UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK

SANOFI-AVENTIS,SANOFI-SYNTHELABO INC., ANDBRISTOL-MYERS SQUIBB SANOFI PHARMACEUTICALSHOLDING PARTNERSHIP,

Plaintiffs,

v.

APOTEX INC. AND APOTEX CORP.,

Defendants.

02-CV-2255 (SHS)

MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFFS'MOTION FOR A PRELIMINARY INJUNCTION

Evan R. Chester (EC 1692)Richard J. Stark (RS 3416)David Greenwald (DG 7633)CRAVATH, SWAINE & MOORE LLPWorldwide Plaza825 Eighth AvenueNew York, NY 10019Telephone: (212) 474-1000Facsimile: (212) 474-3700

Robert L. Baechtold (RB 6866)John D. Murnane (JM 8200)William E. Solander (WS 2073)FITZPATRICK, CELLA, HARPER &

SCINTO30 Rockefeller PlazaNew York, NY 10112-3801Telephone: (212) 218-2100Facsimile: (212) 218-2200

Attorneys for Plaintiffs

August 14, 2006

Table of Contents

Table of Authorities ii

Preliminary Statement 1

Background 3

Argument 5

I. THE COURT SHOULD ISSUE A PRELIMINARY INJUNCTION 5

A. Plaintiffs Are Likely to Prevail at Trial 6

1. The Canadian Plavix Decision 8

2. Recent U.S. Authority on Enantiomer Drug Patents 14

B. Plaintiffs Are Suffering Profound Irreparable Harm from Apotex'sLaunch, Which Is Increasing With the Passage of Time 19

1. Irreversible Price Erosion Is Occurring and Worsening With Time 20

2. Irreparable Harm Will Result From the Suspension ofContemplated Clinical Research 22

3. A Launch Enjoined Only After Trial Will Irreparably ImpairPlaintiffs' Goodwill and May Lead to Adverse Capital MarketEffects and Layoffs 23

4. The Settlement's Damages Limitation Does Not UndercutPlaintiffs' Showing of Irreparable Injury 24

C. The Public Interest Favors the Grant of Preliminary Relief 24

D. The Balance of Hardships Tips Decidedly in Plaintiffs' Favor 26

n. A PRELIMINARY INJUNCTION SHOULD COMPEL RECALL OF PRODUCTALREADY SOLD 28

Conclusion 31

Table of Authorities

Cases

Abbott Labs. v. Andrx Pharms., Inc.,452 F.3d 1331 (Fed. Cir. 2006) 9

Additive Controls & Measurement Sys., Inc. v. Flowdata, Inc.,96 F.3d 1390 (Fed. Cir. 1996) 30

Am. Hoist & Derrick Co. v. Sowa & Sons, Inc.,725 F.2d 1350 (Fed. Cir. 1984) 8

Atlas Powder Co. v. Ireco Clients.,773 F.2d 1230 (Fed. Cir. 1985) 19

Cullman Ventures, Inc. v. Columbian Art Works, Inc.,No. 89 Civ. 312 (KC), 1989 U.S. Dist. LEXIS 9432 (S.D.N.Y. July 28,1989) 29

Cybermedia, Inc. v. Symantec Corp.,19 F. Supp. 2d 1070 (N.D. Cal. 1998) 29

Datascope Corp. v. Kontron Inc.,786 F.2d 398 (Fed. Cir. 1986) 25

Forest Labs., Inc. v. Ivax Pharms., Inc.,No. Civ.A. 03-891-JJF, 2006 WL1982234 (D. Del. July 13, 2006) 14,15,16,17

Gund, Inc. v. Golden Bear Co.,92 Civ. 8555 (LJF), 1992 U.S. Dist. LEXIS 18712 (S.D.N.Y. Dec. 10,1992) 29

Herrlein v. Kanakis,526 F.2d 252 (7th Cir. 1975) 30

Hybritech Inc. v. Abbott Labs.,849 F.2d 1446 (Fed. Cir. 1988) passim

In re Jezl,396 F.2d 1009 (CC.P.A. 1968) 6

In re May,574 F.2d 1082 (CC.P.A. 1978) 2,14

Int'l Rectifier Corp. v. Samsung Elecs. Co.,361 F.3d 1355 (Fed. Cir. 2004) 30

Louis Vuitton Malletier v. Dooney & Bourke, Inc.,454 F. 3d 108 (2d Cir. 2006) 28

ii

Table of Authorities(continued)

New England Braiding Co. v. A.W. Chesterton Co.,970 F.2d878 (Fed. Cir. 1992) 8

Oney v. Ratliff,182 F.3d 893 (Fed. Cir. 1999) 8

OrtJw-McNeil Pharm., Inc. v. Mylan Labs., Inc.,348 F. Supp. 2d 713 (N.D. W. Va. 2004), aff d per curium, 161 Fed. App'x 944(Fed. Cir. 2005) 17,18

Perfect Fit Indus, v. Acme Quilting Co.,646 F.2d 800 (2d Cir. 1981) 28, 29

Pfizer Inc. v. Ranbaxy Labs. Ltd.,405 F. Supp. 2d 495 (D. Del. 2005), aff d in part, rev'd in part, No. 06-1179,2006WL 2137244 (Fed. Cir. Aug. 2, 2006) 11,18,19

Pfizer, Inc. v. Teva Pharms. USA, Inc.,429 F.3d 1364 (Fed. Cir. 2005) 2,20

Polymer Techs, v. Bridwell,103 F.3d 970 (Fed. Cir. 1996) 5

PPG Indus., Inc. v. Guardian Indus. Corp.,75 F.3d 1558 (Fed. Cir. 1996) 26

Purdue Pharma L.P. v. Boehringer Ingelheim GmbH,98 F. Supp. 2d 362 (S.D.N.Y. 2000), affd, 237 F.3d 1359 (Fed. Cir. 2001) passim

Rohm & Haas Co. v. Cumberland Chem. Corp.,No. H-82-1241,1983 U.S. Dist. LEXIS 19879 (S.D. Tex. Jan. 21,1983) 28

Rosemount, Inc. v. Beckman Instruments, Inc.,727 F.2d 1540 (Fed. Cir. 1984) 8

Sanofi-Synthelabo Canada Inc. v. Apotex Inc.,[2005] F.C 390 8

Smith Int'l, Inc. v. Hughes Tool Co.,718 F.2d 1573 (Fed. Cir. 1983) 20, 24

Sunward Ekes., Inc. v. McDonald,362 F.3d 17 (2d Cir. 2004) 28

in

Table of Authorities(continued)

The Tisket-A-Tastet Group, Inc. v. H.S. Craft Mfg.,Cause No. IP 98-0289-C D/F, 1999 U.S. Dist. LEXIS 21090 (S.D. Ind. Dec. 1,1999) 29

United States v. Hall,472 F.2d 261 (5th Or. 1972) 30

Vuitton el Fils S. A. v. Carousel Handbags,592 F.2d 126 (2d Or. 1979) 29, 30

Statutes and Rules

21U.S.C §355 27

35 U.S.C. § 103 6,19

35U.S.C. §112 18

35 U.S.C § 282 6,8

Fed. R. Civ. P. 65(c) 26

Fed. R. Civ. P. 65(d) 30

Other Authorities

Dep't of Health & Human Servs., Naf 1 Insts. of Health, A Plan to EnsureTaxpayers Interests Are Protected (July 2001)http://www.nih.gov/news/070101wyden.htm 25

Joseph A. DiMasi et al, The Price of Innovation: New Estimates of Drug DevelopmentCosts, 22 J. Health Econ. 151 (2003) 25

IV

Preliminary Statement

Plaintiffs, Sanofi-Aventis, Sanofi-Synthelabo Inc. (collectively, "Sanofi"), and

Bristol-Myers Squibb Sanofi Pharmaceuticals Holding Partnership (collectively with Sanofi,

"Plaintiffs") submit this memorandum of law in support of their Motion for a Preliminary

Injunction. Plaintiffs respectfully request that Apotex be enjoined pending the outcome of a

trial that is likely to uphold a patent that Apotex is infringing on a scale not previously

witnessed within the pharmaceutical industry.

This case concerns the patent on the world's second largest-selling prescription

drug, Plavix. One week ago, Apotex began shipping a generic version of that drug to

wholesalers throughout the United States. In doing so, it further infringed the patent claiming

Plavix (the "'265 Patent") and initiated the infliction of massive, ultimately irreparable harm to

Plaintiffs' lawful patent rights. Apotex's launch represents, by far, the largest "at-risk,"

infringing launch of all time. Through it, Apotex is attempting to lay waste to Plaintiffs' lawful

rights as quickly as manufacturing capacity and trucking schedules will allow.

