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Pernix Ireland Pain DAC v. Alvogen Malta Operations Ltd.

United States District Court, D. Delaware

August 24, 2018

PERNIX IRELAND PAIN DAC and PERNIX THERAPEUTICS, LLC, Plaintiffs,
v.
ALVOGEN MALTA OPERATIONS LTD., Defendant.

          FINDINGS OF FACT AND CONCLUSIONS OF LAW

          WILLIAM C. BRYSON, UNITED STATES CIRCUIT JUDGE

         BACKGROUND

         This is a Hatch-Waxman Act case. The plaintiffs, Pernix Ireland Pain DAC and Pernix Therapeutics, LLC, (collectively, “Pernix”) have sued the defendant, Alvogen Malta Operations Ltd. (“Alvogen”) for patent infringement under 35 U.S.C. § 271(e)(2). Pernix is the owner of U.S. Patent Nos. 9, 265, 760 (“the '760 patent”) and 9, 339, 499 (“the '499 patent”), both of which are entitled “Treating Pain in Patients with Hepatic Impairment.” The patents share an essentially identical specification, referred to here as the common specification. The two Pernix patents have a priority date of July 31, 2012.

         1. The Hatch-Waxman Act is the name commonly used to refer to the Drug Price Competition and Patent Term Restoration Act of 1984, Pub. L. No. 98-417, 98 Stat. 1585 (codified at 21 U.S.C. §§ 355, 360(cc), 35 U.S.C. §§ 156, 271, 282), as amended by the Medicare Prescription Drug Improvement and Modernization Act of 2003, Pub. L. No. 108-173, 117 Stat. 2066. The Hatch-Waxman Act was intended to strike a balance between two competing policy interests: (1) to induce pioneering research and development of new drugs; and (2) to enable competitors to bring low-cost generic copies of those drugs to market rapidly if those drugs are not entitled to patent protection. See Andrx Pharm., Inc. v. Biovail Corp., 276 F.3d 1368, 1371 (Fed. Cir. 2002). To promote those objectives, the Hatch-Waxman Act provides a means for pharmaceutical companies to resolve patent disputes relatively quickly. Ideally, it provides for a prompt determination of whether particular drugs made and sold by brand-name pharmaceutical companies are protected by valid patents. If the patents are held to be infringed and not invalid, the covered drugs cannot be made and sold by generic manufacturers until the patents expire. If the patents are held to be invalid or not infringed, the Act provides a mechanism for prompt approval of the generic versions of the drugs by the U.S. Food and Drug Administration (“FDA”), which regulates the sale of pharmaceutical drugs in this country.

         In order to obtain the necessary FDA approval to market a new drug, a pharmaceutical company must file a New Drug Application (“NDA”). That application is designed to show the FDA, through rigorous testing procedures, that the drug is safe and effective for its proposed indications. After considering the application, and often after extended negotiations with the pharmaceutical company, the FDA may grant the application and authorize the company to market the drug for particular indications. The company is restricted to marketing the drug for those indications, as dictated by FDA regulations that govern both labeling and advertising for all prescription drugs. See 21 C.F.R. §§ 201.1-201.327 (labeling); id. § 202.1 (advertising).

         In an effort to speed up the approval process for generic drugs, the Hatch-Waxman Act provides that a generic drug manufacturer may submit an Abbreviated New Drug Application (“ANDA”) for approval by the FDA. If the generic company intends to market a drug that is equivalent to the first pharmaceutical company's approved drug, the ANDA may rely on the safety and efficacy studies previously submitted as part of the first company's NDA. In order to take advantage of those studies, the ANDA applicant must demonstrate that the proposed generic drug is bioequivalent to the previously approved drug product. See 21 U.S.C. § 355(j)(2)(A); Caraco Pharm. Labs., Ltd. v. Forest Labs., Inc., 527 F.3d 1278, 1282 (Fed. Cir. 2008).

         Under the Hatch-Waxman Act, NDA holders are required to notify the FDA of all patents that “claim[] the drug for which the [NDA] applicant submitted the application . . . and with respect to which a claim of patent infringement could reasonably be asserted.” 21 U.S.C. § 355(b)(1), (c)(2). The FDA lists such patents in a publication entitled “Approved Drug Products with Therapeutic Equivalence Evaluations, ” which is commonly referred to as the “Orange Book.” See Bayer Schering Pharma AG v. Lupin, Ltd., 676 F.3d 1316, 1318 (Fed. Cir. 2012); AstraZeneca LP v. Apotex, Inc., 633 F.3d 1042, 1045 (Fed. Cir. 2010).

         The Hatch-Waxman Act creates what is referred to as an “artificial” type of infringement that allows for the adjudication of the parties' rights in patents that would be infringed if the ANDA were issued and the generic product made, used, or sold. See Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661, 676 (1990); Glaxo Grp. Ltd. v. Apotex, Inc., 376 F.3d 1339, 1351 (Fed. Cir. 2004). In particular, 35 U.S.C. § 271(e)(2)(A) provides that it shall be an act of patent infringement to submit an ANDA for a drug claimed in a patent or the use of which is claimed in a patent if the purpose of the submission of the ANDA is to obtain approval to engage in the commercial manufacture, use, or sale of the drug claimed in the patent, or the use of which is claimed in the patent before the patent's expiration.

         2. Zohydro ER, which the parties sometimes refer to as “HC-ER, ” is an extended-release hydrocodone product that contains no other active ingredients.[1] The formulation for Zohydro ER was set forth in a prior art U.S. patent application to Devane, U.S. Patent Appl. No. 2006/0240105 (JTX37), which was published on October 26, 2006. See Trial Tr. 210:20-211:7, 368:24-369:3. When Zogenix, Inc., the prior owner of Zohydro ER, sought FDA approval to market Zohydro ER, the FDA insisted that Zogenix conduct a “hepatic impairment study” to determine the potential effect of Zohydro ER on patients with hepatic impairment-i.e., compromised liver functionality-and to determine whether special restrictions should be imposed on the use of the drug in such patient populations. Trial Tr. 280:7-19, 359:10-360:21. The Zohydro ER hepatic impairment study produced results that surprised the Zogenix scientists who conducted the study. Contrary to their expectations, they discovered that the concentration of hydrocodone in the bloodstream of subjects with mild and moderate hepatic impairment was not dramatically higher than in patients without hepatic impairment. Trial Tr. 369:7-371:4, 379:16-380:5, 387:8-21, 391:21-393:13, 398:5-399:13, 412:23-413:12, 433:23-435:10, 440:18-25.

