`
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`IN THE UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
`
`SEAGEN INC.,
`
`v.
`
`Civil Action No. 2:20-CV-00337-JRG
`
`Plaintiff,
`
`
`
`
`
`DAIICHI SANKYO CO., LTD.,
`
`Defendant,
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`ASTRAZENECA PHARMACEUTICALS LP,
`and ASTRAZENECA UK LTD,
`
`Intervenor-Defendants.
`
`SEAGEN’S SUR-REPLY TO DEFENDANTS’ 50(b) MOTION
`FOR RENEWED JUDGMENT AS A MATTER OF LAW AS TO
`INFRINGEMENT AND DAMAGES
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` SF-4950521
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`Case 2:20-cv-00337-JRG Document 486 Filed 11/10/22 Page 2 of 15 PageID #: 21382
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`TABLE OF CONTENTS
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`PAGE
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`
`I.
`II.
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`III.
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`B.
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`C.
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`Introduction ........................................................................................................................ 1
`Argument ........................................................................................................................... 1
`A.
`Substantial Evidence Supports the Jury’s Finding That Enhertu Meets All
`Limitations of the Asserted Claims........................................................................ 1
`Substantial Evidence Supports the Jury’s Finding That DSC Is a Direct
`Infringer ................................................................................................................. 3
`Substantial Evidence Supports the Jury’s Finding That DSC Induced
`Infringement by DSI .............................................................................................. 4
`Substantial Evidence Supports the Jury’s Finding That DSC Is a Willful
`Infringer ................................................................................................................. 6
`Substantial Evidence Supports the Jury’s Damages Award .................................. 7
`1.
`Defendants’ Motion Is an Improper and Untimely Daubert
`Challenge ................................................................................................... 7
`The Agreements Provide Sufficient Evidence for the Jury’s Award ......... 9
`2.
`Conclusion ....................................................................................................................... 10
`
`D.
`
`E.
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`Case 2:20-cv-00337-JRG Document 486 Filed 11/10/22 Page 3 of 15 PageID #: 21383
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`TABLE OF AUTHORITIES
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`PAGE(S)
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`Cases
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`Bio-Rad Lab’ys, Inc. v. 10X Genomics Inc.,
`967 F.3d 1353 (Fed. Cir. 2020)..................................................................................................8
`
`KAIST IP US LLC v. Samsung Elecs. Co.,
`439 F. Supp. 3d 860 (E.D. Tex. 2020) .......................................................................................8
`
`MEMC Elec. Materials, Inc. v. Mitsubishi Materials Silicon Corp.,
`420 F.3d 1369 (Fed. Cir. 2005)..............................................................................................4, 5
`
`RightQuestion, LLC v. Samsung Elecs. Co.,
`C.A. No. 2:21-CV-00238-JRG, 2022 WL 507487 (E.D. Tex. Feb. 18, 2022) ..........................5
`
`TGIP, Inc. v. AT&T Corp.,
`527 F. Supp. 2d 561 (E.D. Tex. 2007) .......................................................................................3
`
`Virnetx, Inc. v. Cisco Sys., Inc.,
`767 F.3d 1308 (Fed. Cir. 2014)..................................................................................................9
`
`Warsaw Orthopedic, Inc. v. NuVasive, Inc.,
`824 F.3d 1344 (Fed. Cir. 2016)..................................................................................................5
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`Zenith Labs., Inc. v. Bristol-Myers Squibb Co.,
`19 F.3d 1418 (Fed. Cir. 1994)................................................................................................2, 3
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`ii
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`I.
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`INTRODUCTION
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`Defendants’ reply makes clear that the Court should deny their motion. Despite bearing
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`the burden to demonstrate that no reasonable jury could find in Seagen’s favor, Defendants did
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`not address much of the evidence Seagen cited in opposition. Defendants did not even mention
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`Dr. Bertozzi, let alone attempt to address her testimony that DSC’s own representations show
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`that Enhertu meets every limitation of the asserted claims. Rather, Defendants contend that
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`Dr. Lambert’s testimony must be accepted, and that his testimony alone requires judgment in its
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`favor. But they do not explain why a reasonable jury could not reject Dr. Lambert’s testimony,
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`especially in light of the conflict between his testimony and the documentary evidence.