Apotex admits that its product infringes the '265 Patent. Its only excuse for this

unlawful course of conduct is its contention that the '265 Patent is invalid or unenforceable. Yet

now, even before trial, it is clear that that contention will not succeed. The principal prior art

reference on which Apotex relies was thoroughly considered by the U.S. patent office before

issuance of the patent. And the Canadian counterpart to the '265 Patent — i.e., the same patent,

virtually word for word — has already been the subject of a legal proceeding between Apotex

and Plaintiffs in Canada, and in that proceeding, following extensive evidentiary submissions

and arguments by the parties, the Federal Court of Canada upheld the validity of the Plavix

patent based on challenges by Apotex that paralleled closely those Apotex makes here.

Beyond that, there is also a virtually unbroken line of U.S. caselaw — including

three decisions within the past year concerning patents on other major drugs — that uphold the

validity of patents which, like the '265 Patent, claim single "enantiomers" of previously

patented "racemic" compounds. As these and earlier cases (e.g., In re May, 574 F.2d 1082,1090

(C.C.P.A. 1978)) demonstrate, the '265 Patent, which claims such an "enantiomeric" compound

in its uniquely favorable bisulfate salt formulation, is a valid patent. Its validity is evident, as

the Canadian court held, notwithstanding the existence of an earlier Sanofi patent — cited to

and considered by the Patent Office when the '265 Patent issued — on the more easily

synthesized, but more toxic, racemic compound. Clopidogrel bisulfate represented an

unquestionably inventive advance over all other compounds in the prior art.

Because the likelihood of success is strong, irreparable harm is presumed. See,

e.g., Pfizer, Inc. v. Teva Pharms. USA, Inc., 429 F.3d 1364,1381 (Fed. Or. 2005) ("We have

consistently held that a district court should presume that a patent owner will be irreparably

harmed when, as here, a patent owner establishes a strong showing of likely infringement of a

valid and enforceable patent."). But even if the presumption did not apply, the harm to

Plaintiffs' lawful intellectual property rights from Apotex's infringing launch is enormous and

irreparable. Plavix is the single largest contributor to the profits of Sanofi and Bristol-Myers

Squibb Company ("BMS"). The economic and other consequences from Apotex's launch, now

that it is underway, are impossible to reverse fully, but the entry of a preliminary injunction

would surely lessen the injury — the sooner, the better. (It would also restore this case to a

more "even litigation keel," an outcome the Court encouraged during a recent teleconference.

(August 4, 2006 Transcript, at 15.)) Industry and analyst sources are reporting mat there are

many months' worth of supply of generic product already in the distribution channel, and the

volume is growing every day. Unless Apotex is enjoined from selling its product and directed

to recall the product it has already sold, the irreparable harm that Plaintiffs have already

suffered will grow before there can be a final decision in this matter. That will profoundly

undermine the Court's ability to effect meaningful relief if the Court then decides, as Plaintiffs

expect, that permanent protection of Plaintiffs' rights under the '265 Patent is warranted.

In contrast to the harm to Plaintiffs if no preliminary injunction is entered, the

harm to Apotex from the entry of an injunction would not be great, and all of it, in any event,

would be of Apotex's own making. Plaintiffs are prepared to post a bond that will compensate

Apotex for the losses it would suffer should Apotex ultimately prevail. The disparity between

the hardship to Apotex from a provisional injunction of its launch, and the hardship to Plaintiffs

from the failure to enjoin it, is vast. This profound imbalance of hardships weighs heavily in

favor of an order restoring the pre-launch status quo.

Background

This case concerns the patent to the compound clopidogrel bisulfate, which is

marketed by Plaintiffs in the United States under the name "Plavix." Plavix is approved for the

prevention, among other things, of second heart attacks and strokes. It is also widely prescribed

by physicians following cardiovascular stenting procedures. Plavix inhibits the aggregation of

blood platelets, which can cause clots in arteries. It thus plays a critical role in the medical

profession's efforts to address the leading cause of death in the United States and throughout

the world.

In 2002, Plaintiffs filed this action for patent infringement to enjoin Apotex from

manufacturing and selling clopidogrel bisulfate. (A complete exposition of the relevant

underlying facts, the contentions of the parties, and the arguments in support of Plaintiffs'

positions is set forth in Plaintiffs' July 15, 2005 Trial Memorandum, which is incorporated here

by reference.) This action, as well as a similar action filed against Dr. Reddy's Laboratories and

consolidated with this action for pre-trial purposes, is ready for trial.

On August 8,2006, Apotex began to ship what are believed to be vast quantities

of its infringing product to pharmaceutical distributors throughout the United States. (See

August 13, 2006 Declaration of Hugh O'Neill ("O'Neill Decl.") 1 21.) The launch came one

week after Apotex decided to give notice pursuant to the terms of a May 25, 2006 settlement

that it was exercising its option to terminate that agreement because state and federal regulators

had not approved the settlement by July 31-1 The "at-risk" launch, believed to be the largest in

the history of the pharmaceutical industry (O'Neill Decl. f 21), is profoundly affecting the

pricing and sales of a well over $3 billion a year product that is not due to go off patent until

late 2011, at the earliest. It is also wreaking correspondingly large and irreparable injury upon

Plaintiffs.

That irreparable harm is now taking several forms and is worsening greatly with

each passing day. Fundamentally, and most obviously, the massive, at-risk launch of generic

clopidogrel bisulfate has put enormous pricing pressure upon Plavix. It is foreseeable that the

net effective price of Plavix (the consideration Plaintiffs receive from sales of Plavix after all

rebates and discounts are taken into account) will not just fall, but "erode" — i.e., fall to levels

from which it will be very difficult, if not impossible, as a practical matter, for the original,

lawful price to be restored after Plaintiffs' patent rights are finally adjudicated in their favor.

The risk of such "price erosion" is particularly acute here because it appears that Apotex has not

only launched at-risk, but is pumping disproportionately large quantities of generic product

1 For purposes of this motion, Plaintiffs are not challenging the application or enforceability ofany term of this settlement, including its provisions concerning notice of intention to seekprovisional relief or limiting damages, but reserve their right to challenge any or all of these at alater time.

into the commercial pipeline. (O'Neill Decl. | 21.) Thus, even if Apotex is enjoined after trial,

the excess, "overhang" quantities still in the inventory of distributors will continue to drag

down the price of Plavix for a very long time, further increasing the likelihood that its pre-

launch pricing structure will never be restored. Indeed, the most effective means to prevent this

irreparable form of harm is for this Court not only to order Apotex to stop selling its product

pending the outcome of trial, but to recall the product it has already sold and enjoin further

downstream sales. (See Section II.)

There are other forms of irreparable harm that may be averted only through the

entry of a preliminary injunction: the suspension of ongoing clinical trials designed to discover

new indications for Plavix, the abandonment of future clinical research efforts, the tarnishment

of Plaintiffs' goodwill in the marketplace, and the potential layoffs of skilled personnel.

Although some irreparable injury has already been incurred, a preliminary injunction, at least

one entered promptly, can nonetheless go a long way to preserving the value of the '265 Patent

pending a final judgment.

Argument

I. THE COURT SHOULD ISSUE A PRELIMINARY INJUNCTION.

Because an application for a preliminary injunction of patent infringement

"involves substantive matters unique to patent law," Federal Circuit law governs the standard

for its grant. Hybritech Inc. v. Abbott Labs., 849 F.2d 1446,1451 n.12 (Fed. Cir. 1988). Under

Federal Circuit law, a preliminary injunction is awarded, "in light of four factors: '(1) a

reasonable likelihood of success on the merits; (2) irreparable harm if the injunction were not

granted; (3) the balance of the hardships and (4) the impact of the injunction on the public

interest.'" Purdue Pharma l.P. v. Boehringer IngelMm GmbH, 237 F.3d 1359,1363 (Fed. Cir. 2001)

(quoting Polymer Techs, v. Bridwell, 103 F.3d 970,973 (Fed. Cir. 1996)), affg 98 F. Supp. 2d 362,

371 (S.D.N.Y. 2000). All those factors weigh strongly in favor of the grant of preliminary relief

here.

A. Plaintiffs Are Likely to Prevail at Trial.

Plaintiffs are very likely to prevail at trial. The '265 Patent is presumed to be

valid, see 35 U.S.C. § 282, and Apotex has admitted that its product infringes this patent. (May

27, 2005 Joint Pretrial Order, at 4.) The only issues that remain are whether the '265 Patent is

(i) invalid because it is anticipated by the '596 Patent; (ii) invalid because it is obvious in light of

prior art, including that patent;2 and (iii) unenforceable in light of allegedly misleading

statements in and/or omissions from the '265 Patent application. On all these issues, Apotex

bears the burden of proof, by clear and convincing evidence. Plaintiffs' July 15, 2005 Trial

Memorandum demonstrates why Apotex is highly unlikely to be able to carry its burden on any

of these defenses.

