world dose conversion ratio remains uncertain, Roche’s forecasts determined the peg-EPO-to-Aranesp relationship to be one-to-one on a weekly equivalent basis. See, e.g., RTX 6 (MIRCERA WAC Pricing) at R10-004975076 (“Selected conversion factor = 1 mcg CERA per 1 mcg Darbepoetin for Q4W.”); id. at R10-004975077 (“The more robust MIRCERA/Epoetin data validates the 1:1 Aranesp conversion ratio.”). 184 RTX 4 (MIRCERA Label) at R008892353-54. 185 2/15/08 Bernheim Decl. ¶ 14. 186 RTX 30 (5/11/07 Lubina Rebuttal Report) Ex. B at 8 (providing DCR estimates of 303 IU/mcg for Q2W dosing and 240 IU/mcg for Q4W dosing).
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(Q4W) dosing regimen, its cost of therapy would still be 28% higher than the cost of therapy
with EPOGEN.187 If peg-EPO were priced based on once every four week utilization, but
assumed to be utilized entirely on a once every two weeks (Q2W) dosing regimen, its cost under
Roche’s Proposal would still be higher than the cost of EPOGEN.188 Based on Dr. Lubina’s
dose conversion ratio estimates, peg-EPO under Roche’s Proposal would be more costly to
Medicare than EPOGEN, regardless of the proportion of Q2W versus Q4W usage.189 To be
sure, the exact premium will depend on how peg-EPO dosing translates from clinical trial to
clinical practice, but given the particular clinical trial exclusion criterion used in Roche’s clinical
trials and FDA’s recognition that its particular exclusion criteria was not representative of the
general patient population,190 the evidence suggests that Roche’s forecasted dose conversion
ratio underestimates the doses that would be required if the population tested in clinical trials
were representative of the patient population at large. Thus, rather than lowering cost to
Medicare, Roche is still seeking to set its price “as high as [it] can that payers will pay for and
then glide down given the regulatory scheme.”191
Evidence confirms that Roche comprehends, appreciates, and intends to exploit the
advantages conferred to new entrants under the current Medicare reimbursement system.192 As
Roche’s Vice President of Sales and Marketing admitted, Roche’s intent is to set its price “as
187 2/15/08 Bernheim Decl. ¶ 13. 188 Id. 189 Id. See supra Part II.E.3 (regarding the dialysis patient’s treatment regimen and the need, or lack thereof, of a product that can be given on an extended dosing regimen). 190 For example, because Roche excluded patients from its clinical trials with high CRP values, the FDA has required Roche to conduct additional post-marketing studies that include problematic CRP patients. RTX 4 (MIRCERA Label) at R008892348. 191 12/7/07 Remedy Hr’g Tr. at 570:6-8 (Senich). 192 See RTX 6 (MIRCERA WAC Pricing) at R10-004974846.
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high as [it] can that payers will pay for and then glide down given the regulatory scheme.”193
Roche’s Proposal does not do anything different.194 By setting its WAC at a price that is up to
45% greater than the ASP for EPO, Roche can still take advantage of the glide path.195
Additionally, Roche’s Proposal does not guarantee lower prices in the long term. Rather,
Roche’s Proposal is couched in language that promises only the possibility of savings.196 But
substantial savings are not likely. From Roche’s point of view, a “price increase can be good for
both providers and manufacturers in the long run,”197 and that excessive price competition would
result in an undesirable downward price spiral.198 To this end, Roche concluded, “we will not
discount competitively in order to gain share in the ESRD business.”199 Roche’s promises of the
possibility of savings to Medicare ring hollow in the face of all the evidence of record including
Roche’s own internal documents.
B. ROCHE’S PROPOSED 20% ROYALTY WILL NOT ADEQUATELY COMPENSATE AMGEN FOR EVEN ITS ECONOMIC LOSSES.
Like its initial WAC pricing offer, Roche proposes a 20% royalty rate on the net sales of
peg-EPO, without any economic support or justification. Clearly, there can be no justification.
Roche’s proposal is grossly inadequate to compensate Amgen for the harms it will face if Roche
is permitted to commercialize peg-EPO in the U.S., and it ignores that the law mandates that
193 12/7/07 Remedy Hr’g Tr. at 570:5-9 (Young, J.; Senich), 570:10-571:9 (Young, J.; Senich). 194 2/15/08 Bernheim Decl. ¶ 9. 195 Id. ¶¶ 10-15. 196 See Roche’s Proposal (“Roche will likely engage in contractual discounting to customers. . . . These discounts and the competition they will engender, coupled with the ASP reimbursement mechanism itself, will likely deliver lower net costs to providers and payers.”) (emphasis added). 197 RTX 115 (CERA update regarding ASP Reimbursement) at R001619971. 198 Id. at R001619973-974. 199 RTX 112 (CERA 5 Year Business Plan) at R000228626 (emphasis added); id. at R000228616 (“Roche will not discount to gain share with these chains.”).