         The FDA approved the NDA for Zohydro ER on October 25, 2013, in capsule dosage forms ranging from 10 to 50 milligrams that are administered twice daily. The FDA-approved label for Zohydro ER provided, in the Dosage and Administration section: “Patients with Severe Hepatic Impairment: Initiate dosing with 10 mg every 12 hours and titrate carefully, while monitoring for respiratory depression, sedation, and hypotension. No adjustment in starting dose with ZOHYDRO ER is required in patients with mild or moderate hepatic impairment.” JTX5, at 1. In a subsection entitled Dosage Modification in Patients with Severe Hepatic Impairment, the label advises that “[p]atients with severe hepatic impairment may have higher plasma concentrations of hydrocodone than those with normal function, ” but it adds that “[n]o adjustment in starting dose with ZOHYDRO ER is required in patients with mild or moderate hepatic impairment.” JTX5, at 7. And in the section dedicated to the use of the drug in specific populations, the label repeats that “[n]o adjustment in starting dose with ZOHYDRO ER is required in patients with mild or moderate hepatic impairment. Patients with severe hepatic impairment may have higher plasma concentrations than those with normal hepatic function . . . . Therefore a dosage reduction is recommended for patients with severe hepatic impairment . . . .” JTX5, at 17. In the section on clinical pharmacology, the label reported the results of the hepatic impairment study that was performed in connection with the filing of the NDA. JTX5, at 22.

         Following the approval of Zohydro ER, Alvogen filed an ANDA seeking FDA authorization to market a generic form of that product. Alvogen proposed to market its hydrocodone extended-release capsules in strengths ranging from 10 to 50 milligrams. The proposed label for Alvogen's ANDA product, JTX6, is essentially identical to the label for Zohydro ER.[2]

         3. Hydrocodone is an opioid that is widely prescribed to treat pain. It is marketed in both an extended-release form and an immediate-release form. It is often combined with another ingredient, and was found in several products before the priority date of Pernix's patents, including: Vicoprofen, which is hydrocodone combined with ibuprofen; Lortab and Vicodin, which are hydrocodone combined with acetaminophen; and TussiCaps, which is hydrocodone combined with chlorpheniramine, an antihistamine, and is approved for coughs and upper respiratory symptoms. Vicoprofen, Lortab, and Vicodin were sold in immediate-release form, while TussiCaps was sold as an extended-release product.

         Since the priority date of the Pernix patents, two other extended-release hydrocodone products were developed besides Zohydro ER-Hysingla ER and Vantrela. Neither of those products has an active ingredient other than hydrocodone. In addition, many other opioid products, both immediate-release and extended-release, have been on the market since before the priority date of the Pernix patents, including Percocet and OxyContin, which contain oxycodone; Dilaudid and Exalgo, which contain hydromorphone; Opana and Opana ER, which contain oxymorphone; Nucynta ER, which contains tapentadol; and Kadian and Avinza, which contain morphine.

         For many opioids, including hydrocodone, the bulk of the metabolism of the drug occurs in the liver. For that reason, persons of skill in the art have frequently expressed the view that dosages of opioids need to be adjusted for persons suffering from hepatic impairment in order to avoid a dangerous build-up of the opioid in the patient's bloodstream. Such a build-up could occur if the patient's liver were unable to metabolize the opioid as quickly as would be the case for a patient with normal liver function and the patient continued to administer additional doses of the drug.

         4. Following the hepatic impairment study that was conducted as part of the NDA process, the scientists who worked on the project filed applications for the patents-in-suit. Although the Zohydro ER study was the only clinical study supporting the patent, the inventors did not limit themselves to claiming the Zohydro ER formulation or a method of treatment using the Zohydro ER formulation. Rather, the inventors claimed a method of treating pain in a patient having mild or moderate hepatic impairment in which the patient would be administered “a starting dose of an oral dosage unit having hydrocodone bitartrate as the only active ingredient, wherein the dosage unit comprises an extended release formulation of hydrocodone bitartrate.”[3]

         The '760 patent issued to Pernix on February 23, 2016. Ten days later, Pernix brought this action, alleging that Alvogen's act of filing its ANDA infringed the '760 patent. Pernix sought injunctive and declaratory relief to prevent Alvogen from marketing its proposed product. After the '499 patent issued on May 17, 2016, Pernix filed an amended complaint adding claims of infringement of that patent.

         5. Pernix's patents claim methods of treating pain in patients with mild or moderate hepatic impairment. The methods recited in the asserted claims entail using a formulation comprising hydrocodone in an extended-release form, in which hydrocodone is the only active ingredient and in which the formulation has effects on patients with mild or moderate hepatic impairment similar to its effects on patients without hepatic impairment. The common specification contains an embodiment described in Example 8, which is the formulation Pernix sells under the brand name Zohydro ER.

         At trial, Pernix asserted a total of nine claims from the two patents, claims 1-4, 11, 12, 17, and 19 of the '760 patent, and claim 1 of the '499 patent. In addition to the formulation limitation set forth above, the various claims contain limitations seeking to capture the functional efficacy of the invention, either by reference to the absence of a need to reduce the dosage for patients with mild or moderate hepatic impairment relative to patients without hepatic impairment, or by reference to particular pharmacokinetic parameters that reflect the similarity in the results of administering the claimed formulations to persons with and without hepatic impairment.

         The parties refer to the asserted claims as falling into two groups: the two-step (or “non-adjustment”) claims and the one-step (or “pharmacokinetic-only”) claims. The two-step non-adjustment claims (claims 1-4 and 11 of the '760 patent) include that “the starting dose [for a patient with mild or moderate hepatic impairment] is not adjusted relative to a patient without hepatic impairment.” Those claims contain two steps: a physician prescribes a starting dose that is not adjusted, and a patient self-administers that starting dose. The one-step pharmacokinetic claims (claims 12, 17, and 19 of the '760 patent and claim 1 of the '499 patent) do not contain a “non-adjustment” limitation, but instead provide for a release profile of hydrocodone that either results in certain defined pharmacokinetic values in patients with mild or moderate hepatic impairment, or results in pharmacokinetic values that do not deviate by more than a certain percentage amount from the values that the same dosage unit would produce in a patient without hepatic impairment. The method recited in the one-step claims, as construed, requires only that a patient self-administer an oral dosage unit that meets those pharmacokinetic parameters.[4]

         An example of the two-step claims is claim 1 of the '760 patent, which provides as follows:

A method of treating pain in a patient having mild or moderate hepatic impairment, the method comprising:
Administering to the patient having mild or moderate hepatic impairment a starting dose of an oral dosage unit having hydrocodone bitartrate as the only active ingredient, wherein the dosage unit comprises an extended release formulation of hydrocodone bitartrate, and wherein the starting dose is not adjusted relative to a patient without hepatic impairment.