The relevant case law, discussed in Plaintiffs' Trial Memorandum and as applied

to the facts of this case, as well as cases decided since Plaintiffs submitted their Trial

Memorandum (discussed below), enable Plaintiffs to make an unusually strong showing of

"likelihood of success." See Purdue Pharma, 98 F. Supp. 2d at 371. That case law demonstrates,

among other things, that enantiomeric compounds are individually patentable, even when their

corresponding racemates are disclosed by the prior art. (See Plaintiffs' Trial Memorandum, at

46-48,57-61.) The actual efforts of Sanofi's scientists and the opinions of Plaintiffs' experts

2 Apotex also alleges that the '265 Patent is invalid under the judicial doctrine of obviousness-type double-patenting, but for practical purposes of analysis here, that defense is identical toApotex's statutory obviousness defense under 35 U.S.C. § 103. See In re Jezl, 396 F.2d 1009,1013(C.C.P.A. 1968) ("That rejection — one of 'double patenting of the obvious type' — presents thesame basic question as the § 103 [obviousness] rejection....").

(summarized in an addendum to this brief), amply support the application of that case law

here, as well as on the other contested issues in this case.

Apotex's experts' opinions to the contrary share the flaw that they are nearly all

based on impermissibly hindsight-driven conjecture about what a person of ordinary skill in the

art would have done and they ignore what Sanofi's scientists actually did. For example,

Apotex's experts contend that medicinal chemists would have been motivated to investigate the

properties of enantiomers of a racemic compound, such as PCR 4099 (the previously-patented

racemate on which Apotex principally relies for its invalidity attack). But Sanofi spent years

and millions of dollars developing the racemate before even attempting to separate the

enantiomers, and it focused its development efforts on the racemate for sound scientific reasons.

(Plaintiffs' Trial Memorandum, at 26; Expert Report of Stephen Davies ("Davies Rep."),

attached as Exhibit 1 to the August 11,2006 Declaration of Stephen Davies f f 78-79.) Apotex's

experts opine that the differences between PCR 4099 and clopidogrel were predictable in light

of prior art. But nothing in the prior art could have predicted the remarkably clean split of

activity and neurotoxicity between the enantiomers of PCR 4099; the phenomenon that all of the

activity of the racemate and none of its neurotoxicity is present in clopidogrel. (Davies Rep.

11 206-211; Expert Report of Shayne Gad, attached as Exhibit 1 to the August 9,2006

Declaration of Shayne Gad H 118-119; Expert Report of Stephen Hanson, attached as Exhibit 1

to the August 8,2006 Declaration of Stephen Hanson 1 58.) That Sanofi - faced with

substantial business pressure to bring a new anti-platelet drug to the market — spent years of

development time and invested millions of dollars in developing PCR 4099, only later to

abandon it and start over with clopidogrel, confirms the absence from the prior art of anything

that could have predicted clopidogrel's properties. (Plaintiffs' Trial Memorandum, at 30.) As

the Federal Circuit has observed, inventions are made by real people who lack the benefit of

hindsight, and it has accordingly admonished that validity determinations should be made in

that context. Rosemount, Inc. v. Beckman Instruments, Inc., 727 F.2d 1540,1544 (Fed. Cir. 1984).

1. The Canadian Plavix Decision

With respect to Apotex's invalidity defenses,3 the context here is quite different

from that of conventional applications for preliminary relief. Here, those defenses have already

been fully litigated by Apotex with respect to the same patent, and Sanofi prevailed. See Sanofi-

Synthelabo Canada Inc. v. Apotex Inc., [2005] F.C. 390 (the "Canadian Case"), attached as Exhibit 3

to the July 15, 2005 Declaration of Angle K. Young. On that basis, Plaintiffs have asked this

Court to grant Plaintiffs' pending Motion to Preclude Litigation of Facts Found by the Federal

Court of Canada. But even before this Court resolves that pending motion — and Plaintiffs

emphasize that there is no need for the Court to rule upon that motion now — the Court's

evaluation of the merits on this application for preliminary relief should give substantial weight

to the decision of the Federal Court of Canada upholding the validity of the same patent at

issue, in the face of a challenge based on the same prior patent of Sanofi. As the Federal Circuit

noted in Hybritech, Inc. v. Abbott Laboratories, 849 F.2d 1446 (Fed. Cir. 1988), "[i]t is well-

established that in [the] context of a motion for preliminary injunction against further

infringement of a patent, the patent holder may use a prior adjudication of patent validity

involving a different defendant as evidence supporting its burden of proving likelihood of

3 The '265 Patent is accorded a presumption of validity and enforceability pursuant to 35U.S.C. § 282. Purdue Pharma, 98 F. Supp. 2d at 371 (citing New England Braiding Co. v. A.W.Chesterton Co., 970 F.2d 878,882 (Fed. Cir. 1992)). At trial, Apotex will bear the heavy burden ofproving the invalidity of the '265 Patent by "clear and convincing evidence." Oney v. Ratliff, 182F.3d 893,895 (Fed. Cir. 1999). See also Am. Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F.2d 1350,1358-59 (Fed. Cir. 1984). Only if Apotex produces evidence raising a "substantial questionconcerning validity, enforceability, or infringement," must Plaintiffs produce countervailingevidence demonstrating "that these defenses lackf ] substantial merit," Purdue Pharma, 98 F.Supp. 2d at 371 (internal quotation marks omitted; alteration in original), i.e., that defendantsare unlikely to satisfy their clear and convincing burden.

success on the merits." Id. at 1452 (emphasis omitted). A fortiori, it is appropriate to give

"considerable weight", id., to a prior adjudication involving the same parties. The Canadian

Case involved the same defendant, interposing the same defenses (including anticipation and

obviousness), and presenting much of the same evidence. Surely, that is probative of whether

plaintiffs have "some likelihood of success on the merits of the underlying litigation." Abbott

Labs. v. Andrx Pfarms., Inc., 452 F.3d 1331,1334 (Fed. Cir. 2006). And the probative force of the

Canadian Case in assessing the likelihood of success here is the same, regardless of whether this

Court ultimately decides that the Canadian Case's findings are not only persuasive but

preclusive.

The relevant facts concerning the Canadian Case are these: In 2003, Apotex filed

a Notice of Allegation ("NOA"), analogous to a Paragraph IV certification under the Hatch-

Waxman Act, as part of its attempt to market clopidogrel bisulfate in Canada before the

expiration of Canadian Patent No. 1,336,777 (the "'777 Patent"). The '777 Patent is the Canadian

equivalent to the '265 Patent. It is all but a verbatim copy. The written description of the

invention is the same in each patent. In both patents, Claim 3 covers clopidogrel bisulf ate, and

the '777 Patent contains all the claims that are present in the '265 Patent. In its NOA, Apotex

stated that it had filed an abbreviated new drug submission ("ANDS"), which is analogous to

an abbreviated new drug application ("ANDA") in the United States. Accordingly, Sanofi

sought an order prohibiting the Minister of Health from allowing Apotex to market its generic

version of Plavix in Canada before the expiration of the '777 Patent.

Both sides presented extensive expert testimony on the factual bases for Apotex's

challenge to the validity of Claim 3. Apotex submitted the affidavits of five experts, including

two who are also its experts in this case and one patent agent who identified alleged prior art.

Sanofi submitted affidavits from one expert chemist and from one of the two inventors of

clopidogrel bisulfate, Mr. Alain Badorc, who explained how the invention was made. Each of

those witnesses was cross-examined. In addition, Apotex submitted an extensive file of 51

alleged prior art references for comment by its experts and consideration by the court. The

entire record, including the expert testimony, supporting materials, and transcripts of the cross-

examinations, was submitted to the Federal Court of Canada. In addition, each side filed

extensive pre-trial memoranda and presented nearly five full days of argument before the court.

On March 21,2005, the Federal Court of Canada granted Sanofi's application for

an order of prohibition, finding that the '777 Patent was not invalid. The factual findings the

Federal Court of Canada made in support of that legal determination are directly on point here

and are powerful evidence of Plaintiffs' likelihood of success.

a. Anticipation

With respect to the argument that the earlier, '875 Patent described (i.e.,

anticipated) clopidogrel bisulfate, the court found that the class of compounds disclosed by that

patent was far too large a haystack to describe a clopidogrel bisulfate needle within it. "The

'875 patent discloses a number of possible alternatives which, when added up, totals more than

250,000 possible different compounds but only 21 individual compounds are specifically

identified (i.e. Derivatives 1-21). These 21 compounds are set out in the examples to the '875

patent." Canadian Case f 28. But, as the court found, those examples did not include

clopidogrel, much less did they include clopidogrel's bisulfate salt. Id. |f 30-31.

