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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE ENDO PHARMACEUTICALS INC., Plaintiff/Counterclaim Defendant, v. WATSON LABORATORIES, INC., Defendant/Counterclaim Plaintiff. ) ) ) ) Civil Action No. 1:11-cv-00575 (GMS) ) ) ) ) ) JURY TRIAL DEMANDED ) ) ) ) ANSWER, AFFIRMATIVE DEFENSES AND COUNTERCLAIMS OF DEFENDANT WATSON LABORATORIES, INC. Defendant Watson Laboratories, Inc. ("Watson Labs") answers the Complaint for Patent Infringement ("Complaint") of Plaintiff Endo Pharmaceuticals Inc. ("Endo" or "Plaintiff") as follows. This pleading is based upon Watson Labs' knowledge as to its own activities, and upon information and belief as to the activities of others. The numbered Paragraphs below correspond to the numbered Paragraphs in the Complaint: PARTIES 1. Watson Labs admits, on information and belief, that Endo Pharmaceuticals Inc. is a Delaware corporation having its principal place of business located at 100 Endo Boulevard, Chadds Ford, Pennsylvania 19317, and that Endo markets and sells a product called the Lidoderm® patch. Watson Labs is without knowledge or information sufficient to form a belief as to the truth of the remaining allegations and, therefore, denies the same. 2. This Paragraph is directed at a party other than Watson Labs and, therefore, no answer is required. To the extent an answer is required, Watson Labs admits that Watson Case 1:11-cv-00575-GMS Document 6 Filed 07/27/11 Page 1 of 21 PageID #: 60

FOR THE DISTRICT OF DELAWARE ENDO … 27, 2011 · Plaintiff/Counterclaim Defendant, v. WATSON LABORATORIES, INC., ... JURY TRIAL DEMANDED ) ) ) ) ANSWER, AFFIRMATIVE DEFENSES AND

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE

ENDO PHARMACEUTICALS INC.,

Plaintiff/Counterclaim Defendant,

v.

WATSON LABORATORIES, INC.,

Defendant/Counterclaim Plaintiff.

) ) ) ) Civil Action No. 1:11-cv-00575 (GMS) ) ) ) ) ) JURY TRIAL DEMANDED ) ) ) )

ANSWER, AFFIRMATIVE DEFENSES AND COUNTERCLAIMS OF DEFENDANT WATSON LABORATORIES, INC.

Defendant Watson Laboratories, Inc. ("Watson Labs") answers the Complaint for Patent

Infringement ("Complaint") of Plaintiff Endo Pharmaceuticals Inc. ("Endo" or "Plaintiff") as

follows. This pleading is based upon Watson Labs' knowledge as to its own activities, and upon

information and belief as to the activities of others. The numbered Paragraphs below correspond

to the numbered Paragraphs in the Complaint:

PARTIES

1. Watson Labs admits, on information and belief, that Endo Pharmaceuticals Inc. is

a Delaware corporation having its principal place of business located at 100 Endo Boulevard,

Chadds Ford, Pennsylvania 19317, and that Endo markets and sells a product called the

Lidoderm® patch. Watson Labs is without knowledge or information sufficient to form a belief

as to the truth of the remaining allegations and, therefore, denies the same.

2. This Paragraph is directed at a party other than Watson Labs and, therefore, no

answer is required. To the extent an answer is required, Watson Labs admits that Watson

Case 1:11-cv-00575-GMS Document 6 Filed 07/27/11 Page 1 of 21 PageID #: 60

Pharmaceuticals is a Nevada corporation having a principal place of business at 311 Bonnie

Circle, Corona, CA 92880.

3. Admitted.

4. This Paragraph is directed at a party other than Watson Labs and, therefore, no

answer is required. To the extent an answer is required, admitted.

5. Admitted.

JURISDICTION AND VENUE

6. This Paragraph contains legal conclusions for which no answer is required. To

the extent that a response is required, Watson Labs does not currently contest that this action

arises under the Patent Laws of United States, 35 U.S.c. § 100, et seq., nor that this Court has

jurisdiction over the subject matter of this action pursuant to 28 U.S.C. §§ 1331 and 1338(a), and

28 U.S.C. §§ 2201 and 2202. Further, Watson Labs will not contest that venue in this Court is

proper with respect to Watson Labs for purposes of this action only. Watson Labs denies the

remaining allegations in this Paragraph.