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`Defendants also fail to address the myriad evidence of DSC’s exceptional behavior
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`during the parties’ collaboration that led to DSC’s infringement. As to damages, Defendants
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`again ignore Ms. Distler’s testimony accounting for the differences between the hypothetical
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`negotiation and the comparable licenses, and instead advance now-waived methodological
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`challenges.
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`II.
`
`ARGUMENT
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`A.
`
`Substantial Evidence Supports the Jury’s Finding That Enhertu Meets All
`Limitations of the Asserted Claims
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`Defendants’ non-infringement arguments are untethered from the standard for JMOL.
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`Defendants disregard all of the documentary evidence that Seagen and Dr. Bertozzi presented to
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`the jury as “inapposite” and having “different meaning than the claim limitations of its patent.”
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`(Dkt. 472 at 2.) But Defendants cannot show that the documents have a different meaning as a
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`matter of law.
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`Dr. Bertozzi explained how DSC’s representations to the FDA, the scientific community,
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`and investors demonstrate that Enhertu is intracellularly cleaved to release the drug moiety,
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`DXd. (Trial Tr. (Day 2) at 76:7–77:17, 79:7–80:3; Dkt. 468 at 3–4.) Dr. Bertozzi also presented
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`DSC’s scientific publications offering experimental assays that show Enhertu’s intracellular
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`cleavage mechanism. (Trial Tr. (Day 2) at 75:08–77:17; PX-161 at 18; PX-168 at 6.)
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`Defendants do not grapple with Dr. Bertozzi’s testimony, and even they acknowledge that the
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`“FDA regulatory documents shown at the trial state that Enhertu® undergoes ‘intracellular linker
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`cleavage.’” (Dkt. 472 at 2.) Defendants again offer no reason why DSC’s statements must
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`necessarily be interpreted in their favor.
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`Defendants’ argument that the documents do not mean the “drug moiety is intracellularly
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`cleaved in a patient” as that claim limitation was construed by the Court again ignores
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`Dr. Bertozzi’s testimony, which in fact hewed to the Court’s construction. (Id.) The Court
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`construed “intracellularly cleaved” to mean “a metabolic process or reaction inside a cell on an
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`antibody drug conjugate (ADC) whereby the covalent attachment, e.g., the linker, between the
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`drug moiety (D) and the antibody (Ab) is broken, resulting in the free drug dissociated from the
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`antibody inside the cell.” (Dkt. 155 at 41–42.) Dr. Bertozzi explained that “Enhertu[] was
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`designed to undergo intracellular cleavage . . . by using a peptide moiety that would be cut by
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`proteases, and those proteases are inside the cell.” (Trial Tr. (Day 2) at 75:22–76:1.)
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`Dr. Bertozzi showed that the result of this cleavage, as shown by DSC’s own documents, is the
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`release of free drug—DXd—within the cell. (Id. at 75:8–76:3.) The Court’s construction
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`requires nothing more.
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`Defendants’ argument that Seagen “acknowledges that actual experimental evidence is
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`required for it to meet its burden” has no support. (Dkt. 472 at 2.) Seagen never acknowledged
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`such a requirement, and neither does any case law. Defendants’ only authority—Zenith—does
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`not so hold. Zenith Labs., Inc. v. Bristol-Myers Squibb Co., 19 F.3d 1418 (Fed. Cir. 1994). In
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`Case 2:20-cv-00337-JRG Document 486 Filed 11/10/22 Page 6 of 15 PageID #: 21386
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`Zenith, the court found error where the patentee’s expert compared the accused compound with a
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`sample of the purportedly patented compound, not the claims of the patent itself. Id. at 1424.
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`Zenith did not hold that there must be experimental evidence to sustain a finding of infringement.
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`Here, Dr. Bertozzi properly analyzed DSC’s representations against the claims of the
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`’039 patent, not against a commercial embodiment. (Trial Tr. (Day 2) at 75:08–77:17; PX-161 at
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`18; PX-168 at 6.) Defendants fault Seagen for “ignor[ing] Dr. Lambert’s testimony” that even
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`DSC does not know whether the drug moiety is intracellularly cleaved in a patient. (Dkt. 472 at
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`3.) But Dr. Lambert admitted that it is “widely understood” that ADCs undergo intracellular
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`cleavage to release a free drug. (Trial Tr. (Day 3) at 212:20–25.) Regardless, the jury was free
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`to disregard Dr. Lambert’s testimony, and it may be disregarded at JMOL. TGIP, Inc. v. AT&T
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`Corp., 527 F. Supp. 2d 561, 569 (E.D. Tex. 2007).