The Canadian '875 Patent, like the U.S. '596 Patent, disclosed the hydrochloride

(not bisulfate) salt of a racemic mixture of clopidogrel and its opposite enantiomer.4 But "there

4 As explained in more detail in Plaintiffs' Trial Memorandum (pp. 8-11), certain types oforganic chemical compounds are enantiomeric: that is, they can exist in either of two distinctconfigurations. Chemists distinguish between enantiomeric configurations by the direction inwhich each rotates a plane of polarized light. If an enantiomer rotates such a plane of light to

10

is no teaching in the '875 patent on how to separate the racemates into their isomers.[5]

Following the teachings of the examples in the '875 patent, one would only obtain racemates,

never their isomers." Id. f 29. The court explained that following the teaching of the first

example in the '875 Patent specification (identical to the first example in the '596 Patent) "would

only result in a racemate and not an isolated isomer and would only yield the hydrochloride

salt of the racemate not its bisulfate salt." Id. f 31. The court found "no mention or suggestion

that there are any pharmaceutical or toxicological differences between the isomers of the

disclosed racemates with respect to activity or tolerability." Id. f 30. Accordingly, the court

found that the '875 Patent did not disclose Claim 3 of the '777 Patent because "the most that can

be said about the '875 patent is that it discloses the existence of optical isomers as part of a large

class of compounds." Id. ̂ 59. Consequently, "nowhere in the '875 patent is there a disclosure

of any specific optical isomer, which means there is certainly no specific disclosure of the

dextrorotatory isomer of the racemate nor of the bisulfate salt of the dextrorotatory isomer." Id.

The court found that the '777 Patent (the Canadian counterpart to the '265 Patent) embodied

"the discovery that it is more specifically the dextrorotatory isomer that is active and non toxic

in the overall racemate, which renders the impugned patent unanticipated." Id. f 72.

the right, it is called a dextrorotatory enantiomer; if it rotates one to the left, it is called alevorotatory enantiomer. An equal mixture of the two enantiomers is referred to as a racemicmixture or, equivalently, a racemate. See generally Pfizer Inc. v. Ranbaxy Labs. Ltd., 405 F. Supp. 2d495,502 (D. Del. 2005) (summarizing relevant stereochemical principles), aff d in part, rev'd inpart on other grounds, No. 06-1179, 2006 WL 2137244 (Fed. Cir. Aug. 2, 2006).

Plavix (clopidogrel bisulfate) is the bisulfate salt of the dextrorotatory enantiomer(clopidogrel) of a racemic compound known within Sanofi as "PCR 4099."

5 The Canadian court used the term "isomer" here as shorthand for "stereoisomers" or"enantiomers."

11

b. Obviousness

The Canadian court also made extensive factual findings demonstrating that the

invention of clopidogrel bisulf ate was not obvious, whether viewed in light of the claims

and/or specification of the prior Sanofi patent or in light of the entirety of the prior art. For

example, the Canadian court found that the prior art did not disclose the beneficial properties of

clopidogrel; a chemist would not be able to know whether one enantiomer possessed favorable

properties without first making and testing the enantiomers.

"[T]he Court then considered the analysis as to whether the prior artdisclosed the beneficial properties of the dextrorotatory isomer of theracemate and its bisulf ate salt. Having read the prior art carefully, theCourt is satisfied that there is no disclosure in it of the beneficialproperties associated, specifically, with the dextrorotatory isomer. Nor isthere a disclosure of any advantages which flow from using the bisulf atesalt in combination with the dextrorotatory isomer. As discussed earlier,the dextrorotatory isomer of the racemate is not even, specifically,disclosed in the prior art. In light of this, the beneficial properties of acompound undisclosed in the prior art could obviously not have been,specifically, described in such prior art." Id. If 71.

As is now known — but only with the benefit of hindsight and Sanofi's research

efforts — the dextrorotatory enantiomer (clopidogrel) has no detectable neurotoxicity, whereas

the levorotatory enantiomer (which constitutes 50 percent of the racemate, and has no anti-

platelet aggregation activity whatsoever) causes convulsions in mammals, including primates.

See id. If 81 ("The properties that were discovered in the case of the dextrorotatory isomer were

its high activity and its low toxicity, as compared to the levorotatory isomer." (footnote

omitted)); ^j 89 ("Since a chemist would not be able to determine which isomer possessed the

beneficial properties without first making the optical isomer and then testing it, claim 1 of the

'777 patent is not obvious in light of the prior art.").

The Canadian court also made findings that the decision even to attempt to

isolate clopidogrel as a single enantiomer was so fraught with synthetic chemical hurdles that

12

the successful isolation of clopidogrel — achieved after months of unsuccessful attempts by

Sanofi chemist, Alain Badorc — rendered its invention non-obvious. It took Badorc, a person

skilled in the art, over five months to separate the racemate into its enantiomers, "trying several

different methods, with failures along the way." Id. If 69. That it took so many unsuccessful

attempts was understandable because, according to the Canadian court, "[t]here was no

evidence presented to this Court that knowledge at the relevant time was such that a person

skilled in the art would know before trying the different separation techniques which one would

work with the racemate at issue in this case." Id. ̂ 80 (emphasis in original). The court

concluded, "having to try different separation techniques with uncertainty as to whether each

or some specific techniques would actually result in a successful separation and then having to

perform tests to discover what the properties of the dextrorotatory isomer of the racemate were,

cannot mean that this compound and its beneficial properties were obvious." Id. ̂ 81.

The court also made findings that compel the conclusion that the bisulfate salt

form of clopidogrel was not obvious. The prior art did not disclose the advantages of the

formulation of clopidogrel as a bisulfate salt. To the contrary, "[hjaving read the prior art

carefully, the Court is satisfied that there is no disclosure in it of any advantages which

flow from using the bisulfate salt in combination with the dextrorotatory isomer." Id. f 71.

"Though different pharmaceutically-acceptable salts could have beentried in combination with the dextrorotatory isomer of the racemate(some of these salts being, indeed, present in the examples of the '875patent), there was no evidence that a person skilled in the art wouldknow before trying the different salts in combination with thedextrorotatory isomer what the bisulfate salt's beneficial propertieswould be." Id. If 82 (emphasis in original).

Only after the bisulfate salt of clopidogrel was formulated were its unexpectedly superior

crystal properties, non-hygroscopicity, and water solubility discovered. See id.

13

2. Recent U.S. Authority on Enantiomer Drug Patents

What the Canadian case shows, U.S. case law confirms. At least three recent

federal decisions have upheld the validity of patents, which, like the '265 Patent, claim a

particular enantiomer of a racemic compound disclosed by the prior art. These recent decisions,

whose reasoning is persuasive in the similar — indeed, more compelling — factual context of

this case, underscore the strong likelihood that the '265 Patent will be upheld by this Court.

They demonstrate the continuing, strong vitality of the holding of In re May, 574 F.2d 1082

(C.C.P.A. 1978), that the "novelty of an optical isomer [i.e., an enantiomer] is not negated by the

prior art disclosure of its racemate." Id. at 1090.

a. Lexapro

Forest Laboratories, Inc. v. Ivax Pharmaceuticals, Inc., No. Civ.A. 03-891-JJF, 2006 WL

1982234 (D. Del. July 13,2006), involved a challenge to a patent claiming the antidepressant

compound, escitalopram oxalate (marketed today under the name, Lexapro). Like Plavix,

Lexapro is a particular salt of an enantiomer of a previously known racemic compound,

citalopram. In Forest Laboratories, the generic defendants asserted that the patent claiming

Lexapro was anticipated by a 1986 article in a scientific journal that stated, in pertinent part:

"[C]italopram... is a racemic drug with potent inhibitory effecton 5-HT [serotonin] uptake. Although effects of the individualenantiomers of citalopram have never been studied, the modelpredicts that the (R)-enantiomer is far more potent than the (S)-enantiomer as a 5-HT uptake inhibitor. Thus, the present modelcan be tested by determining whether these predictions arecorrect." Id. at *3 (alterations and omission in original).

The generic defendants argued that the above-quoted language effectively disclosed the

individual enantiomers of citalopram and thereby rendered the claim to the (S)-enantiomer,

escitalopram, invalid. Id. at *4. The court disagreed, finding that while the article referred to

each enantiomer, it did not disclose escitalopram in substantially pure form (that is, generally

14

free from combination with the other constituent enantiomer of the racemate, citalopram), as

claimed in the patent-in-suit. Id. Here, while the '596 Patent refers to the enantiomers of a large

class of compounds (millions, in fact) and their racemic mixtures, see '596 Patent, col. 12, In. 30 -

col. 13, In. 19, nowhere is clopidogrel (let alone clopidogrel bisulfate) specifically claimed or

described. Only the '265 Patent — specifically, Claim 3 — describes clopidogrel and its bisulfate

salt.

The court also held that the prior art journal article was not enabling, i.e., it did

not disclose to a person of ordinary skill how to obtain escitalopram in substantially pure form.