7. Watson Labs admits that it is in the business of manufacturing generic drug

products. Watson Labs further admits that it is responsible for the development and submission

of ANDAs. Watson Labs specifically denies that Watson Labs acts as an agent for Watson

Pharmaceuticals or Watson Pharma. The remainder of this Paragraph is directed at parties other

than Watson Labs and, therefore, no answer is required. To the extent that an answer is required,

denied.

8. This Paragraph contains legal conclusions for which no answer is required. To

the extent a response is required, Watson Labs states that it will not contest personal jurisdiction

2

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in this Court for purposes of this action only. Watson Labs denies the remaining allegations in

this Paragraph.

9. This Paragraph is directed at parties other than Watson Labs and, therefore, no

answer is required. To the extent an answer is required, denied.

10. This Paragraph is directed at a party other than Watson Labs and contains legal

conclusions and, therefore, no answer is required. To the extent an answer is required, Watson

Labs admits that Watson Pharma is a Delaware Corporation.

11. This Paragraph is directed at parties other than Watson Labs and, therefore, no

answer is required. To the extent an answer is required, Watson Labs admits that it is in the

business of manufacturing generic drug products. Watson Labs specifically denies that Watson

Pharmaceuticals, Watson Labs and Watson Pharma collaborate in the research, development,

manufacture, marketing, distribution and sale of many pharmaceutical products distributed and

sold within the State of Delaware.

12. Watson Labs states that it will not contest personal jurisdiction in this Court for

purposes of this action only. The remaining allegations in this Paragraph are directed at parties

other than Watson Labs and, therefore, no answer is required. To the extent that an answer is

required, denied.

l3. Watson Labs states that it will not contest personal jurisdiction in tIns Court for

purposes of this action only. The remaining allegations in this Paragraph are directed at parties

other than Watson Labs and, therefore, no answer is required. To the extent that an answer is

required, denied.

14. Watson Labs states that it will not contest personal jurisdiction in this Court for

purposes of this action only. Watson Labs specifically denies that it is collaborating in

3

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preparation to commit patent infringement, and denies all remaining allegations with respect to

Watson Labs. The remaining allegations in this Paragraph are directed at patiies other than

Watson Labs and, therefore, no answer is required. To the extent that an answer is required,

denied.

THE DRUG APPROVAL PROCESS

15. This Paragraph contains legal conclusions for which no answer is required. To

the extent that an answer is required, admitted.

16. This Paragraph contains legal conclusions for which no answer is required. To

the extent that an answer is required, Watson Labs denies that the generic manufacturer may

"piggyback" on the innovator company's data, and admits the remaining allegations in Paragraph

16.

17. TIllS Paragraph contains legal conclusions for which no answer is required. To

the extent that an answer is required, admitted.

18. This Paragraph contains legal conclusions for which no answer is required. To

the extent that an answer is required, admitted.

19. This Paragraph contains legal conclusions for which no answer is required. To

the extent that an answer is required, Watson Labs admits that if a patentee or NDA holder files a

patent infringement action within 45 days of receiving a Paragraph IV Notice from an ANDA

filer, final approval of the ANDA may be subject to a 30-month stay. Watson Labs denies the

remaining allegations in Paragraph 19.

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FACTUAL BACKGROUND

Endo's LIDODERM® Patch

20. Watson Labs admits that on March 19, 1999, the FDA approved the NDA for

Lidoderm®, an adhesive patch product that contains lidocaine in the amount of 5%, for the relief

of pain associated with post-herpetic neuralgia ("PHN").

21. Watson Labs is without knowledge or information sufficient to form a belief as to

the truth of the allegations in this Paragraph and, therefore, denies the same.

22. Watson Labs is without knowledge or information sufficient to form a belief as to

the truth of the allegations in this Paragraph and, therefore, denies the same.

23. Watson Labs admits, on information and belief, that the FDA has indicated

Lidoderm® for the relief of pain associated with post-herpetic neuralgia. Watson Labs is

without knowledge or information sufficient to form a belief as to the truth of the remaining

allegations in this Paragraph and, therefore, denies the same.