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injunctions should be fashioned on “principles of equity to prevent the violation of any right
secured by patent,” (not make it profitable for the infringer to infringe), and that any damages
award must be “adequate to compensate for the infringement.”200 Roche’s only explanation for
the 20% royalty offer is that the amount is “about double that paid currently by Johnson &
Johnson for its Procrit product.” But as explained below, there are no comparisons between
Roche’s current position as an adjudged infringer and J&J’s position in 1985 when it licensed
non-competing and uncertain medical indications for EPO from Amgen.
Roche’s proposed 20% royalty grossly under compensates Amgen for even the most
immediate lost profits that Amgen will realize when a sale of peg-EPO displaces a sale of
EPOGEN or Aranesp and leaves wholly unanswered the harm to Amgen which is not amenable
to calculation with reasonable certainty. For example, using Roche’s expert’s calculations for
Amgen’s unit costs and profit margin, 201 for every sale of peg-EPO into dialysis Amgen will
lose its 89% profit margin and will receive only a 20% royalty from Roche on its net price
(whatever that may be).202 Assuming that EPOGEN and peg-EPO are priced equivalently on a
cost-of-therapy basis, Amgen will receive only 23% of the profits that it would have earned on
each unit but for Roche’s infringement.203 In contrast, Roche would keep approximately 77% of
the profits associated with each unit.204 Roche cites to no reason why it should be allowed to
infringe Amgen’s patents but capture three times the profit that Amgen would make. Roche has
done nothing to deserve such a windfall.
200 35 U.S.C. §§ 283-284 (2007) (emphasis added). 201 Roche’s expert, Mr. Elhauge, estimates that Amgen’s profit margin on EPOGEN is 89%. See RTX 42 (4/6/07 Elhauge Report) ¶ 41. 202 2/15/08 Bernheim Decl. ¶ 18. 203 Id. 204 Id.
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Roche’s reliance on the royalty provision in Amgen’s agreement with Ortho Biotech
(Johnson & Johnson’s subsidiary) and its offer to “double that paid currently by Johnson &
Johnson”205 is wholly inappropriate.206 The position of the parties and the development risks
associated with the products were radically different in 1985 as compared to today. In addition,
the structure of the relationship between Amgen and Ortho was fundamentally different than the
position of Roche today. At its most fundamental level, the Ortho Agreement is not a patent
license agreement. Rather, it is a product license agreement that grants to Ortho a limited license
to sell a particular product in a limited field of use. Ortho had the obligation to develop the
clinical basis for the use of EPO in non-dialysis settings. This is far different from the
unrestricted access that Roche is requesting to uses already established by both Amgen and
Ortho. Amgen did not license Ortho to compete with it in the dialysis indication but imposed on
Ortho the risk and the costs of developing EPO for non-competing uses. In contrast, years after
ESAs were established as the standard of care through the efforts and commitment of Amgen
and Ortho to prove their value, Roche seeks to compete directly with Amgen across all ESA
usage.
Roche also ignores the other consideration given to Amgen by Ortho. For example,
Ortho agreed to develop and expand indications in which EPO would be sold, share its
improvements with Amgen, and initially fund Amgen’s internal development efforts.207
Importantly, Ortho agreed that Amgen would be Ortho’s sole manufacturer, granting to Amgen
205 Roche’s Proposal (emphasis removed). 206 2/15/08 Bernheim Decl. ¶ 20. 207 RTX 22 (Amgen/Ortho Product License Agreement) at AM-ITC 00508749; RTX 46 (Amgen/Ortho Technology License Agreement) at AM-ITC 00508814-15, 8807-09.
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the benefits afforded by the economies of scale, as well as input in regulatory issues.208
The Amgen/Ortho product license was executed long-before EPOGEN or Procrit were
approved for sale by the FDA.209 When Amgen granted the limited license to Ortho, Amgen
was in its infancy as a corporation, and lacked experience with clinical trials, marketing and
distribution. Amgen was in need of capital in order to fund additional clinical trials; Ortho
agreed to provide capital, and agreed to incur risk for the possibility of a financial reward.210
Indeed, at the time Amgen and Ortho entered into its license, the IND for Epoetin alfa which
allowed testing in humans to begin had not even been filed. In contrast, Roche faces little
comparative risk. Blessed with hindsight and Amgen’s pioneering efforts, Roche knows that Dr.
Lin’s inventions are lucrative. It knows that EPO can be safely manufactured to treat patients
with anemia. It knows that there is a substantial market for treatment of anemia in the United
States. It knows all of these things because Amgen and Ortho took the risk to develop and
market Dr. Lin’s inventions.211
208 11/15/07 Remedy Hr’g Tr. at 34:20-35:3 (Sharer); RTX 22 (Amgen/Ortho Product License Agreement) at AM-ITC 00508764. 209 The license agreement was executed on Sept. 30, 1985. RTX 22 (Amgen/Ortho Product License Agreement) at AM-ITC 00508736. The product license application for Epoetin alfa (EPOGEN) was submitted to FDA on October 30, 1987, and was approved by the FDA on June 1, 1989. See, e.g., 10/1/07 Trial Tr. at 1955:13-22 (Browne). 210 11/15/07 Remedy Hr’g Tr. at 34:1-11 (Sharer); RTX 46 (Amgen/Ortho Technology License Agreement) at AM-ITC 00508806-09, 8814-15. 211 By comparing its Proposal to the Ortho royalty, Roche also ignores the other consideration given to Amgen by Ortho. For example, Ortho agreed to develop and expand upon the potential EPO markets, share its improvements with Amgen, and initially fund Amgen’s internal development efforts. 11/15/07 Remedy Hr’g Tr. at 34:1-11 (Sharer); RTX 46 (Amgen/Ortho Technology License Agreement) at AM-ITC 00508806-09, 8814-15. Importantly, Ortho agreed that Amgen would be Ortho’s sole manufacturer, granting to Amgen the benefits afforded by the economies of scale, as well as input in regulatory issues. 11/15/07 Remedy Hr’g Tr. at 34:20-35:3 (Sharer); RTX 22 (Amgen/Ortho Product License Agreement) at AM-ITC 00508764; 2/15/08 Bernheim Decl. ¶ 20.