Forest Labs., 2006 WL1982234, at *9. The court rejected the defendants' arguments - virtually

identical to the arguments Apotex makes here — that general techniques existed for separating

enantiomers and that those techniques could be applied to separate citalopram into its purified

enantiomers. Id. at *6-7. The court found that the scientific literature of the relevant period

offered no guidance concerning how to separate the enantiomers of citalopram and that many

methods were tried without success before scientists finally hit on the right one. Id. at *6-9. As

discussed in Plaintiffs' Trial Memorandum (pp. 26-29), the resolution of the PCR 4099 racemate

into its constituent enantiomers was likewise unpredictable and required the precise

determination of several experimental variables. The inventors failed many times before they

successfully prepared clopidogrel, and many of those failures could be attributed to the fact that

intermediates used to make clopidogrel, like those employed in some syntheses of escitalopram,

could "re-racemize" (i.e., revert back to a racemate, rather than separated enantiomers) under

certain conditions. (Id. at 27-29,63; see Forest Labs., 2006 WL 1982234, at *8 ("[T]he Diol

Intermediate method was laden with risks and chemists would be reluctant to resolve an

intermediate, rather than a final product, because the resolved intermediate could re-racemize

during the latter part of the synthesis.").) As Plaintiffs' expert, Dr. Stephen Davies, one of the

15

world's foremost authorities on stereoselective synthesis, has opined in this case, the task of

resolving PCR 4099 into its enantiomeric constituents would have been formidable for any

skilled chemist during the 1980s, and he would not have predicted that the technique Sanofi's

scientists ultimately discovered would have worked. (Davies Rep. Iffl 83-84,103-107,175,177-

180.)

Forest Laboratories also rejected the generic defendants' contention that the patent-

in-suit was obvious in view of a prior art patent disclosing the citalopram racemate's utility as

an anti-depressant. See 2006 WL1982234, at *14. Rejecting an argument that the prior art

afforded a basis for prediction that one enantiomer of citalopram would be superior to another,

the court stated (citing the generic defendants' experts) that "the activity of a particular

enantiomer could not be known until it was actually separated and tested." Id. at *10.

Escitalopram's clinical properties were unexpected, in part, because it was many times more

potent than citalopram and had been approved for indications for which citalopram was not.

Id. at *13. Similarly, clopidogrel was unexpectedly more potent and less neurotoxic than the

levorotatory enantiomer and the racemate, PCR 4099 — a result that no piece of prior art

intimated. Indeed, clopidogrel's superiority to its racemate is more significant than

escitalopram's. Altough escitalopram, as the court found, has superior properties compared to

its racemate, the racemate is nonetheless (in its hydrobromide salt formulation) an approved,

successfully marketed drug (Celexa). By contrast, Sanofi abandoned its expensive, multi-year

effort to develop the racemate PCR 4099 as a marketed pharmaceutical precisely because of the

differences in toxicity between that racemate and clopidogrel.6

6 The court in Forest Laboratories also credited a number of secondary considerations thatfavored a finding of non-obviousness, including several that are present in the instant case:

• Lexapro is, like Plavix, a commercial success. 2006 WL 1982234, at *12.

16

Lastly, the court rejected several theories that the Lexapro patent was

unenforceable due to inequitable conduct, one of which is particularly pertinent to the instant

case. Like Apotex, the generic defendants contended that the inventors of the Lexapro patent

had falsely claimed that they were "surprised that almost all of the activity of citalopram resided

in one enantiomer," when it was allegedly known in the art that one enantiomer would be more

active than the other. Id. at *20 (emphasis added). As is true here, the prior art did not predict

the superior properties of the patented enantiomer; hence, the statement in the '265 Patent that

the properties of clopidogrel were "unexpected" was not false. Id.

b. Levaquin

Ortho-McNeil Pharmaceutical, Inc. v. Mylan Laboratories, Inc., 348 F. Supp. 2d 713

(N.D.W. Va. 2004), affd per curiam, 161 Fed. App'x 944 (Fed. Cir. 2005), cited prior to its

affirmance in Plaintiffs' Trial Memorandum, involved a challenge to a patent on the compound

levofloxacin (marketed under the name, Levaquin), an enantiomer of a racemic compound,

ofloxacin, disclosed by prior art. In rejecting the defendant's obviousness challenge, the court

found, among other things, that levofloxacin's combination of higher activity and lower toxicity

compared to the racemate (a phenomenon also observed in Plavix) was an unexpected

• Lexapro was superior to previous anti-depressants of the same class. Id. at *13.Plavix is also superior to other anti-thrombotics including ticlopidine andaspirin.

• Generic drug manufacturers seek to manufacture copies of Lexapro, as they dofor Plavix. Id.

• At least one generic company acquiesced to the validity of the Lexapro patent byfiling an application with the government to market a copy of Lexapro only afterthe patent expires. Id. Likewise, many generic drug manufacturers, includingWatson Pharmaceuticals, Mutual Pharmaceutical, Roxane Laboratories, Sandoz,Mylan Pharmaceuticals, and Ivax have filed applications with the government tomarket a copy of Plavix only after the '265 Patent expires.

17

property; to the extent any generalization can be made, "increased therapeutic activity is

normally accompanied by increased toxicity." Id. at 755. But that was not true of levofloxacin; it

was both more active and less toxic than racemic ofloxacin (which, again, unlike PCR 4099, was

a marketed drug). Id. at 754. This same general correlation between activity and toxicity was

also unexpectedly and favorably absent with clopidogrel. With clopidogrel, the split between

toxicity and activity was surprisingly sharp: clopidogrel was effective in inhibiting platelets, but

never caused convulsions in any animal (or, man, for that matter, so far as is known), whereas

the levorotatory enantiomer of PCR 4099 had neurotoxic potential and no antiplatelet activity.

c. Lipitor

A third noteworthy decision is Pfizer Inc. v. Ranbaxy Laboratories Ltd., 405 F.

Supp. 2d 495 (D. Del. 2005), aff d in part, rev'A in part on other grounds, No. 06-1179,2006 WL

2137244 (Fed. Cir. Aug. 2,2006), upholding the validity of the patent on Lipitor, the world's

largest-selling prescription drug. Like clopidogrel bisulfate, the active ingredient in Lipitor is a

salt of an enantiomer of a racemic compound disclosed by prior art. The court held, consistent

with the line of cases cited in Plaintiffs' Trial Memorandum (pp. 47,57-63), that "courts

considering issues related to racemates and their individual isomers have concluded that a prior

art disclosure of a racemate does not anticipate the individual isomers of the racemate or render

the individual isomers of the racemate obvious." Pfizer, 405 F. Supp. 2d at 519. In the context of

ruling that the enantiomer was not obvious (a holding not disturbed by the recent appellate

opinion7), the court observed that "the motivation at the time [i.e., the late 1980s] was to

7 On August 2,2006, the Federal Circuit reversed the decision of the district court withrespect to one of the challenged patents. It did so on the technical ground that a challengeddependent claim covering Lipitor did not comply with 35 U.S.C. § 112 f 4 because it did notnarrow the scope of a prior dependent claim from which it depended; rather, it contained arequired limitation that was effectively excluded by the prior dependent claim. That issue is notpresent in this case. The Federal Circuit did not disturb the district court's holding

18

develop racemates and make structural changes to the compounds to increase their activity, not

to resolve those racemates into individual isomers. " Id. at 517. Pfizer also strongly supports

Plaintiffs' argument that the bisulfate salt was a non-obvious formulation of clopidogrel. As the

court stated, "the selection of salts is a difficult task," and "salt selection is not a routine process

and the success of a given salt is not easily predicted." Id.

B. Plaintiffs Are Suffering Profound Irreparable Harm from Apotex's Launch,Which Is Increasing With the Passage of Time.

"It is well-settled that, because the principal value of a patent is its statutory right

to exclude, the nature of the patent grant weighs against holding that monetary damages will

always suffice to make the patentee whole." Hybritech Inc. v. Abbott Labs., 849 F.2d 1446,1456-57

(Fed. Cir. 1988), cited in Purdue Pharma LP. v. Boehringer Ingelheim GmbH, 98 F. Supp. 2d 362,398

(S.D.N.Y. 2000), off d, 237 F.3d 1359,1363 (Fed. Cir. 2001).» Because a patent has a limited term,

the court cannot restore to its owner the exclusivity that it lost during the period of

infringement. The availability of injunctive relief in patent cases reflects the law's

acknowledgment of how difficult it generally will be to obtain full compensation for the injuries

that result from sales of infringing products that occur after a patent is adjudicated to be valid

and infringed.9

(summarized above) that the claim was not invalid under 35 U.S.C. § 103. Indeed, the FederalCircuit "recognize[d] that the patentee was attempting [in the challenged claim] to claim whatmight otherwise have been patentable subject matter." 2006 WL 2137244, at *6.

8 "If monetary relief were the sole relief afforded by the patent statute then injunctions wouldbe unnecessary and infringers could become compulsory licensees for as long as the litigationlasts." Atlas Powder Co. v. Ireco Chems., 773 F.2d 1230,1233 (Fed. Cir. 1985).

9 In the Revised Settlement, Apotex acknowledged that an infringing launch of genericclopidogrel bisulfate (following approval of the settlement) would cause irreparable injury. AsParagraph 9 of the Revised Settlement provides:

Apotex agrees that it will not sell any clopidogrel product in the UnitedStates prior to the date its license under the '265 patent becomes effective.