24. Watson Labs admits that Teikoku Pharma USA, Inc. is listed as the holder of the

approved NDA for the Lidoderm® patch. Watson Labs is without knowledge or information

sufficient to form a belief as to the truth of the remaining allegations in this Paragraph and,

. therefore, denies the same.

25. Watson Labs is without knowledge or information sufficient to form a belief as to

the truth of the allegations in this Paragraph and, therefore, denies the same.

The Rolf Patents

26. This Paragraph contains legal conclusions for which no answer is required. To

the extent an answer is required, Watson Labs admits that the face page of the '510 patent

indicates that it is entitled "Adhesive Patch For Applying Analgesic Medication To The Skin,"

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that the face page lists the issue date of the patent as April 21, 1998, that the face page lists

LecTec Corporation as the assignee, that what purports to be a copy of the '510 patent was

attached as Exhibit A to Plaintiffs Complaint, and that the FDA's Orange Book lists the

expiration date as March 30, 2014. Watson Labs denies that the '510 patent was duly or legally

issued, and denies any remaining allegations in this Paragraph.

27. TIns Paragraph contains legal conclusions for which no answer is required. To

the extent an answer is required, Watson Labs admits that the face page of the '333 patent

indicates that it is entitled "Method Of Forming Adhesive Patch For Applying Medication To

The Skin," that the face page lists the issue date of the patent as August 1, 2000, that the face

page lists LecTec Corporation as the assignee, that what purports to be a copy ofthe '333 patent

was attached as Exhibit B to Plaintiff s Complaint. Watson Labs denies that the '333 patent was

duly or legally issued. Watson Labs is without knowledge or information sufficient to form a

belief as to the truth of the remaining allegations, and therefore denies the same.

28. This Paragraph contains legal conclusions for which no answer is required. To

the extent an answer is required, Watson Labs admits that the face page of the '334 patent

indicates that it is entitled "Adhesive Patch For Applying Medication To The Skin And Method,"

that the face page lists the issue date of the patent as August 1, 2000, that the face page lists

LecTec Corporation as the assignee, that what purports to be a copy of the '334 patent was

attached as Exhibit C to Plaintiffs Complaint. Watson Labs denies that the '334 patent was duly

or legally issued. Watson Labs is without knowledge or information sufficient to form a belief

as to the truth of the remaining allegations, and therefore denies the same.

29. Watson Labs is without knowledge or information sufficient to form a belief as to

the truth of the allegations in this Paragraph and, therefore, denies the same.

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30. Watson Labs is without knowledge or information sufficient to form a belief as to

the truth of the allegations in this Paragraph and, therefore, denies the same.

31. Watson Labs is without knowledge or information sufficient to form a belief as to

the truth of the allegations in this Paragraph and, therefore, denies the same.

32. Watson Labs admits, on infonnation and belief, that the FDA lists the '510 patent

in the Orange Book with respect to the Lidoderm® Patch and further identifies the applicant as

Teikoku Phanna USA, Inc. Watson Labs is without knowledge or information sufficient to form

a belief as to the truth of the remaining allegations in this Paragraph and, therefore, denies the

same.

Watson's ANDA Filing

33. Watson Labs admits that prior to January 14, 2010, it submitted to the FDA its

ANDA under § 5050) of the Federal Food, Drug and Cosmetic Act, 21 U.S.C. § 3550), seeking

approval to engage in the commercial manufacture, use, and sale of a lidocaine patch 5%

("Generic Lidocaine Patch") as a generic version of the Lidoderm® Patch.

34. Admitted.

35. This Paragraph contains legal conclusions for which no answer is required. To

the extent that an answer is required, Watson Labs denies the allegations in this Paragraph.

COUNT I Alleged Infringement of the '510 Patent

36. Watson Labs repeats and incorporates by reference its responses to Paragraphs 1-

35 as if fully set forth herein.

37. Watson Labs admits that this Court has subject matter jurisdiction over this

action. Watson Labs denies the remaining allegations in this Paragraph, including any

7

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implication or allegation that the product that is the subject of Watson Labs' ANDA infringes

any valid and enforceable claim of the' 51 0 patent.

38. Denied.

COUNT II Declaratory Judgment for Infringement of the '510 Patent

39. Watson Labs repeats and incorporates by reference its responses to Paragraphs 1-

38 as if fully set forth herein.