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`Defendants do not address DSC’s own public statements that identify the released drug
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`moiety as DXd, or Dr. Naito’s testimony that “[a]fter [Enhertu] is broken down inside of the cell,
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`DXd is released” beyond merely asserting that they were “out-of-context.” (Trial Tr. (Day 3) at
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`14:1–4, 16:12–19; Dkt. 472 at 4.) Such an assertion falls far short of showing why JMOL must
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`be rendered in Defendants’ favor.
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`Faced with a mountain of documentary and testimonial evidence that Enhertu meets
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`every limitation of the asserted claims, Defendants’ only argument is a factual one that the jury
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`resolved in Seagen’s favor. After two rounds of briefing, Defendants have failed to offer any
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`justification to overturn that finding as a matter of law.
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`B.
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`Substantial Evidence Supports the Jury’s Finding That DSC Is a Direct
`Infringer
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`Defendants repeat the arguments from their opening brief on direct infringement and do
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`not address Seagen’s opposing evidence. Defendants again assert that DSI “controls the process
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`whereby Enhertu® ‘crosses the United States’ border.’” (Dkt. 472 at 4 (emphasis removed).)
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`But Defendants do not grapple with the evidence Seagen cited in its opposition, including that
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`DSC retains title to vials of Enhertu until after they enter the United States,
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`Trial Tr. (Day 2) at 175:5–9; PX-359
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`at 5, 8.)
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`Defendants also emphasize the location of contracting of the agreements and assert
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`without explanation that MEMC’s “plain applicability” somehow speaks for itself. (Dkt. 472 at
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`4, n.5.) But as Seagen’s opposition explained, MEMC is not applicable where, as here, DSC
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`sells the bulk vials directly to its domestic subsidiary, DSC retains title to the vials until after
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`they entered the United States, and the contracts between DSC and DSI contemplate importation
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`into, and sale within, the United States. (Dkt. 468 at 9 (citing MEMC Elec. Materials, Inc. v.
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`Mitsubishi Materials Silicon Corp., 420 F.3d 1369, 1372 (Fed. Cir. 2005).) Defendants cite no
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`case where location of contracting is a relevant consideration in such a scenario.
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`Defendants similarly make no effort to address the substantial evidence that DSC is liable
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`as a direct infringer based on its direction and control of the actions of its wholly-owned
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`subsidiary. (Dkt. 468 at 9–10.) In reply, Defendants argue that DSC’s contracts “do not
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`constitute the level of control needed for a principal-agent relationship” and that the “evidence”
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`in Defendants’ motion shows that DSI operates independently. (Dkt. 472 at 5.) Defendants cite
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`no such evidence in their motion or reply.
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`C.
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`Substantial Evidence Supports the Jury’s Finding That DSC Induced
`Infringement by DSI
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`Without support or analysis, Defendants assert that the substantial evidence in the record
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`“cannot provide sufficient evidentiary support” to prove that DSC took affirmative acts to bring
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`Case 2:20-cv-00337-JRG Document 486 Filed 11/10/22 Page 8 of 15 PageID #: 21388
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`about DSI’s direct infringement. (Id.) Defendants do not, however, address the relevant
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`,
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` (PX-360 at 4; see also PX-403 at 1;
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`PX-359.) These contracts, in combination with the actual sale of Enhertu to DSI, are more than
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`sufficient for the jury to conclude that DSC was not only aware of the infringing activities in the
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`United States; it also intended to encourage those activities. See MEMC, 420 F.3d at 1380. Nor
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`can Defendants contest that DSC had actual knowledge of the ’039 patent as of the filing of the
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`suit. See RightQuestion, LLC v. Samsung Elecs. Co., C.A. No. 2:21-CV-00238-JRG, 2022 WL
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`507487, at *3 (E.D. Tex. Feb. 18, 2022) (“The Complaint—and the service thereof—therefore
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`provides Samsung the requisite notice of the Asserted Patents to support a claim of induced
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`infringement at least as of the time the Complaint was filed.”).