19

Indeed, in cases in which there is a strong likelihood of success, there is a

presumption of irreparable injury. Pfizer, Inc. v. Teva Pharnts. USA, Inc., 429 F.3d 1364,1381

(Fed. Cir. 2005) ("We have consistently held that a district court should presume that a patent

owner will be irreparably harmed when, as here, a patent owner establishes a strong showing of

likely infringement of a valid and enforceable patent."); Purdue Pharma, 237 F.3d at 1367

("[U]nder the rule prevailing in our circuit, Purdue was entitled to a rebuttable presumption of

irreparable harm."); Smith Int'l, Inc. v. Hughes Tool Co., 718 F.2d 1573,1580-81 (Fed. Cir. 1983).

That presumption is fully engaged here, because the likelihood of success is strong.

But even if the presumption were not applicable, irreparable injury is apparent.

The injuries that Plaintiffs will continue to suffer based on Apotex's launch would never be

fully compensable, and those injuries would persist long after a judgment in Plaintiffs' favor is

entered.

1. Irreversible Price Erosion Is Occurring and Worsening With Time.

The most immediate harm from Apotex's launch is sharp downward pressure on

the price of Plavix and/or loss of Plaintiffs' market share. That harm is already well underway,

and Plaintiffs have recently attempted to address it partially through the initiation of a program

of large rebates to third party payers ("TPPs"). (O'Neill Decl. ̂ 19.) The purpose of such a

program is to stem loss of market share and to avoid loss of patient loyalty. But an inevitable

aspect of that policy is a reduction in the net effective price of Plavix. Most importantly for this

motion, as a matter of commercial reality, the net effective price of Plavix, in the absence of a

Apotex further agrees that any breach by it of this provision will causeirreparable harm to Sanofi. Apotex hereby irrevocably and unconditionallyconsents to immediate entry of a temporary restraining order,preliminary injunction and permanent injunction to enforce thisprovision. (Emphasis added.)

20

preliminary injunction, is not likely to recover from this reduction, even after a trial vindicating

Plaintiffs' patent rights. Because of the way pharmaceuticals are priced and purchased in the

United States, as well as the lasting impact of Apotex's efforts to flood the distribution channels

with tablets that may be sold by downstream purchasers many months from now, the failure to

issue a preliminary injunction — soon —will lead to persistent "price erosion": prices that, once

fallen, can never return to pre-launch levels. (August 14,2006 Declaration of Jerry Hausman

("Hausman Decl.") f^f 7,15.) This is a recognized form of irreparable injury on an application

such as this. As this Court held in Purdue Pharma, 98 F. Supp. 2d at 398, a drug patent holder

suffers irreparable harm when competition from an infringing product prevents the patent

holder from restoring prices to their pre-infringement levels after the infringement is enjoined.

See also Purdue Pharma, 237 F.3d at 1368 ("Given the testimony of the likelihood of price erosion

.. . , we see no deficiency in the district court's finding of irreparable harm.").

The reasons for the phenomenon of price erosion, and the related inventory

"overhang" effect, are set forth in the accompanying declarations of Hugh O'Neill, a Sanofi

executive involved in pricing decisions related to Plavix, and of Jerry Hausman, a professor of

economics at MIT. As Mr. O'Neill and Professor Hausman explain, pricing of pharmaceuticals

— at least within the sectors of the U.S. market that purchase them under private third party

reimbursement plans, such as are provided through private health insurance —is governed by a

complex series of practices relating to the "tier" in which a drug is placed, and the

corresponding copay an insured consumer pays when he or she fills a prescription. (O'Neill

Decl. 1f| 8-11; Hausman Decl. ft 10-11.) The recent introduction of generic product would

ordinarily lead TPPs to place Plavix in a less favorable tier (if that has not happened already)

and thus cause patients to pay a substantially higher copay for Plavix. (O'Neill Decl. f 22.)

Plaintiffs have two alternatives in the wake of Apotex's launch: they may either (i) offer

21

discounts/rebates (in an effort to get more, or maintain, favorable tier placement, and abate loss

of market share), or (ii) maintain the net effective price at pre-launch levels (and suffer losses

due to unfavorable tier placement, albeit maintain a higher margin on each sale). (O'Neill Decl.

f 16.) For the reasons Professor Hausman and Mr. O'Neill explain, either course of action

(including the rebate program Plaintiffs inaugurated a few days ago, (O'Neill Decl. f 19)) leads

to scenarios under which, after the '265 Patent is upheld and Apotex exits from the market, the

net effective price of Plavix will remain depressed as Plaintiffs attempt to maintain or regain a

favorable tier position for Plavix. (O'Neill Decl. f 20; Hausman Decl. f 21.)

This effect — "price erosion" — is exacerbated here by what appears to be a

deliberate effort on Apotex's part not only to supply existing needs, but to flood the market

with clopidogrel bisulfate now to ensure that even after a preliminary /permanent injunction is

entered, substantial quantities of generic product will still be available for resale thereafter.

(Hausman Decl. ff 22-23; O'Neill Decl. f 21.) That existence of "overhang" inventories of

clopidogrel bisulfate will afford TPPs even greater bargaining power in the potentially lengthy

period following entry of a permanent injunction of Apotex's future sales, making the price

erosion even worse. (Hausman Decl. fU 23-24; O'Neill Decl. f 21.)

2. Irreparable Harm Will Result From the Suspension of ContemplatedClinical Research.

Another source of irreparable harm is the impact that Apotex's unenjoined entry

will have on clinical research programs dedicated to learning more about the conditions

clopidogrel bisulfate can treat. Prior to and since the introduction of Plavix, Plaintiffs,

incentivized by the expectation of patent protection through 2011, have sponsored numerous

clinical trials, including some of the largest and most famous in the annals of cardiology, such

as the CAPRIE, CURE, CLARITY, COMMIT, CLASSICS, CREDO, and CHARISMA trials.

22

(August 13, 2006 Declaration of Jerome Durso ("Durso Decl.") 1J 9.) Many of these have

expanded the approved indications for Plavix, and all have expanded the body of medical

knowledge about how this medication may best be used. Still other clinical trials are under

consideration, including studies to determine whether Plavix can safely and effectively treat

certain cardiovascular ailments of children. (Durso Decl. ^f 14-15.) Yet it is a simple, though

unfortunate, commercial reality that Plaintiffs may be required to discontinue, or at least defer,

further efforts in this regard if the threat of the continuing presence of generic product is not

lifted. Apotex's launch, if not enjoined, will remove any prospect of return on the substantial

investment necessary to conduct such additional studies. The suspension of further trials

would clearly constitute an irreparable harm, particularly if those suspended trials might have,

in fact, led to the discovery of new applications for Plavix.10

3. A Launch Enjoined Only After Trial Will Irreparably Impair Plaintiffs'Goodwill and May Lead to Adverse Capital Market Effects andLayoffs.

Plaintiffs also stand to suffer other forms of irreparable harm from the failure to

enjoin preliminarily Apotex's launch. A launch that is not preliminarily enjoined and lasts for a

considerable period of time may lead to substantial layoffs of employees involved in the

marketing of Plavix. (Durso Decl. f 21.) The failure to enjoin Apotex's launch preliminarily

may lead, for one or both companies, to dividend cuts, credit rating downgrades, and/or effects

on liquidity, any of which may cause disproportionate share price volatility and/or declines.11

On the customer side, the delay of injunctive relief until after trial will inevitably generate ill-

10 This harm would also have a significant impact upon the public interest, as argued below.

11 In the period since Apotex's termination of the settlement and the initiation of its launch, theshare prices of both companies, particularly of BMS, have declined substantially, wiping outbillions of dollars in shareholder value. And on August 4, the opening of trading in BMS stockwas delayed for 15 minutes.

23

will among those who understandably grew accustomed to lower prices for clopidogrel

bisulfate because of Apotex's unlawful, but unenjoined, course of conduct. The latter losses are

not quantifiable, but are certain to increase the longer generic product remains on the market.

(Durso Decl. 1f1J 17-18.)

4. The Settlement's Damages Limitation Does Not Undercut Plaintiffs'Showing of Irreparable Injury.

Nor should this Court give weight to Apotex's anticipated argument that the

limitation on Plaintiffs' damages that appears in the settlement agreement between the parties is

an impediment to a finding of irreparable injury. (Cf. Letter from Robert S. Silver to the Court 2

(Aug. 3,2006) (citing Paragraph 14(ii) of the Revised Settlement).) As the Court appreciated,

this "ceiling on damages" (August 4,2006 Transcript, at 29), is not a concession of lack of

irreparable injury. To the contrary, Plaintiffs specifically retained the right in the Revised

Settlement to seek preliminary and permanent injunctive relief, and that right would be

frustrated by converting a negotiated allocation of damages into a forecast of the full scope of

Plaintiffs' actual injury in the event of an infringing launch.

C. The Public Interest Favors the Grant of Preliminary Relief.

The limited right to exclude other competitors is the most valuable right

embodied in a patent grant. See Smith Int'l, Inc. v Hughes Tool Co., 718 F.2d 1573,1577-78 (Fed.