40. Admitted.

4l. Denied.

42. Admitted.

43. Admitted.

44. Denied.

COUNT III Declaratory Judgment for Infringement of the '333 Patent

45. Watson Labs repeats and incorporates by reference its responses to Paragraphs 1-

44 as if fully set forth herein.

46. Admitted.

47. Denied.

48. Admitted.

49. Admitted.

50. Denied.

COUNT IV Declaratory Judgment for Infringement of the '334 Patent

51. Watson Labs repeats and incorporates by reference its responses to Paragraphs 1-

50 as if fully set forth herein.

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52. Admitted.

53. Denied.

54. Admitted.

55. Admitted.

56. Denied.

JURY DEMAND

57. Watson Labs demands trial by jury as to all issues so triable.

[PLAINTIFF'S) PRAYER FOR RELIEF

The "Wherefore" Paragraph following Paragraph 57 of the Complaint and the ten lettered

Paragraphs that follow it state Plaintiff's Prayer for Relief, to which no response is required. To

the extent a response is required, Watson Labs denies the allegations set forth in the "Wherefore"

Paragraph following Paragraph 57 and the ten lettered Paragraphs that follow, and denies that

Plaintiffs are entitled to any of the relief requested therein, or any relief whatsoever.

AFFIRMATIVE DEFENSES

First Affirmative Defense

The claims of the '510 patent are invalid under one or more provisions of the U.S. Code,

including, but not limited to, 35 U.S.C. §§ 101, 102, 103 andlor 112.

Second Affirmative Defense

The manufacture, use, offer for sale, sale or importation of the products described in

ANDA No. 20-675, have not infringed, do not infringe, and would not infringe, if marketed, any

valid and enforceable claim of the '510 patent, either directly or indirectly, and either literally or

under the doctrine of equivalents.

9

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Third Affirmative Defense

The claims of the '333 patent are invalid under one or more provisions of the U.S. Code,

including, but not limited to, 35 U.S.C. §§ 101, 102, 103 and/or 112.

Fourth Affirmative Defense

The manufacture, use, offer for sale, sale or importation of the products described in

ANDA No. 20-675, have not infringed, do not infringe, and would not infringe, if marketed, any

valid and enforceable claim of the '333 patent, either directly or indirectly, and either literally or

under the doctrine of equivalents.

Fifth Affirmative Defense

The claims of the '334 patent are invalid under one or more provisions of the U.S. Code,

including, but not limited to, 35 U.S.C. §§ 101, 102, 103 and/or 112.

Sixth Affirmative Defense

The manufacture, use, offer for sale, sale or importation of the products described in

ANDA No. 20-675, have not infringed, do not infringe, and would not infringe, if marketed, any

valid and enforceable claim of the '334 patent, either directly or indirectly, and either literally or

under the doctrine of equivalents.

Seventh Affirmative Defense

Plaintiffs' Complaint fails to state a claim upon which relief may be granted.

Eighth Affirmative Defense

Any additional defenses or counterclaims that discovery may reveal.

The inclusion of a defense among the above-listed defenses is not an admission that

Watson Labs bears the burden of proof or persuasion on any claim or issue.

10

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COUNTERCLAIMS

Watson Laboratories, Inc. ("Watson Labs"), by way of counterclaim against Endo

Pharmaceuticals Inc. ("Endo" or "Counterclaim Defendant") alleges as follows:

Parties

1. Watson Labs is a corporation organized and existing under the laws of Nevada,

with a principal place of business at 311 Bonnie Circle, Corona, California 92880.

2. On information and belief, Endo is a Delaware corporation having a principal

place of business at 100 Endo Boulevard, Chadds Ford, Pennsylvania 19317.

3. In this lawsuit, Endo has alleged in its Complaint that the products described in

Watson's ANDA No. 20-675 concerning a lidocaine patch would, if marketed, infringe one or

more valid claims of U.S. Patent No. 5,741,510 ("the '510 patent"), U.S. Patent No. 6,096,333

("the '333 patent"), and U.S. Patent No. 6,096,334 ("the '334 patent").

Jurisdiction and Venue

4. This Court has jurisdiction over the subject matter of these counterclaims

pursuant to 28 U.S.C. §§ l331 and 1338(a), in that the counterclaims arise under the Patent Laws

of the United States, 35 U.S.C. § 100 et seq.