         An example of the one-step claims is claim 1 of the '499 patent, which provides as follows:

A method of treating pain in a patient having mild or moderate haptic impairment, the method comprising:
administering to the patient having mild or moderate hepatic impairment an oral dosage unit having hydrocodone bitartrate as the only active ingredient, wherein the dosage unit comprises an extended release formulation of hydrocodone bitartrate,
wherein the dosage unit provides a release profile of hydrocodone that:
does not increase average hydrocodone AUC0-inf in subjects suffering from mild hepatic impairment relative to subjects not suffering from renal or hepatic impairment in an amount of more than 14%; and does not increase average hydrocodone AUC0-inf in subjects suffering from moderate hepatic impairment relative to subjects not suffering from renal or hepatic impairment in an amount of more than 30%.

         All nine claims recite a method of treating pain in a patient having mild or moderate hepatic impairment, and all nine recite a patient administering an oral dosage unit of hydrocodone bitartrate comprising an extended-release formulation. Broken out by claim, the functional limitations of each of the asserted claims provide as follows:

• Claim 1 of the '760 patent adds the limitation: “wherein the starting dose is not adjusted relative to a patient without hepatic impairment.”
• Claims 2 and 3 of the '760 patent depend from claim 1 and add the limitation that the dosage unit provides a release profile that does not increase average hydrocodone AUC0-inf by more than certain percentage amounts in subjects suffering from mild or moderate hepatic impairment relative to subjects not suffering from renal or hepatic impairment.[5]
• Claim 4 of the '760 patent depends from claim 1 and adds the limitation that the dosage unit provides a release profile that does not increase average hydrocodone Cmax by more than certain percentage amounts in subjects suffering from mild or moderate hepatic impairment relative to subjects not suffering from renal or hepatic impairment.[6]
• Claim 11 of the '760 patent depends from claims 1 and 9 and adds limitations to claim 1 that the dosage unit provides a release profile of hydrocodone such that the average hydrocodone AUC0-inf per 20 milligrams of hydrocodone bitartrate falls in particular ranges for persons not suffering from renal or hepatic impairment, for persons suffering from mild hepatic impairment, and for persons suffering from moderate hepatic impairment.
• Claim 12 of the '760 patent contains the same limitations as claims 1, 3, and 4, except that it does not require that the “starting dose is not adjusted relative to a patient without hepatic impairment.”
• Claims 17 and 19 of the '760 patent depend from claim 12 and add limitations that the dosage unit provides a release profile for hydrocodone such that the average hydrocodone AUC0-inf per 20 milligrams of hydrocodone bitartrate falls in particular ranges for persons not suffering from renal or hepatic impairment, for persons suffering from mild hepatic impairment, and for persons suffering from moderate hepatic impairment.
• Claim 1 of the '499 patent contains the same limitations that are common to all nine asserted claims and adds the limitations found in claims 2 and 3 of the '760 patent regarding the dosage unit providing a release profile that does not increase average hydrocodone AUC0-inf by more than certain percentage amounts in subjects suffering from mild or moderate hepatic impairment, relative to subjects not suffering from renal or hepatic impairment.

         6. At trial, Pernix sought to show that Alvogen induced infringement of the asserted claims. As to the two-step claims, Pernix's theory was that by marketing its generic product, Alvogen would infringe because (1) patients would administer the drug to themselves when taking the oral dosage prescribed by their physicians; (2) physicians would not adjust the starting dose of the drug when prescribing it to patients with mild or moderate hepatic impairment; (3) physicians and patients would engage in joint direct infringement because the physicians would direct the patients to take the drug and would condition the patients' continued treatment on their compliance with the physicians' directions; and (4) Alvogen would be liable for induced infringement, because it would encourage physicians to direct patients with hepatic impairment to take the same dose that would be administered to patients without hepatic impairment. As to the one-step claims, Pernix's theory was that by marketing its generic product, Alvogen would be liable for induced infringement, because it would induce patients to commit direct infringement by administering the drug to themselves, thereby producing the pharmacokinetic results recited in the claims.

         Alvogen disputed various aspects of Pernix's infringement theory, and raised three defenses and counterclaims at trial. First, it contended that the Devane patent application anticipated all the asserted claims. Second, it contended that the asserted claims were invalid for obviousness based on various references, including Devane; a 2010 published patent application to Jain; and various products that were on the market as of the priority date of the Pernix patents, as well as prior art publications that addressed the issue of treating hepatically impaired patients with opioids. Finally, Alvogen contended that the asserted claims of the two Pernix patents were much broader than the disclosures in the common specification, and thus the claims were invalid for lacking adequate written description support in the specification.

         The following findings of fact and conclusions of law address each of those issues.

         DISCUSSION

         I. Infringement

         Pernix argues that Alvogen is liable for infringement under section 271(e)(2)(A) based on Alvogen's submission of an ANDA to the FDA for a drug the use of which is claimed in the '760 and '499 patents. In the “artificial infringement” environment of the Hatch-Waxman Act, Pernix must show by a preponderance of the evidence that Alvogen would either directly or indirectly infringe the asserted patents if Alvogen's proposed product were marketed. Vanda Pharm. Inc. v. West-Ward Pharm. Int'l Ltd., 887 F.3d 1117, 1130 (Fed. Cir. 2018). At trial, Pernix did not attempt to show that Alvogen would directly infringe any of the asserted claims, all of which require at least one step to be performed by a patient or physician, and the Court granted Alvogen's Rule 52 motion of no direct infringement at the conclusion of the trial. Trial Tr. 809:4-25. Instead, Pernix relies on a theory of indirect infringement.

         In order to establish that Alvogen indirectly infringes the asserted claims, Pernix must first prove that all the steps of the claimed methods would be performed by or be attributable to a single entity. Akamai Techs., Inc. v. Limelight Networks, Inc., 797 F.3d 1020, 1022 (Fed. Cir. 2015) (en banc). For the one-step claims, Pernix's theory is that patients with mild or moderate hepatic impairment would directly infringe the asserted claims by taking Alvogen's product at a dosage level that would produce the pharmacokinetic results set forth in the claims.