Cir. 1983). Particularly in cases where the patentee has a high likelihood of success on the

merits and is likely to suffer substantial and irreparable harm by infringing entry, the

availability of a preliminary injunction is essential to protect that right. See id. Those

considerations here strongly support the public interest in the preliminary injunction of

Apotex's infringing launch. The launch represents perhaps the most egregious instance of

pharmaceutical patent infringement in history and has profoundly damaged the value of a valid

24

patent that has at least five more years to run. It also threatens, for the reasons indicated above,

to trigger the suspension of important clinical research efforts, which might expand knowledge

of the therapeutic advantages of clopidogrel bisulfate.

More generally, the enforcement of the intellectual property rights of innovator

pharmaceutical companies is an essential component of efforts to discover new, useful

compounds. While expense and uncertainty are the inevitable incidents of research and

development in any industry, nowhere are these factors as pronounced as they are in the

pharmaceutical industry. It has been estimated that for every 5,000 compounds tested, only one

is approved by the FDA,12 and the cost of developing a single new drug has been estimated at

over $800 million.13 These oft-cited statistics underscore how critical to the process of drug

discovery is the protection of patents, without which recovery of the costs of laboratory and

clinical research would be impossible.

The public interest would not be injured by the Court's award of preliminary

relief. See Hybritech, 849 F.2d at 1458 (noting that the court's analysis should focus on "whether

there exists some critical public interest that would be injured by the grant of preliminary

relief"); cf. Datascope Corp. v. Kontron Inc., 786 F.2d 398,401 (Fed. Or. 1986) (harm to the public

shown where some physicians preferred to use the defendant's, as opposed to the patent-

holder's, device). Apotex's product is a copy of the patented compound that is widely available

throughout the United States from Plaintiffs. Plaintiffs face no difficulty in filling orders for

Plavix, and there is no risk of patients being faced with shortages of supply if Apotex's product

12 Dep't of Health & Human Servs., Nat'l Insts. of Health, A Plan to Ensure Taxpayers Interests AreProtected (July 2001), http://www.nih.gov/news/070101wyden.htm.

13 Joseph A. DiMasi et al., The Price of Innovation: New Estimates of Drug Development Costs, 22 J.Health Econ. 151,180 (2003).

25

exits from the market. See PPG Indus., Inc. v. Guardian Indus. Corp., 75 F.3d 1558,1567 (Fed. Cir.

1996) (public interest favors grant of preliminary injunction where patentee can fill orders and

no shortage results). An anticipated argument that the public interest would be served by the

availability to consumers of a lower priced generic product both proves too much —that would

argue against preliminary relief in any pharmaceutical patent case between an innovator

company and a generic infringer— and fails to appreciate the greater consumer interests served

by the encouragement of innovation afforded by the enforcement of valid pharmaceutical

patents. Indeed, it was only because of the patent protection afforded by the '265 Patent that

Sanofi undertook in 1992 to fund, among other things, the CAPRIE trial, then the largest clinical

trial in history. CAPRIE's finding that Plavix is superior to aspirin in preventing second heart

attacks has led to improvements in public health, as well as other trials that have also led to

important breakthroughs in the treatment of cardiovascular disease. (See Plaintiffs' Trial

Memorandum, at 35-36.)

D. The Balance of Hardships Tips Decidedly in Plaintiffs' Favor.

In assessing the balance of hardships, "[tjhe district court must balance the harm

that will occur to the moving party from the denial of the preliminary injunction with the harm

that the non-moving party will incur if the injunction is granted." Hybritech, 849 F.2d at 1457.

The harm to Apotex, a privately held company, from the interruption of its

launch would be purely monetary, easily calculated, and fully protected by an injunction bond.

The maximum possible amount of the bond would be Apotex's lost profits during the period in

which it is wrongfully enjoined.

In fact, the appropriate amount — the calculation of which lies in the Court's

discretion, see Fed. R. Civ. P. 65(c) (amount to be set "in such sum as the court deems proper")

— is more appropriately set far lower, since the harm Apotex will suffer from injunction of its

26

launch is entirely of its own making. Apotex chose to stand on its contractual right to block

Plaintiffs from seeking injunctive relief until its product had been on the market for five

business days. Apotex thereby consciously and knowingly elected to put its right to 180 days of

semi-exclusive marketing at risk; had Apotex simply chosen to put off its launch until Plaintiffs

could seek provisional relief, the maximum losses they would have sustained had the launch

been enjoined would have been the present discounted value of the deferral of the 180 days of

semi-exclusivity described in 21 U.S.C. § 355(j)(5)(B)(iv).14 Under these circumstances, it is

within the Court's discretion to determine that the appropriate amount of the bond is not the

amount of the profits Apotex will lose owing to its own, calculated efforts to maximize the harm

it will suffer from an injunction, and instead simply to require from Plaintiffs the security it

would have had to post had Apotex heeded the Court's suggestion that the parties work to put

the case on an "even litigation keel." (August 4,2006 Transcript, at 15.)

hi contrast to the harm to Apotex, which is self-inflicted, the harm to Plaintiffs

would, for the reasons set forth above, be substantial and irreparable. Plavix is the second most

widely-sold prescription drug in the world, and its annual sales make it one of Sanofi's most

commercially significant drugs, and by far BMS's most. The loss of the ability to enforce the

exclusive rights to market this drug is having the most severe financial consequences for the

companies and their shareholders and employees, which will not be adequately remedied

through an award of damages after trial. The disparity between the hardship to Apotex from a

temporary delay of its marketing now and the hardship to Plaintiffs from the failure to enjoin a

14 It is the deferral of those semi-exclusive profits, not their permanent loss, that would havebeen the only loss incurred by Apotex had it agreed to refrain from launching prior to Plaintiffs'application for preliminary relief.

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launch that should never have occurred is enormous and weighs heavily in favor of the relief

Plaintiffs now seek.

H. A PRELIMINARY INJUNCTION SHOULD COMPEL RECALL OF PRODUCTALREADY SOLD.

Because Apotex began to ship clopidogrel bisulfate on August 8, and has

continued to ship the generic product — by some accounts, enough to supply the entire United

States for months — it is apparent that a preliminary injunction that merely enjoins further sales

and allows existing supplies to pass through the streams of commerce uninterrupted will not

afford Plaintiffs the full measure of relief to which they are entitled. For that reason, Plaintiffs

respectfully request that the Court include in its preliminary injunction not only a provision

that bars future sales by Apotex, but also a provision that commands a recall of the product

already sold.

Under circumstances such as these, in which a defendant has already sold

infringing products by the time an injunction is entered, courts do not hesitate to order the

defendant to recall the infringing product. See Perfect Fit Indus, v. Acme Quilting Co., 646 F.2d

800,805 (2d Cir. 1981) (recall order "well within the district court's broad powers as a court of

equity").15 For example, in Rohm & Haas Co. v. Cumberland Chemical Corp., No. H-82-1241,1983

U.S. Dist. LEXIS 19879 (S.D. Tex. Jan. 21,1983), the court ordered the defendant to recall the

chemical product allegedly infringing the plaintiff's patent (the "propanil in the pipeline") from

15 In the Second Circuit, a party requesting a mandatory injunction — i.e., one that orders anaffirmative act — must meet a heightened standard of "clear" or "substantial" likelihood ofsuccess, as opposed to the more lenient standard of a simple "likelihood" of success that appliesto an application for a purely prohibitory injunction. Louis Vuitton Malletier v. Dooney & Bourke,Inc., 454 F. 3d 108,114 (2d Cir. 2006); Sunward Ekes., Inc. v. McDonald, 362 F.3d 17, 24 (2d Cir.2004). However, this difference, assuming it is also recognized by the Federal Circuit, isimmaterial here since Plaintiffs can show a likelihood of success that is not only clear orsubstantial, but strong.

28

the dealers to whom it had made deliveries. Id. at *17-18. And in Cybermedia, Inc. v. Symantec

Corp., 19 F. Supp. 2d 1070 (N.D. Cal. 1998), the court ordered a recall since it was the only

"effective remedy," the absence of which would cause the allegedly infringing product to

continue to be sold in direct competition with the plaintiff's. Id. at 1079.16 Particularly since

Apotex's unlawful plan has been to flood the market as quickly as possible, it is appropriate

that that plan be thwarted promptly by the entry of preliminary relief that far more effectively

restores the status quo to what it would have been but for Apotex's deliberate strategem. See id.

("In the absence of a recall order, these products will continue to be sold in direct competition

with [the plaintiff], depriving [the plaintiff] of customers it might otherwise have acquired in

the absence of Defendants' infringement"). Indeed, because the extent of Apotex's launch has

been so large, it is quite possible that the entry of preliminary relief that prohibits only future

sales falls far short of providing full, meaningful relief to Plaintiffs, especially if Apotex

succeeds in selling, before it is enjoined, all it could ever have hoped to sell over the period

between August 8 and a final judgment in this action.