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`Defendants assert that the “evidence presented at trial demonstrated that [DSC]
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`reasonably believes that the sale of Enhertu® does not infringe the Asserted Claims” but again
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`cite no evidence in support. (Dkt. 472 at 1.) As discussed above and in Seagen’s Motion for an
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`Exceptional Case Finding (Dkt. 435), DSC’s noninfringement positions were weak and
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`objectively unreasonable, particularly in light of its own public statements, publications, and
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`submissions to regulators that all consistently describe Enhertu as intracellularly cleaving to
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`release a free drug. (PX-157 at 7; PX-158; PX-160 at 5; PX-161 at 18; PX-163 at 4; PX-168 at
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`6; PX-256 at 38; PX-978 at 6; PX-1049 at 14; PX-1137 at 7.) There is no basis to find, as a
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`matter of law, that DSC could not have induced DSI’s direct infringement. See Warsaw
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`Orthopedic, Inc. v. NuVasive, Inc., 824 F.3d 1344, 1348 (Fed. Cir. 2016) (“[W]e conclude that
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`there was substantial evidence that [defendant’s] infringement position was objectively
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`unreasonable and that the jury, based on this evidence, could reasonably have concluded that
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`[defendant] had knowledge (or was willfully blind to the fact) that it was infringing.”).
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`D.
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`Substantial Evidence Supports the Jury’s Finding That DSC Is a Willful
`Infringer
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`Defendants do not contest that a finding of willfulness can be based on copying that
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`occurred before issuance of the asserted patent. (Dkt. 472 at 6.) Seagen cited substantial
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`evidence of DSC’s exceptional conduct, none of which Defendants challenge. (Dkt. 468 at 11–
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`15.) DSC originally sought a partnership opportunity to jump-start its ADC research. (Dkt. 468
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`at 12; Trial Tr. (Day 2) at 57:24–59:20; PX-587 at 2–3.) Once the collaboration began, Seagen
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`supplied DSC scientists with a vast library of confidential information, including minute details
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`on the conjugation process used in manufacturing, as well as “hands-on training for preparation
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`of ADCs using Seagen’s cysteine-conjugated, protease-cleavable linker technology.” (Dkt. 468
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`at 12; Trial Tr. (Day 2) at 57:24–59:20, 60:11–62:2, 89:14–90:10; see also PX-587 at 2–3; PX-
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`184.) DSC scientists who participated in the collaboration then joined DSC’s internal ADC
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`working group, yet all the while DSC had no internal firewall or any other policies in place to
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`prevent misuse of the information. (Dkt. 468 at 12; Trial Tr. (Day 2) at 84:4–86:15, 88:9–89:13,
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`214:19–215:02; PX-256.) Dr. Bertozzi explained how DSC’s incorporation of Seagen’s
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`proprietary protocols in the manufacturing process for Enhertu ultimately led to infringement of
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`the ’039 patent. (Dkt. 468 at 12; Trial Tr. (Day 2) at 87:18–88:8.) She also explained how DSC
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`scientists copied every parameter in Seagen’s confidential batch record—from the order of
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`operations to the reagents to the reaction conditions and times. (Dkt. 468 at 12–13; Trial Tr.
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`(Day 4) at 107:18–111:25, 113:6–114:17.) Defendants have nothing probative to say about this
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`misconduct.
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`Defendants argue that because the ’039 patent does not claim the misappropriated
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`conjugation methods, there can be no willful infringement. (Dkt. 472 at 6–7.) But Defendants
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`have no response to Dr. Bertozzi’s testimony that it is a direct result of DSC’s use of these
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`conjugation methods that DSC arrived at a linker structure that infringes the ’039 patent: a
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`cysteine conjugated ADC with a maleimidocaproyl (mc) stretcher unit attaching the linker to the
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`antibody. (Dkt. 468 at 13; Trial Tr. (Day 2) at 91:11–92:7.) Defendants likewise overstate the
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`outcome of the arbitration, which said nothing about whether this misconduct occurred. The
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`arbitrator’s decision turned instead on the interpretation of the collaboration agreement between
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`Seagen and DSC and DSC’s statute of limitation defense. (Dkt. 450-1; Dkt. 450-2.) He made no
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`findings about whether DSC misused Seagen’s information.
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`DSC’s post-suit conduct also supports a finding of willful infringement. Defendants have
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`no excuse other than the bare assertion that they purportedly “had good faith defenses.” As
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`explained above and in Seagen’s Motion for Exceptional Case Finding, those defenses were
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`meritless. And after two rounds of briefing, Defendants still have not cited any authority to
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`support their argument that Seagen’s decision not to pursue an injunction bars a finding of
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`willful infringement. Instead, Defendants attempt to shift the burden to Seagen, but the burden
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`to show they are entitled to JMOL remains with Defendants—and they have failed to meet it.