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C. ROCHE IS ASKING THE COURT TO TAKE THE PROFITS OF AMGEN, THE PROVEN INNOVATOR, AND AWARD THEM TO ROCHE FOR ITS INFRINGEMENT — ALL IN THE NAME OF THE PUBLIC INTEREST.
Permitting Roche to commercialize peg-EPO in the U.S. before Dr. Lin’s Patents expire
allows Roche to enjoy the benefits of the patents at Amgen’s expense. Roche will not gain share
by significantly expanding the demand for ESAs in the treatment of anemia of chronic renal
failure (the only indication for which peg-EPO is approved); sales gained by Roche will be taken
from Amgen (or Ortho, Amgen’s licensee).212
Roche’s Proposal ignores that what it is asking the Court to do is punish Amgen and
encourage copyists like Roche — a result that is the 180° opposite of the purpose of an
injunction. As Roche’s witness, Mr. Elhauge, testified at trial, for the $500 million in ESRD
savings he says Medicare will receive, Amgen will lose $3 billion, and Roche will gain $2.5
billion.213 Nothing in Roche’s Proposal changes this fundamental dynamic. Any Medicare
savings would be based on losses to Amgen. Such an outcome rewards Roche for infringing
Amgen’s patents, at Amgen’s expense.214 Roche is asking this Court to take Amgen’s rightful
profits and award them to Roche for its infringement — all in the name of the public interest.
That result in no way reflects an appropriate view of the public interest. The hope,
dream, or desire to reduce health care spending while laudable is not an appropriate factor to
consider in weighing the public interest. And even if it were, it cannot possibly outweigh the
public interest in encouraging innovation reflected in our nation’s Constitution and our patent
laws.
IV.
CONCLUSION
212 11/15/07 Remedy Hr’g Tr. at 102:10-103:5 (Bernheim). 213 12/7/07 Remedy Hr’g Tr. at 672:4-673:12 (Elhauge). 214 2/15/08 Bernheim Decl. ¶¶ 18-19.
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Amgen has shown that each of the four factors considered under eBay favor issuance of a
permanent injunction and that Roche’s allegations of unclean hands and patent misuse are
without merit. As such, Roche should be permanently enjoined from commercializing its
infringing peg-EPO product in the United States. Under the facts before the Court, any other
remedy would only encourage infringement rather than deter and would thereby disserve the
principles underlying injunctions.
Respectfully Submitted, AMGEN INC., By its attorneys, _/s/ Michael R. Gottfried _______
Of Counsel: MICHAEL R. GOTTFRIED (BBO#542156) D. DENNIS ALLEGRETTI (BBO#545511) STUART L. WATT PATRICIA R. RICH (BBO#640578) WENDY A. WHITEFORD DUANE MORRIS LLP MONIQUE L. CORDRAY 470 Atlantic Avenue, Suite 500 DARRELL G. DOTSON Boston, MA 02210 KIMBERLIN L. MORLEY Telephone: (857) 488-4200 ERICA S. OLSON Facsimile: (857) 488-4201 AMGEN INC. [email protected] One Amgen Center Drive Thousand Oaks, CA 91320-1789 LLOYD R. DAY, JR. (pro hac vice) (805) 447-5000 DAY CASEBEER MADRID & BATCHELDER LLP 20300 Stevens Creek Boulevard, Suite 400 Cupertino, CA 95014 Telephone: (408) 873-0110 Facsimile: (408) 873-0220
WILLIAM GAEDE III (pro hac vice) McDERMOTT WILL & EMERY 3150 Porter Drive Palo Alto, CA 94304 Telephone: (650) 813-5000 Facsimile: (650) 813-5100 KEVIN M. FLOWERS (pro hac vice) MARSHALL, GERSTEIN & BORUN LLP
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233 South Wacker Drive 6300 Sears Tower Chicago IL 60606 Telephone: (312) 474-6300 Facsimile: (312) 474-0448
February 19, 2008
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CERTIFICATE OF SERVICE
I hereby certify that this document, filed through the ECF system will be sent electronically to the registered participants as identified on the Notice of electronic filing and paper copies will be sent to those indicated as non-registered participants. /s/ Michael R. Gottfried Michael R. Gottfried
901658_4 1
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