For that reason, Plaintiffs also respectfully request that the Court, as part of its

injunctive order, bar resales of infringing product by distributors and compel Apotex to accept

their returns with a full refund of what they paid. Although Apotex's purchasers are not

parties to this case, "American jurisprudence has rejected Lord Eldon's view that only a party to

a suit may be bound by a decree." Vuitton et Fils S. A. v. Carousel Handbags, 592 F.2d 126,129 (2d

Cir. 1979). A court has authority to assert its injunctive power over non-parties who are "in

M See also Perfect Fit Indus., 646 F.2d at 807; The Tisket-A-Tasket Group, Inc. v. H.S. Craft Mfg.,Cause No. IP 98-0289-C D/F, 1999 U.S. Dist. LEXIS 21090, at *8 (S.D. Ind. Dec. 1,1999); Gund,Inc. v. Golden Bear Co., 92 Civ. 8555 (LJF), 1992 U.S. Dist. LEXIS 18712, at *13-15 (S.D.N.Y. Dec.10,1992); Cullman Ventures, Inc. v. Columbian Art Works, Inc., No. 89 Civ. 312 (KC), 1989 U.S.Dist. LEXIS 9432, at * 10 (S.D.N.Y. July 28,1989).

29

active concert or participation with [parties] who receive actual notice of the order by personal

service or otherwise." Fed. R. Civ. P. 65(d). In addition, nonparties may be bound when their

injunction is necessary "to preserve [a court's] ability to render a judgment in a case over which

it has jurisdiction." Vuitton, 592 F.2d at 129 n.6 (citing Herrkin v. Kanakis, 526 F.2d 252,255 (7th

Or. 1975), and United States v. Hall, 472 F.2d 261 (5th Cir. 1972)). By selling infringing product,

rather than returning it to Apotex and obtaining a refund of the purchase price, those

purchasers would be actively furthering Apotex's efforts to enrich itself by infringing sales. Cf.

Additive Controls & Measurement Sys., Inc. v. Flowdata, Inc., 96 F.3d 1390,1395 (Fed. Cir. 1996)

(third parties may be held in contempt of court for assisting a parly's violation of an injunction);

Int'l Rectifier Corp. v. Samsung Ekes. Co., 361 F.3d 1355,1362 (Fed. Cir. 2004) (injunction may

bind non-party who aids or abets violation of injunction).

30

Conclusion

For the foregoing reasons, Plaintiffs respectfully request that Apotex be enjoined

from further sales of clopidogrel bisulfate pending the adjudication of the validity and

enforceability of the '265 Patent at trial, and that the Court order recall of clopidogrel bisulfate

that has already been sold.

August 14, 2006

Respectfully submj

By:

Evan R. Chesler (yt 1692)Richard J. Stark (RS 3416)David Greenwald (DG 7633)CRAVATH, SWAINE & MOORE LLPWorldwide Plaza825 Eighth AvenueNew York, NY 10019Telephone: (212) 474-1000Facsimile: (212) 474-3700

Robert L. Baechtold (RB 6866)John D. Murnane (JM 8200)William E. Solander (WS 2073)FITZPATRICK, CELLA, HARPER &

SCINTO30 Rockefeller PlazaNew York, NY 10112-3801Telephone: (212) 218-2100Facsimile: (212) 218-2200

Attorneys for Plaintiffs

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Addendum

The following are synopses of the declaration of Alain Badorc and of the reportsof Plaintiffs' experts that have been offered in support of this motion.

A. Alain Badorc

Alain Badorc is an inventor of the '265 patent. Mr. Badorc recites the factsconcerning his invention of clopidogrel bisulfate, including the real-world difficulties that theinventors faced in trying to make that compound for the first time. In particular, Mr. Badorcexplains that he and co-inventor Daniel Frehel failed several times while trying to separatelysynthesize the individual enantiomers of PCR 4099 from scratch. (Affidavit of Alain Badorc,attached as Exhibit 1 to the August 11,2006 Declaration of Alain Badorc Hf 4-13.) He furtherrecites his efforts to separate the enantiomers of PCR 4099, including the laborious search forthe precise set of conditions that permitted successful separation. (Id. U1f 14-24.) Lastly, Mr.Badorc explains that he tried to make numerous salts of clopidogrel, which exists as an oil inbase form, and only a few salts that were tried were even obtainable in solid form. (Id. H 26-29.) Of those, the bisulfate had excellent properties and was selected for drug development. (Id130.)

B. Prof. Stephen Davies

Prof. Stephen Davies is the Waynflete Professor of Chemistry and Chairman ofChemistry at Oxford University. He has over 30 years of research in the field of stereochemistryand the preparation of single enantiomers of medicinal compounds. (Expert Report of StephenG. Davies, attached as Exhibit 1 to the August 11,2006 Declaration of Stephen Davies Iffl 2-14.)Prof. Davies opines that the '596 patent does not describe clopidogrel bisulfate or its method ofpreparation. (Id. Uf 147-193.) Prof. Davies calculated that the general formula of the '596 patentcovers over 9 million compounds (Id. f 1 59-64.) Only 21 compounds are exemplified in thepatent, all of which are racemic, and none of which is clopidogrel bisulfate. (Id. f 149.) Prof.Davies concludes that, without the benefit of Apotex's improper hindsight, there is nosuggestion or motivation to pick and choose among the variables of the general formula, or tomix and match pieces of the 21 examples, to make clopidogrel bisulfate. (Id. f1f 196-204.)

Prof. Davies further opines that the difficulties in making clopidogrel bisulfatewould have been expected to be, and in fact were, substantial. (Id. ft 78-126,164-169.) Theseinclude the unpredictability of the chemistry of enantiomeric isolation in general, and the factthat clopidogrel in particular was susceptible to chemical reactions that would turn it back intoa racemic compound (frustrating any effort to prepare it as a single enantiomer), either while itwas being made or upon ingestion by a patient. (Id. HI 164-183.) Lastly, Prof. Davies explainsthat the properties of clopidogrel bisulfate (e.g., the no toxicity/full activity combination) couldnot have been predicted, and the prior art would not have provided a reasonable expectationthat clopidogrel bisulfate would have the properties that it does. (Id. Hf 206-211.)

C. Dr. Shayne Gad

Dr. Shayne Gad is a toxicologist and former President of the American College ofToxicology who has been involved with filing 61 complete Investigational New DrugApplications and 9 New Drug Application safety packages with the FDA and over 900toxicology studies. (Expert Report of Shayne Gad, attached as Exhibit 1 to the August 9,2006Declaration of Shayne Gad H 1,5-6.) Based on his review of the toxicological evidence in thiscase, Dr. Gad opines that the toxicological benefits afforded by separating the clopidogrelenantiomer from its levorotatory counterpart were both unexpected and substantial. (Id.11 103-120.) In particular he opines that the removal of the levorotatory enantiomer from thePCR 4099 racemate resulted in three clinically significant benefits to the patient: 1) it removed apotentially lethal side-effect of convulsions; 2) it provided a much improved therapeutic index;and 3) it permitted the drug to be given at a lower dose, reducing the metabolic load and thedrug-drug interaction potential on patients. (Id. 1 118.) Lastly, Dr. Gad opines that Sanofi'sassertion that the levorotatory enantiomer was "less well tolerated" than clopidogrel wastruthful and well-supported by the evidence. (Id. 1 1 121-125.)

D. Prof. Stephen Hanson

Prof. Stephen Hanson is the Head of the Department of Biomedical Engineeringat the OGI School of Science and Engineering of the Oregon Health and Science University.(Expert Report of Stephen R. Hanson, attached as Exhibit 1 to the August 8, 2006 Declaration ofStephen R. Hanson 11.) His research focuses on the study of hemostasis and thrombosis. (Id.1 2.) Prof. Hanson opines that the superior antiplatelet action of clopidogrel was not obviousbased on the prior art. (Id. H 30-37,57.) In particular, Prof. Hanson explains that clopidogrel'ssuperior activity was unexpected in view of the limited knowledge of anti-platelet aggregationmechanisms at the time and the complete lack of knowledge concerning the interaction ofclopidogrel and PCR 4099 with the receptors responsible for suppressing platelet aggregation.(Id. 11 57-68.)

E. Prof. Stephen Byrn

Prof. Stephen Byrn is currently the Charles B. Jordan Professor MedicinalChemistry at Purdue University, and former Head of the Department of Medicinal Chemistryand Pharmacy at Purdue in the School of Pharmacy and Pharmacological Sciences. (July 9,2004Expert Report of Stephen Byrn 1 2.) Dr. Byrn's primary research interest is in solid-statechemistry, including salts of pharmaceuticals. (Id. 1 3.) Dr. Byrn opines that it is impossible topredict whether a particular salt of a drug can be made and what its properties will be. (Id.11 28-30.) In particular, at the time of the invention of clopidogrel bisulfate (as well as today,for that matter), it was not possible, based on the prior art, to predict that the bisulfate salt ofclopidogrel could be made in solid form, and that it would have the superior properties it has,namely high stability, crystallinity and non-hygroscopicity. (Id. H 80-96.)