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`E.
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`Substantial Evidence Supports the Jury’s Damages Award
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`1.
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`Defendants’ Motion Is an Improper and Untimely Daubert Challenge
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`Defendants’ challenge to Ms. Distler’s testimony is directed to issues that should have
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`been resolved during Daubert practice. Defendants concede that where a challenge is “solely to
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`an expert’s methodology, or admissibility of a particular agreement as a comparable license, the
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`proper vehicle is a motion to exclude under Rule 702.” (Dkt. 472 at 8.) Yet many of
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`Defendants’ challenges to Ms. Distler’s testimony relate solely to her methodology. As to the
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`Case 2:20-cv-00337-JRG Document 486 Filed 11/10/22 Page 11 of 15 PageID #: 21391
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`selection of agreements, Defendants argue that Ms. Distler “cherry-picked” license agreements.
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`(Dkt. 445 at 19 (“Ms. Distler’s testimony was legally flawed because it was based almost entirely
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`upon her analysis of licensing agreements that are cherry picked and are also not sufficiently
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`comparable to the hypothetical license at issue for Seagen’s ’039 patent.”) (emphasis added).)
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`As to Ms. Distler’s analysis of the license agreements she selected, Defendants argue that
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`Ms. Distler “ignored” the differences between those licenses and the hypothetical negotiation.
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`(Mot. at 20.) These criticisms are plainly directed to Ms. Distler’s methodology. See KAIST IP
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`US LLC v. Samsung Elecs. Co., 439 F. Supp. 3d 860, 877 (E.D. Tex. 2020) (“Defendants’
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`criticism of the products Dr. Kuhn claimed were representative in her analysis is essentially a
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`late-breaking, and thus waived, Daubert challenge.”). As to the
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`specifically, Defendants challenge Ms. Distler’s calculation of the derived royalty rate and her
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`supposed failure to account for certain value contained within the agreement (though, as
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`explained below, she did). (Dkt. 468 at 9.) This too is directed to the methodology underlying
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`Ms. Distler’s analysis, not the substantial evidentiary value the
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` provides
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`given its comparability to the hypothetical negotiation.
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`Defendants’ cited authority does not help them. In Bio-Rad, the infringer did move under
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`Daubert to exclude the patentee’s damages expert, but the district court denied the motion,
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`finding the licenses had a “baseline comparability.” Bio-Rad Lab’ys, Inc. v. 10X Genomics Inc.,
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`967 F.3d 1353, 1374 (Fed. Cir. 2020). The Federal Circuit affirmed, holding that any factual
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`discrepancies between the licenses and the hypothetical negotiation were best resolved by the
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`jury. Id. at 1373–74. Here, Defendants did not move to exclude Ms. Distler’s opinion. They
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`have thus waived any challenge to Ms. Distler’s methodology, including the selection of the
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`comparable agreements and the analysis underlying each agreement. To the extent that fact
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`Case 2:20-cv-00337-JRG Document 486 Filed 11/10/22 Page 12 of 15 PageID #: 21392
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`issues remain, the jury resolved them in Seagen’s favor.
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`2.
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`The Agreements Provide Sufficient Evidence for the Jury’s Award
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`As Seagen’s opposition explained, the Federal Circuit has never required “identity of
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`circumstances” from comparable licenses, recognizing that “any reasonable royalty analysis
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`necessarily involves an element of approximation and uncertainty.” Virnetx, Inc. v. Cisco Sys.,
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`Inc., 767 F.3d 1308, 1330 (Fed. Cir. 2014) (quotation omitted). Instead, the Federal Circuit
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`requires that consideration of past licenses “must account for differences in the technologies and
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`economic circumstances of the contracting parties.” Id. Defendants again fail to address
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`Ms. Distler’s testimony that accounts for the differences.