         For the two-step claims, in which no single actor performs all the steps of the claimed methods, Pernix must show that joint direct infringement would occur, which requires that “the acts of one are attributable to the other such that a single entity is responsible for the infringement.” Id. To establish joint direct infringement, a plaintiff must show either that the parties will be engaged in a joint enterprise or that one party will direct and control the infringing activity of the other. Id.; see also Eli Lilly & Co. v. Teva Parenteral Meds., Inc., 845 F.3d 1357, 1364 (Fed. Cir. 2017) (Lilly-Teva). Pernix does not rely on the “joint enterprise” theory of liability to prove joint direct infringement. Instead, Pernix's theory is that physicians would direct and control their patients' administration of Alvogen's proposed product, thereby establishing joint direct infringement of the two-step claims.

         For both the one- and two-step claims, Pernix must next show that Alvogen is liable for induced infringement. To do so, Pernix must show that Alvogen would induce a party or parties to directly infringe the asserted claims. Limelight Networks, Inc. v. Akamai Techs., Inc., 134 S.Ct. 2111, 2117 (2014); Vanda, 887 F.3d at 1130. To make that showing, Pernix must establish that Alvogen specifically intends “to encourage another's infringement and not merely that [Alvogen will have] knowledge of the acts alleged to constitute inducement.” Vanda, 887 F.3d at 1129 (quoting DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1306 (Fed. Cir. 2006) (en banc in relevant part)).

         Based on the evidence at trial, as discussed in detail below, the Court finds (in part I.A) that patients with mild or moderate hepatic impairment taking Alvogen's product in accordance with the directions in Alvogen's proposed label would directly infringe the one-step claims: Physicians would prescribe a non-adjusted dose of Alvogen's product for patients with mild or moderate hepatic impairment, and the patients would self-administer the dosages as prescribed and directed by their physicians. The Court finds (in part I.B) that physicians and patients would jointly infringe the two-step claims, because the patients would self-administer the drugs pursuant to the physicians' direction and control. Finally, the Court finds (in part I.C) that Alvogen's label would induce infringement of both the one-step and two-step claims.

         A. Direct Infringement: The Court's Findings

         The Court makes the following findings with regard to the issue of direct infringement:

1. Alvogen's proposed label states that Alvogen's product is a hydrocodone bitartrate extended-release capsule that is indicated for the management of pain; the label specifies that the product contains hydrocodone bitartrate as the only active ingredient. JTX6, at 1, 4, 19; see Trial Tr. 24:10-17, 160:10-12, 160:18-23. It is undisputed that the pharmacokinetic parameters of Alvogen's proposed product exhibit the ranges recited in the asserted claims. JTX6, at 21; see Trial Tr. 34:12-37:14, 160:24-161:5. As such, Alvogen's proposed product satisfies both the pharmacokinetic limitations and the limitation that requires “an oral dosage unit having hydrocodone bitartrate as the only active ingredient, wherein the dosage unit comprises an extended release formulation of hydrocodone bitartrate.”
2. Pernix's infringement expert, Dr. Jeffrey Gudin, testified that patients, including patients having mild or moderate hepatic impairment, would self-administer Alvogen's proposed product to treat their pain. Trial Tr. 14:10-15:1, 16:19-17:9, 24:18-26:22, 82:1-17. Alvogen's expert did not disagree. Trial Tr. 110:6-18, 160:10-17. The Court therefore finds that patients having mild or moderate hepatic impairment would self-administer a starting dose of Alvogen's proposed product, and that those patients would therefore infringe the one-step claims.
3. As for prescribing physicians, Dr. Gudin testified that at least some physicians-upon reading the statement in Alvogen's proposed label that “[n]o adjustment in starting dose with Hydrocodone Bitartrate Extended Release Capsules is required in patients with mild or moderate hepatic impairment, ” JTX6, at 1, 7, 17-would not adjust the starting dose for patients with mild or moderate hepatic impairment relative to a patient without hepatic impairment. Trial Tr. 21:24-23, 26:25-28:1, 31:20-32:8. Alvogen's expert did not dispute that physicians would directly infringe the “starting dose is not adjusted” step when prescribing a starting dose of Alvogen's product that was not adjusted for patients with mild or moderate hepatic impairment. See Trial Tr. 110:6-18.

         Based on Dr. Gudin's testimony, the Court concludes that at least some physicians, upon reviewing Alvogen's proposed label, would prescribe a dose of Alvogen's product to a patient with mild or moderate hepatic impairment when initiating treatment that is not reduced due to that hepatic impairment relative to the dose that the physician would prescribe to a patient without hepatic impairment when initiating treatment. The Court also concludes, as described above, that some hepatically impaired patients would take a non-reduced dose of Alvogen's product, which satisfies those limitations of the two-step claims of the '760 and '499 patents.

         B. Joint Infringement

         1. Legal Standard

         In order to prove direct infringement of the two-step claims, Pernix must show that a physician would prescribe an unadjusted starting dose of Alvogen's proposed product for a patient with mild or moderate hepatic impairment, and that the patient would self-administer that unadjusted dose. In addition, Pernix must show that patient and the physician jointly infringe, as that term is used in patent law. Joint infringement occurs when one entity “directs or controls” the other's performance, or when the actors “form a joint enterprise.” Lilly-Teva, 845 F.3d at 1364 (quoting Akamai, 797 F.3d at 1022). Pernix did not pursue a joint enterprise theory, but instead seeks to prove that physicians would direct and control their patients' administration of Alvogen's proposed hydrocodone product. Direction and control can be shown where an actor “(1) ‘conditions participation in an activity or receipt of a benefit' upon others' performance of one or more steps of a patented method, and (2) ‘establishes the manner or timing of that performance.'” Id. at 1365 (quoting Akamai, 797 F.3d at 1023).

         The parties disagree about the level of conditioning necessary to satisfy the Akamai test. Alvogen argues that “the alleged condition must be categorical to establish joint infringement.” Dkt. No. 243, at 35. Pernix disagrees, arguing that the requirements of joint infringement can be satisfied even if the conditioning is not absolute. Dkt. No. 244, at 35.

         The case law does not support Alvogen's strict categorical conditioning requirement. Alvogen relies on the Federal Circuit's opinions in Akamai, Lilly-Teva, and Travel Sentry, Inc. v. Tropp, 877 F.3d 1370 (Fed. Cir. 2017), but a close examination of those cases shows that they do not erect the rigid standard that Alvogen suggests.

         In Akamai, Limelight was accused of infringing a patent on methods of hosting content and delivering it over the Internet. The evidence showed that Limelight performed several steps of the claimed methods, but that Limelight's customers performed at least one of the steps, in which the customers “tagged” and “served” the content to be hosted and delivered by Limelight's content delivery network. The en banc Federal Circuit held that substantial evidence supported the jury's determination that Limelight directed or controlled its customers' performance of the remaining method steps. The court observed that “if Limelight's customers wish to use Limelight's product, they must tag and serve content.” Akamai, 797 F.3d at 1024. That statement was based on evidence that “Limelight requires all of its customers to sign a standard contract” that “delineates the steps customers must perform if they use the Limelight service.” Id. The Federal Circuit did not recite any evidence that Limelight categorically enforced the contract, but found conditioning based only on the contractual promise of the user.