5. This Court may declare the rights and other legal relations of the parties involved

pursuant to 28 U.S.c. §§ 2201 and 2202, because this action is based on a case of actual

controversy within the Court's jurisdiction seeking a declaratory judgment that the manufacture,

use, offer for sale, sale and/or importation of the products described in Watson Labs' ANDA No.

20-675 would not infringe the claims of the '510, patent, the '333 patent, and the '334 patent

(collectively, the "Rolf patents") and/or that the claims of the '510 patent, the '333 patent, and

the '334 patent are invalid and/or unenforceable.

11

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6. Venue for these counterclaims is proper within this judicial district pursuant to 28

U.S.C. § 1391(b).

U.S. Patent No. 5,741,510

7. On information and belief, the '510 patent, entitled "Adhesive Patch for Applying

Analgesic Medication to the Skin," was issued on April 21, 1998. The face of the '510 patent

lists LecTec Corporation as assignee.

8. On infonnation and belief, LecTec assigned its rights in and to the '510 patent to

Counterclaim Defendant Endo.

9. On information and belief, the '510 patent will expire on March 30, 2014.

U.S. Patent No. 6,096,333

10. On infonnation and belief, the '333 patent, entitled "Method of Forming

Adhesive Patch for Applying Medication to the Skin," was issued on August 1, 2000. The face

of the '333 patent lists LecTec Corporation as assignee.

11. On information and belief, LecTec assigned its rights in and to the '333 patent to

Counterclaim Defendant Endo.

U.S. Patent No. 6,096,334

12. On information and belief, the '334 patent, entitled "Adhesive Patch for Applying

Medication to the Skin and Method," was issued on August 1,2000. The face ofthe '334 patent

lists LecTec Corporation as assignee.

13. On information and belief, LecTec assigned its rights in and to the '333 patent to

Counterclainl Defendant Endo.

12

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Factual Background

A. FDA Approval of New Brand Name Drugs

14. The Federal Food, Drug, and Cosmetic Act ("FFDCA"), 21 U.S.C. § 301 et seq.,

as amended by the Hatch-Waxman Amendments, sets forth the rules that the Food and Drug

Administration ("FDA") follows when considering whether to approve the marketing of both

brand-name and generic drugs.

15. Under the FFDCA, an applicant seeking to market a new brand-name drug must

prepare a New Drug Application ("NDA") for consideration by FDA. See 21 U.S.C. § 355.

16. An NDA must include, among other things, the number of any patent that

allegedly claims the "drug" or "a method of using [the] drug" for which the NDA was submitted

and for which a claim of patent infringement could reasonably be asserted against an

unauthorized party. See 21 U.S.C. § 355(b)(1), -(c)(2); 21 C.F.R. § 314.53(b)(1), -(c)(2).

17. Upon approval of an NDA, FDA publishes patent information for the approved

drug in "Approved Drug Products with Therapeutic Equivalence Evaluations," cOlmnonly

known as the "Orange Book." 21 C.F.R. § 314.53(e).

18. FDA's duties with respect to Orange Book listings are purely ministerial. If the

NDA holder submits a patent to FDA for listing in the Orange Book, the patent is listed in the

Orange Book. See 21 U.S.C. § 355(b)(1); 21 C.F.R. § 314.53(e)-(f). FDA does not

substantively review the submitted patent information to ensure that it is accurate or that the

NDA holder properly submitted it in connection with the NDA drug (or "reference listed drug"),

but instead relies on the NDA holder to properly list the patents.

13

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B. FDA Approval Of New Generic Drugs

19. In 1984, Congress enacted the Drug Price Competition and Patent Term

Restoration Act, also known as the Hatch-Waxman Amendments, to the FFDCA. See Pub. L.

No. 98-417, 98 Stat. 1585 (1984) (codified at 21 U.S.C. § 355 and 35 US.c. §§ 156, 271(e».

Congress passed Hatch-Waxman Amendments, which simplified the procedure for obtaining

approval of generic drugs, for the purpose of decreasing the cost of pharmaceuticals through

increased competition.

20. Under the Hatch-Waxman Amendments, a generic manufacturer submits to FDA

what is called an Abbreviated New Drug Application ("ANDA").