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`. Defendants argue that the
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` “does not have
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`an implied 8% royalty.” (Dkt. 472 at 9 (emphasis removed).) Seagen has never so argued. Nor
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`is it required that all agreements informing the hypothetical negotiation have the same royalty
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`rate that the jury adopts. Defendants again ignore Ms. Distler’s testimony explaining how the
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` royalty rates inform the hypothetical negotiation. Contrary to
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`Defendants’ assertion, Ms. Distler did explain to the jury how the agreement was different from
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`the hypothetical negotiation, including
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`. (Trial Tr. (Day 4) at 156:8–
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`10, 157:21–161:1.) Most critically, Defendants ignore that the
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` was
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`entered into in
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`—years before Seagen’s ADC technology was proven through its first
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`successful ADC, Adcetris, in 2011. (Id. at 153:25–154:9, 158:3–7.)
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`. Defendants do not contest much of why the
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` informs the hypothetical negotiation, including that it involved
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`Case 2:20-cv-00337-JRG Document 486 Filed 11/10/22 Page 13 of 15 PageID #: 21393
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`. (See Trial Tr. (Day 4) at
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`165:15–166:4.) Defendants argue that the
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` that Ms. Distler derived from the
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` is “inapplicable,” but again ignore Ms. Distler’s testimony about how she
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`was able to isolate the value of
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` that
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`—like DSC in the
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`hypothetical negotiation—would need for
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`. (Id. at
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`165:15–172:16.) Further, contrary to Defendants’ argument, Ms. Distler did explain that the
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`terms of the
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`, including
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`. (Id. at
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`219:23–220:14, 220:25–221:10, 222:10–223:6.)
`
` &
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`Agreements. Defendants argue that the
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` and
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`Agreements cannot provide substantial evidence for the jury’s award because they are different
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`from the hypothetical negotiation. (Dkt. 472 at 10.) This is, again, not the standard for
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`comparability. The
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` illustrates the royalty rate increases that Seagen realized
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`from its licensing as its technology advanced, as well as the attention Seagen was receiving from
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`potential collaborators. (Trial Tr. (Day 4) at 163:11–164:18.) The
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` Agreement shows
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`, which also would inform the structure of a
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`hypothetical license for Enhertu. (Id. at 177:10–178:10.)
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`Defendants also argue that Ms. Distler ignored other license agreements, but again fail to
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`identify licenses she should have considered and how those licenses were more relevant.
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`III. CONCLUSION
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`Defendants have not shown that they are entitled to judgment as a matter of law. In
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`reply, they fail to confront Seagen’s substantial showing and instead cite only the evidence they
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`view as most favorable to their positions. They cannot meet their burden by avoiding the record
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`evidence as a whole. Their motion should be denied.
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`Case 2:20-cv-00337-JRG Document 486 Filed 11/10/22 Page 14 of 15 PageID #: 21394
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`Dated: October 21, 2022
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`By: /s/ Michael A. Jacobs
`Michael A. Jacobs
`MJacobs@mofo.com
`Matthew A. Chivvis
`MChivvis@mofo.com
`MORRISON & FOERSTER LLP
`425 Market Street
`San Francisco, CA 94105
`Telephone: 415.268.7000
`Facsimile: 415.268.7522
`
`Bryan Wilson
`BWilson@mofo.com
`MORRISON & FOERSTER LLP
`755 Page Mill Road
`Palo Alto, California 94304-1018
`Telephone: 650.813.5600
`Facsimile: 650.494.0792
`
`Melissa R. Smith
`Texas State Bar No. 24001351
`melissa@gillamsmithlaw.com
`GILLAM & SMITH, LLP
`303 South Washington Avenue
`Marshall, Texas 75670
`Telephone: 903.934.8450
`Facsimile: 903.934.9257
`Of Counsel:
`T. John Ward, Jr.
`Texas State Bar No. 00794818
`jw@wsfirm.com
`Charles Everingham IV
`Texas State Bar No. 00787447
`ce@wsfirm.com
`Andrea L. Fair
`Texas State Bar No. 24078488
`andrea@wsfirm.com
`WARD, SMITH & HILL, PLLC
`1507 Bill Owens Parkway
`Longview, Texas 75604
`Telephone: 903.757.6400
`Facsimile: 903.757.2323
`Attorneys for Plaintiff Seagen Inc.
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`Case 2:20-cv-00337-JRG Document 486 Filed 11/10/22 Page 15 of 15 PageID #: 21395
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`CERTIFICATE OF SERVICE
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`The undersigned hereby certifies that counsel of record who are deemed to have
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`consented to electronic services are being served with a copy of this document via the Court’s
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`CM/ECF system per Local Rule CV-5(a)(3) on this the 21st day of October 2022.
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`/s/ Melissa R. Smith
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