         Lilly-Teva, which addressed joint infringement of a method of treatment claim in the Hatch-Waxman context, is even more directly applicable here. In Lilly-Teva, the issue of joint infringement was presented because the patient would self-administer folic acid, after which the physician would administer pemetrexed, a drug used to treat certain types of mesothelioma and lung cancer. The opinion quoted expert testimony that “taking folic acid was ‘an absolute requirement' before pemetrexed treatment because ‘it wouldn't be safe to take the drug without the vitamin supplementation. . . . [I]t must be done this way.” 845 F.3d at 1366 (alterations in original). Another expert testified that it was “standard practice” that a patient “must have taken their required folic acid in order to have the pemetrexed administered.” Id. Based on the facts of the Lilly-Teva case, Alvogen argues that categorical conditioning is required in order to find joint infringement. See Dkt. No. 243, at 35.

         Alvogen reads the Lilly-Teva opinion too restrictively. As the Federal Circuit explained in that case, the legal standard requires that a physician “cross the line from merely guiding or instructing patients . . . to conditioning.” 845 F.3d at 1366. After reciting the evidence, the court concluded that “a physician, in his or her discretion, need not provide pemetrexed treatment based on the patient's failure to perform the step of folic acid administration.” Id. (emphasis added). The defendants in that case argued that the proof of joint infringement was insufficient because the record lacked evidence that physicians “‘verify compliance' with their instructions” or “‘threaten' denial of pemetrexed treatment.” Id. The court, however, rejected those arguments. Instead, the court stated that conditioning “does not necessarily require double-checking another's performance or making threats.” Id. The court also rejected the defendants' argument that conditioning requires a legal obligation or unavoidable technological prerequisites to participation, which were the facts at issue in Akamai. Id. at 1366-67. The court explained that the contract in Akamai “was not significant for imposing potential civil liability but for ‘delineat[ing] the steps' that customers would have to perform ‘if [they] wish[ed] to use [the defendant's] product.' And we did not focus on whether a customer's failure to perform certain steps might have made it technologically impossible for other steps to occur.” Id. at 1367 n.5 (alterations in original) (citation omitted) (quoting Akamai, 797 F.3d at 1024).

         Finally, Alvogen relies on Travel Sentry, which involved a claim of joint infringement of a patent directed to an improvement in airline luggage inspection systems. The evidence showed that the accused infringer, Travel Sentry, performed certain steps of the patented method, and that agents of the federal Transportation Security Administration (“TSA”) performed the final two steps. The Federal Circuit held that the evidence was sufficient for a reasonable jury to conclude that the TSA agents' performance of the final two claim steps was attributable to Travel Sentry. The Court explained that “whatever benefits flow to TSA . . . can only be realized if TSA performs the final two claim steps.” 877 F.3d at 1382-83. The court, moreover, reaffirmed the conditioning standard articulated in Lilly-Teva, stating that conditioning does not require the imposition of a “legal obligation” or a “technological prerequisite, ” nor does it require verification of compliance or a threat of denial of treatment. 877 F.3d at 1380 (quoting Lilly-Teva, 845 F.3d at 1366-67).

         Based on the applicable Federal Circuit precedent, the Court holds that double-checking and threat-making are not required to establish that a benefit has been conditioned upon performance of a method step. Direction or control can be shown where an actor crosses the line from merely guiding or instructing to conditioning, even if the conditioning is not categorical in nature.

         2. The Court's Findings

         1. Pernix argues, and Alvogen does not dispute, that a physician would establish the dosage and frequency of a patient's administration of a drug such as Alvogen's proposed opioid product. See Trial Tr. 118:24-120:14. The undisputed evidence shows that (1) Alvogen's label instructs physicians to dose the product on a particular schedule, JTX6, at 4-8; Trial Tr. 52:7-18; (2) physicians would give dosing instructions to their patients that establish the frequency of administration and dosage amounts, Trial Tr. 148:10-149:17; and (3) Alvogen's label directs patients to use the product exactly as prescribed, JTX6, at 25; Trial Tr. 41:5-12. Nothing more is required to show the manner or timing of performance, see Lilly-Teva, 845 F.3d at 1367-68, and the Court therefore finds that physicians would establish the manner or timing of their patients' administration of Alvogen's proposed product.

         2. The dispute between the parties concerns the extent to which physicians would condition treatment on the patient's self-administering Alvogen's proposed product. The Court finds that Pernix has proved by a preponderance of the evidence that physicians would condition a benefit-that is, the prescription of a starting dose or subsequent prescriptions for Alvogen's proposed product-upon their patients' self-administration of the drug in accordance with the physicians' instructions.

         3. Pernix's expert Dr. Gudin is a palliative care physician with extensive experience in treating patients with chronic pain. Trial Tr. 7:19-24, 9:12-24. At trial, he explained that hydrocodone, as a Schedule II drug, is subject to strict prescribing requirements, including a prohibition on automatic refills. Trial Tr. 38:10-40:11; PTX30, at 23. As a result, according to Dr. Gudin, each individual prescription must be written by the clinician and must include specific instructions for use. Trial Tr. 40:1-11. Alvogen's expert, Dr. William Schmidt, agreed that it is important for a physician, when prescribing an opioid, to counsel the patient to follow the physician's instructions. Trial Tr. 150:6-12.

         4. Dr. Gudin explained that the standard of care in pain management practice requires physicians who prescribe opioids to take steps to monitor their patients to ensure they are taking the drugs as directed. He testified, for example, that a doctor can confirm compliance with the patient's family or caregiver and can check the state's prescription drug monitoring database to confirm that the patient is filling the prescriptions as directed. Trial Tr. 51:2-13. In addition, Dr. Gudin explained that it has become the standard of care to do toxicology testing both before the physician writes a patient's first prescription and then at random intervals during treatment. Trial Tr. 51:14-23.

         5. Dr. Gudin also testified about the use of physician-patient agreements, which are signed by both the physician and the patient and which “lay out the roles, rules and responsibilities of patients and physicians when it comes to prescribing the controlled substances.” Trial Tr. 42:2-4. Such physician-patient agreements often require the patients to agree to keep the medication in a secure location, to take the medication exactly as prescribed, and not to alter the dose or frequency of administration. Trial Tr. 42:5-11. Dr. Gudin explained that the physician-patient agreements often state that the patient's continued treatment is conditioned on the patient's following the agreement. Trial Tr. 42:11-15. According to Dr. Gudin, “most, if not all, state medical boards mandate that clinicians use” such agreements, and some states, including New Jersey and Florida, require them. Trial Tr. 41:18-24, 44:16-22, 131:1-132:9; PTX81.