21. Among other things, an ANDA must also contain a "certification" to each patent

that the NDA holder has submitted to the FDA for listing in the Orange Book in connection with

the reference listed drug. See 21 U.S.C. § 355(j)(2)(A)(vii); 21 C.F.R. §314.94(a)(12).

22. A "Paragraph IV" certification asselis that the listed patent is invalid,

unenforceable, andlor will not be infringed and, on that basis, the applicant seeks FDA approval

of the generic product prior to the patent expiration. See 21 US.C. § 355(j)(2)(A)(vii)(IV); see

also 21 C.F.R. § 314.94(a)(12)(i)(A)(4).

23. An applicant submitting an ANDA containing a Paragraph IV certification must

notify both the patent holder and NDA holder of each of its Paragraph IV certifications. See 21

US.C. § 355(j)(2)(B).

24. Upon receiving notice of the Paragraph IV certifications, the patent holder has 45

days in which to file an infringement suit against the generic manufacturer. See 21 U.S.C. §

355(j)(5)(B)(iii); 35 U.S.C. § 271(e)(2)(A).

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25. Patent holders have a significant strategic incentive to file suit within 45 days of

receiving notice of the Paragraph IV certifications, because doing so, regardless of merit,

prevents FDA from approving the generic maker's ANDA for a period of 30 months, absent

certain exceptions requiring court action. See 21 U.S.C. § 355G)(5)(B)(iii).

26. If the court hearing the infringement action decides the patent is valid,

enforceable, and would be infringed by the product proposed in the ANDA, FDA will not

approve the ANDA until the patent expires. Id. If, however, the court hearing the infringement

action rules before the expiration of the 30-month period that the patent is invalid, unenforceable,

or not infringed, FDA may approve the ANDA effective on the date when the court enters the

judgment. Id.

C. Watson's ANDA and Counterclaim Defendant's Complaint.

27. On March 19, 1999, the United States Food and Drug Administration (the

"FDA") approved a New Drug Application ("NDA"), under § 505(b) of the Federal Food, Drug,

and Cosmetic Act, 21 U.S.C. § 355(b), for Lidodenn® Patch, an adhesive patch product that

contains lidocaine in the amount of 5% for the relief of pain associated with post-herpetic

neuralgia ("PHN").

28. Endo alleges that in or about November 2009, Endo obtained an exclusive license

under the Rolf patents to make and sell prescription pain medicines and treatments that contain

5% lidocaine, in a patch dosage fOlm. Endo further alleges that it recently acquired from LecTec

full title to each of the Rolf patents, and is now the owner and assignee of the Rolf patents.

29. On November 13, 2009, Watson Labs filed ANDA No. 20-675 seeking generic

approval for a lidocaine patch 5% ("Watson Labs' ANDA Product").

15

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30. At the time, u.s. Patent No. 5,827,529 ("the '529 patent"), was listed in the

Orange Book in connection with Lidoderm® Patch NDA No. 20-612 with Teikoku Seiyaku Co.,

Ltd, ("Teikoku") as assignee.

31. Watson Labs' ANDA No. 20-675 included a Paragraph IV certification to the

'529 patent.

32. On or about January 14,2010, Watson Labs sent to Teikoku a statutorily-required

notice letter of its Paragraph IV certifications, which contained a detailed factual and legal

statement as to why the '529 patent is invalid, unenforceable, and/or not infringed by Watson

Labs' ANDA product.

33. Endo alleges that in or about October 2010, Endo granted Teikoku a sublicense

under the '510 patent to make and sell prescription pain medicines and treatments that contain

5% lidocaine, in a patch dosage form, including the Lidoderm® Patch.

34. It was not until after October 2010, and well after the filing of Watson's ANDA

No. 20-675, that Teikoku submitted to the FDA information regarding the '510 patent for listing

in the Orange Book with respect to the Lidoderm® Patch.

35. Pursuant to 21 C.F.R. § 314.53(e) the FDA, in its administrative role and without

review, listed the '510 patent in the Orange Book with respect to the Lidoderm® Patch.

36. Teikoku did not submit to the FDA information regarding the '333 or '334 patents

for listing in the Orange Book with respect to the Lidoderm® Patch.