         6. A number of sample agreements were introduced into evidence. All of them condition continued receipt of an opioid on compliance with the physician's administration instructions. For example, Dr. Gudin introduced the agreement that he uses in his medical practice, which includes the statement: “I agree to take this medication as prescribed, and not to change the amount or frequency of the medication without discussing it with the prescribing doctor. Running out early, needing early refills, escalating doses without permission, and losing prescriptions may be signs of misuse of the medication, and may be reasons for the doctor to discontinue prescribing to me.” JTX22, at 1; Trial Tr. 45:10-13, 121:15-19.

         7. Pernix introduced a template for controlled substances therapy for chronic pain treatment developed by the American Academy of Pain Medicine. The template states that “[b]ecause these medications have the potential for abuse or diversion . . ., strict accountability is necessary for both medical safety and legal reasons.” The template requires the patient to “take all medications exactly as prescribed” and states that “failure to adhere to these policies will be considered noncompliance and may result in cessation of opioid prescribing by your physician and possible dismissal from this clinic.” PTX37, at 1-3; see also PTX82, at 1-2.

         8. Pernix also submitted into evidence two template agreements distributed by the National Institute of Health's National Institute on Drug Abuse. The first requires that the patient agree to “take my medication as instructed and not change the way I take it without first talking to the doctor or other member of the treatment team, ” and that the patient acknowledge that “I may lose my right to treatment in this office if I break any part of this agreement.” PTX39, at 2-3. The other requires that the patient agree to “not increase my medicine until I speak with my doctor or nurse, ” and acknowledge that “[i]f I break any of the rules, or if my doctor decides that this medicine is hurting me more than helping me, this medicine may be stopped by my doctor in a safe way.” PTX39, at 4-5.

         9. The Court finds that Dr. Gudin's testimony and the prevalence of physician-patient agreements governing the use of opioids establishes that physicians frequently establish strict conditions for initial prescriptions and continued opioid treatments, and that many physicians would do so with respect to Alvogen's proposed product. See, e.g., Trial Tr. 40:12-16 (Dr. Gudin testifying that the patient's agreement to take the drug as prescribed is “[a]bsolutely” a requirement for the patient to receive treatment), 48:16-49:7 (Dr. Gudin explaining that he has discontinued treatment for non-compliant patients “[t]housands of times”). The evidence thus shows that physicians do not merely “guid[e] or instruct[]” their patients to follow the prescribed dosing regimen for such opioids, but that they condition both the prescription of the starting dose and any continued treatment on the patient's agreement to follow the physician's dosage plan. As the Federal Circuit has explained, a physician need not verify compliance or issue threats to satisfy the “conditioning” requirement, Lilly-Teva, 845 F.3d at 1366, although the evidence at trial shows that physicians would frequently do both when prescribing an opioid such as Alvogen's proposed product.

         10. The Court finds Alvogen's arguments to the contrary to be unpersuasive. First, Alvogen argues that Dr. Gudin's testimony proved only that physicians condition treatment on the patients' promise to abide by the prescribing directions. Dkt. No. 243, at 34. The Court disagrees with that characterization of both the evidence and the applicable legal standard. Lilly- Teva made clear that conditioning “does not necessarily require double-checking another's performance or making threats.” 845 F.3d at 1366. As long as the conduct goes beyond merely “guiding or instructing, ” the conditioning requirement is satisfied. The evidence at trial shows that the governing standard is satisfied here.

         11. Alvogen argues that Pernix's evidence that physicians “may” sometimes discontinue treatment is insufficient to satisfy the “conditions” test for joint infringement. Dkt. No. 243, at 34-37. Alvogen expert Dr. Keith Allen Candiotti testified that patients do not always follow their physicians' dosing instructions precisely. Trial Tr. 118:24-122:9. He explained that “patients often deviate from prescribing instructions for, often for very good reason[s].” Trial Tr. 119:14-17; see also Trial Tr. 120:1-25 (Dr. Candiotti testifying that patients may, for example, underdose, and “[t]here are a lot of reasons and some medical reasons as well why people vary [from] their pattern of medicine administration.”). He emphasized that the physician-patient agreements referred to by Dr. Gudin state that evidence of misuse “may” lead to the termination of their treatment, but do not categorically require it. Trial Tr. 121:23-122:9.

         That argument relies on Alvogen's position regarding the proper legal standard for “conditioning, ” which, as discussed above, is incorrect. Dr. Gudin explained that the agreements include the word “may” because “there are circumstances . . . where patients have a valid excuse . . . for being non-compliant, ” such as when a patient loses his medicine, so there are instances in which a physician may elect to excuse non-compliance. Trial Tr. 47:18-48:15. But providing for such exceptions does not alter the fact that, in the absence of a valid excuse, physicians will typically discontinue treatment if the patient fails to properly self-administer the drug. Trial Tr. 65:5-9 (Dr. Gudin testifying that “we redirect them to be compliant, or we discontinue their therapy.”).

         12. Finally, Alvogen argues that Pernix's “conditions” theory was “uniformly presented as physicians conditioning treatment on the patient's administering the drug ‘as prescribed' or ‘exactly as prescribed.'” Dkt. No. 248, at 15 (quoting Dkt. No. 219, ex. 13 ¶ 59). Alvogen argues that Pernix has improperly raised a “new and previously undisclosed theory that physicians will condition treatment upon the patient's self-administering Alvogen's proposed product in any manner, regardless of whether that administration is compliant with the physician's prescribing instructions.” Dkt. No. 248, at 16. The Court disagrees. Dr. Gudin credibly testified that a physician would condition a prescription for Alvogen's proposed product upon proper administration in accordance with the physician's instructions. See, e.g., Trial Tr. 41:17-42:15. And to the extent that Alvogen argues that the conditioning must be categorical- that is, that a physician must require perfect compliance with the dosing instructions-Alvogen's position has been rejected by the Federal Circuit.

         Based on the findings set forth above, the Court concludes that Pernix has proved by a preponderance of the evidence that physicians would condition receipt of a benefit-the initial or subsequent prescription of Alvogen's proposed product-upon the patient's performance of the self-administration limitation, and that the physician establishes the manner and timing of that administration. The Court therefore concludes that Pernix has proved by a preponderance of the evidence that the use of an unadjusted starting dose of Alvogen's proposed product for persons with mild or moderate hepatic impairment would result in joint infringement by physicians and their patients of the two-step claims of '760 patent.

         B. Inducement

         Having found that patients would directly infringe the one-step claims, and that physicians and patients would jointly infringe the two-step claims, the Court now turns to the question whether Alvogen's label would induce that infringement. The Court finds that it would.

         1. Legal Standard

         Pernix must show “specific intent and action to induce infringement.” Lilly-Teva, 845 F.3d at 1368 (quoting Takeda Pharm. USA, Inc. v. West-Ward Pharm. Corp., 785 F.3d 625, 631 (Fed. Cir. 2015)). In the context of patent infringement litigation involving pharmaceuticals, the Federal Circuit has held that “the sale of a product specifically labeled for use in a patented method constitutes inducement to infringe that patent.” Eli Lilly & Co. v. Actavis Elizabeth LLC, 435 Fed.Appx. 917, 926 (Fed. Cir. 2011).

         In a Hatch-Waxman Act case in which the act of infringement under section 271(e)(2)(A) consists of the filing of an ANDA for a method of treatment protected by a patent, “[t]he pertinent question is whether the proposed label [of the ANDA product] instructs users to perform the patented method.” AstraZeneca, 633 F.3d at 1060. In that setting, the Federal Circuit has explained, “[t]he label must encourage, recommend, or promote infringement.” Takeda, 785 F.3d at 631. Evidence that a proposed label would “inevitably lead some consumers to practice the claimed method” can suffice to support a finding of specific intent to induce infringement. AstraZeneca, 633 F.3d at 1060; Novartis Pharm. Corp. v. Breckenridge Pharm., Inc., 248 F.Supp.3d 578, 585 (D. Del. 2017). Put another way, the question is whether the instructions in the label “teach an infringing use . . . such that we are willing to infer from those instructions an affirmative intent to infringe the patent.” Takeda, 785 F.3d at 631 (emphasis omitted) (quoting Vita-Mix Corp. v. Basic Holding, Inc., 581 F.3d 1317, 1329 n.2 (Fed. Cir. 2009)); Rhodes Pharm. L.P. v. Indivior, Inc., No. 16-cv-1308, 2018 WL 326405, at *7 (D. Del. Jan. 8, 2018).

         2. The Court's Findings: The One-Step Claims

         As discussed above, it is undisputed that Alvogen's draft label directs the use of the product for the treatment of pain and that Alvogen's proposed product satisfies the pharmacokinetic limitations of the one-step claims. The only remaining question bearing on inducement is whether Alvogen's proposed label would encourage a patient with mild or moderate hepatic impairment to use Alvogen's proposed product to inhibit pain. The Court makes the following findings directed to that issue:

         1. The evidence at trial established that a physician, when prescribing an opioid to treat pain in a patient with hepatic impairment, would prefer a drug that does not require a dose adjustment relative to the dose for a normal patient. Dr. Gudin explained that a physician would be cautious in prescribing an opioid for a patient with hepatic impairment, and that a physician would therefore rely on dosing recommendations and pharmacokinetic data included in the product's label. Trial Tr. 12:22-14:9, 24:18-26:22.

         2. Alvogen's draft label contains dosing instructions and clinical data that support the use of the product in patients with mild or moderate hepatic impairment. JTX6, at 1 (summary of treatment of patients with mild, moderate, and severe hepatic impairment); JTX6, at 17 (“Hepatic Impairment” section); JTX6, at 21 (“Pharmacokinetics” section).

         3. Dr. Gudin testified that a physician would look to the pharmacokinetics section of a drug's label to understand “how the product behaves . . . inside the patient's body, ” and that “it's an important section that physicians often reference.” Trial Tr. 26:6-13. Dr. Gudin also explained that physicians generally follow the instructions provided on a drug's label because “it's important to understand where to use the product and how to appropriately use the product.” Trial Tr. 22:12-21. For those reasons, Dr. Gudin concluded that Alvogen's label would encourage a physician to use Alvogen's product in treating patients with mild or moderate hepatic impairment. Trial Tr. 26:14-22.

         4. Alvogen's expert Dr. Schmidt agreed that a physician would be encouraged to prescribe Alvogen's proposed product to patients with mild or moderate hepatic impairment. He testified that “if I were selecting or recommending to a physician who [was] treating a patient with mild or moderate hepatic insufficiency, dysfunction, I would recommend one of the products where you don't need to make dose adjustments.” Trial Tr. 253:10-14. That evidence undercuts the testimony of Alvogen's infringement expert, Dr. Candiotti, who characterized the statements in Alvogen's draft label as merely “data statements” and said that he does not “find it as an endorsement at all or promoting use. It's simply stating data without commentary as it were.” Trial Tr. 123:17-24. The Court does not find Dr. Candiotti's conclusory testimony on that point to be credible. To the contrary, the Court finds that the several references to patients with mild or moderate hepatic impairment in Alvogen's draft label would be understood by a physician as a recommendation that the product can be prescribed to such patients and that Alvogen's product would allow a patient with mild or moderate hepatic impairment to obtain the analgesic benefits of a full dose of hydrocodone without running the risk of overdosing that some opioid formulations might present for hepatically impaired patients.

         5. Alvogen's label also instructs patients, including patients who suffer from mild or moderate hepatic impairment, to administer Alvogen's product for the treatment of pain, and to do so as prescribed by their physicians. Alvogen's draft label includes a Medication Guide, directed at patients, that describes using Alvogen's product to treat pain and instructs patients to take the product “exactly as prescribed by your healthcare provider, ” which includes taking the starting dose as prescribed. JTX6, at 27.

         6. Based on the foregoing findings, the Court finds that Alvogen's draft label would induce physicians to prescribe Alvogen's product to patients with mild or moderate hepatic impairment and would induce those patients to self-administer Alvogen's proposed product as directed. The Court therefore finds that Alvogen induces infringement of the one-step claims.

         3. The Court's Findings: The Two-Step Claims

         The two-step claims contain the additional limitation that “the starting dose is not adjusted relative to a patient without hepatic impairment.” The Court makes the following findings directed to those claims:

         1. Alvogen's draft label states, three times, that “No adjustment in starting dose . . . is required in patients with mild or moderate hepatic impairment.” JTX6, at 1, 7, 17. It also provides pharmacokinetic data as to the effect of the drug on patients with hepatic impairment. JTX6, at 21. Dr. Gudin explained that the pharmacokinetic information “gives the detailed information of the performance of this drug in patients with mild to moderate hepatic impairment, ” Trial Tr. 25:22-24, and Dr. Candiotti admitted that the pharmacokinetic data is “useful information that a physician would consider when prescribing medication, ” Trial Tr. 145:8-9.

         2. The evidence at trial showed that dosing instructions in labels can be crucial information to a prescribing physician. Dr. Gudin testified that “[o]ne of the challenges we face as clinicians is finding the right dose of the medicine, of an effective medicine as quickly as possible.” Trial Tr. 725:1-3. Dr. Gudin explained that both overdosing and underdosing can be a problem, Trial Tr. 724:19-725:22, and that particularly in special populations such as patients with hepatic impairment, “[t]he dosage selection is as important as anything else, ” Trial Tr. 747:16-21. A dosing instruction that suggests that a starting dose adjustment is “not required” would therefore be significant to the physician. Trial Tr. 798:24-799:9. Similarly, Dr. Schmidt testified that “if you don't have to make dose adjustments, it makes life easier for a physician, ” Trial Tr. 236:23-237:5, and that he would recommend that a physician treating a patient with hepatic impairment use an opioid product for which a dose adjustment is not required, Trial Tr. 253:10-14. Dr. Candiotti's statement that the information in Alvogen's draft label is useful information but does not constitute an endorsement or promotion of unadjusted doses for patients with hepatic impairment, Trial Tr. 123:17-24, is unpersuasive in light of the other evidence at trial, including the proposed label itself and the testimony of Drs. Gudin and Schmidt.

         3. In response to Alvogen's suggestion that the language “is not required” in Alvogen's draft label does not “encourage, recommend, or promote infringement, ” see Dkt. No. 243, at 39- 40, Dr. Gudin explained that a categorical instruction on a product label-e.g., “do not adjust the starting dose”-would be ill-advised because a physician should retain some discretion to modify the dose in his or her judgment: “[I]f it says do not adjust the starting dose, clinicians would not adjust the starting dose. And there are many scenarios in this patient population where you want to adjust the starting dose.” Trial Tr. 27:20-24. The Federal Circuit has made clear that all that is required is that “the product labeling . . . would inevitably lead some physicians to infringe.” Lilly-Teva, 845 F.3d at 1369 (emphasis added). Alvogen's argument is unavailing, as it demands that all physicians would never adjust the dose to find inducement, a standard that is too restrictive.

         Based on the findings set forth above, viewed in light of the governing case law, the Court concludes that the language in Alvogen's draft label is sufficient to establish inducement. In AstraZeneca LP v. Apotex, Inc., the proposed label “implicitly instructed users to administer the generic drug once daily, ” by including statements such as “[i]n all patients, it is desirable to downward-titrate to the lowest effective dose once asthma stability is achieved, ” and “[o]nce the desired clinical effect is achieved, consideration should be given to tapering to the lowest effective dose.” 633 F.3d at 1057 (alterations in original). Similarly here, the trial testimony from Dr. Gudin and Dr. Schmidt shows that a physician would be encouraged not to adjust a starting dose for a patient with mild or moderate hepatic impairment unless instructed otherwise, and an instruction that “no adjustment in starting dose . . . is required” would promote the infringing use. This is not a case in which the label provides only “‘vague' instructions that require one to ‘look outside the label to understand the alleged implicit encouragement, ” which, without more, would not be sufficient to induce infringement.” Lilly-Teva, 845 F.3d at 1369 (quoting Takeda, 785 F.3d at 632, 634).

         Alvogen relies heavily on two District of New Jersey cases in which inducement was not found. In Acorda Therapeutics Inc. v. Apotex Inc., No. 07-4937, 2011 WL 4074116 (D.N.J. Sept. 6, 2011), aff'd 476 Fed.Appx. 746 (Fed. Cir. 2012), an asserted method patent concerned the administration of a particular drug with food. The proposed label directed physicians to “the pharmacokinetics section of the label for information on the differences between the fed and fasted states with capsules and tablets, ” and stated that physicians should be “thoroughly familiar with the complex effects of food” on the drug. Id. at *17. However, the court explained that none of the label's statements “direct any action on the part of any physician, but merely call attention to the pharmacokinetics section.” Id. In addition, the label did not state “a preference of one over the other or a direction to use the capsule form in the fed state.” Id. For that reason, the court found that the label did not induce infringement. Similarly, in Shire LLC v. Amneal Pharm., LLC, No. 11-3781, 2014 WL 2861430 (D.N.J. June 23, 2014), some of the asserted claims recited a method of treatment that comprised administering a drug to patients “with intake of food by said subject.” Id. at *4. The proposed label stated that the ANDA product may be taken “with or without food.” The district court concluded that such a neutral formulation “cannot be reasonably understood to be an instruction to engage in an infringing use” because “it is indifferent to which option is selected.” Id. at *5.

         Unlike the labels at issue in Acorda and Shire, Alvogen's label goes beyond merely providing pharmacokinetic data or neutral information. Rather, the label provides both data and instructions on how to prescribe a starting dose in patients with mild or moderate hepatic impairment. Based on the evidence at trial, the Court finds that the contents of that label would encourage a physician to prescribe to patients with mild or moderate hepatic impairment a starting dose of Alvogen's proposed product that is not adjusted relative to a starting dose prescribed to a patient without hepatic impairment.

         Accordingly, the Court finds that Pernix has proved by a preponderance of the evidence that Alvogen's draft label would induce physicians to directly infringe the non-adjustment limitation of the two-step claims of the '760 patent.

         II. Anticipation

         To anticipate a patent claim, a single prior art reference must contain all the limitations of the asserted claim, either explicitly or inherently. See In re Omeprazole Patent Litig., 483 F.3d 1364, 1378 (Fed. Cir. 2007). In order to establish inherent anticipation, any missing limitations must necessarily be present in the prior art reference, not merely probably or possibly present. See Trintec Indus., Inc. v. Top-U.S.A. Corp., 295 F.3d 1292, 1295 (Fed. Cir. 2002); Cont'l Can Co. v. Monsanto Co., 948 F.2d 1264, 1268-69 (Fed. Cir. 1991). If the prior art reference “necessarily functions in accordance with, or includes, the claimed limitations, it anticipates.” Atlas Powder Co. v. Ireco, Inc., 190 F.3d 1342, 1347 (Fed. Cir. 1999) (quoting In re King, 801 F.2d 1324, 1326 (Fed. Cir. 1986)). In general, “the discovery of a previously unappreciated property of a prior art composition, or of a scientific explanation for the prior art's functioning, does not render the old composition patentably new to the discoverer.” Id. Anticipation is a ...


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