37. Pursuant to 21 C.F.R. § 314.94(a)(12)(vi), Watson Labs was not required to file

any certification, including a Paragraph IV certification, to the '510 patent, and Watson Labs did

not do so.

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38. In a letter dated May 20, 2011, Endo asked whether Watson Labs would consent

to Endo filing a patent infringement suit alleging infringement of the Rolf patents by the product

described in Watson Labs' ANDA No. 20-675. Watson Labs consented to such a filing, but

denied that the products in Watson Labs' ANDA infringed any valid or enforceable claim of the

Rolf patents.

39. In its Complaint, Endo alleged that the commercial manufacture and sale by

Watson Labs of its Generic Lidocaine Patch would infringe the Rolf patents, and that any launch

by Watson Labs of its Generic Lidocaine Patch prior to the expiration of the Rolf patents would

cause Endo to suffer immediate and irreparable harm.

40. As a consequence of the foregoing, there is an actual and justiciable controversy

between Watson Labs and Endo as to whether the claims of the Rolf patents are invalid and/or

unenforceable, whether the claims of the '510 patent are infringed by Watson Labs' ANDA No.

20-675, and whether the claims of the Rolf patents will be infringed by the manufacture, use,

sale, offer for sale, and/or importation of the products described in Watson Labs' ANDA.

COUNT I Declaration of Invalidity of the '510 Patent

41. Watson Labs realleges and incorporates by reference the allegations in Paragraphs

1-40 of these Counterclaims, and Paragraphs 1-57 of this Answer.

42. A present, genuine and justiciable controversy exists between Watson Labs and

Counterclaim Defendant regarding, inter alia, the validity of the' 51 0 patent.

43. The claims of the '510 patent are invalid under one or more provisions of 35

u.s.C. §§ 101, 102, 103 and/or 112.

44. Watson Labs is entitled to a declaration that the claims of the '510 patent are

invalid.

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COUNT II

Declaration of Noninfringement of the '510 Patent

45. Watson Labs realleges and incorporates by reference the allegations in Paragraphs

1-44 of these Counterclaims, and Paragraphs 1-57 of this Answer.

46. A present genuine and justiciable controversy exists between Watson Labs and

Counterclaim Defendant regarding, inter alia, the issue of whether the manufacture, use, offer

for sale, sale or importation of the products described in ANDA No. 20-675 would infringe any

valid and enforceable claim of the '510 patent.

47. The manufacture, use, offer for sale, sale or importation of the products described

in ANDA No. 20-675 would not infi·inge any valid and enforceable claim of the '510 patent.

48. Watson Labs is entitled to a declaration that the manufacture, use, offer for sale,

sale or importation of products described in ANDA No. 20-675 would not infi-inge any valid and

enforceable claim of the' 51 0 patent.

COUNT III Declaration of Invalidity of the '333 Patent

49. Watson Labs realleges and incorporates by reference the allegations in Paragraphs

1-48 ofthese Counterclaims, and Paragraphs 1-57 of this Answer.

50. A present, genuine and justiciable controversy exists between Watson Labs and

Counterclaim Defendant regarding, inter alia, the validity of the '333 patent.

51. The claims of the '333 patent are invalid under one or more provisions of 35

u.s.C. §§ 101, 102, 103 andlor 112.

52. Watson Labs is entitled to a declaration that the claims of the '333 patent are

invalid.

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COUNT IV Declaration of Noninfringement of the '333 Patent

53. Watson Labs realleges and incorporates by reference the allegations in Paragraphs

1-52 of these Counterclaims, and Paragraphs 1-57 of this Answer.

54. A present genuine and justiciable controversy exists between Watson Labs and

Counterclaim Defendant regarding, inter alia, the issue of whether the manufacture, use, offer

for sale, sale or importation of the products described in ANDA No. 20-675 would infringe any

valid and enforceable claim ofthe '333 patent.

55. The manufacture, use, offer for sale, sale or importation of the products described

in ANDA No. 20-675 would not infringe any valid and enforceable claim of the '333 patent.

56. Watson Labs is entitled to a declaration that the manufacture, use, offer for sale,

sale or importation of products described in ANDA No. 20-675 would not infringe any valid and

enforceable claim of the '333 patent.

COUNT V Declaration of Invalidity of the '334 Patent

57. Watson Labs realleges and incorporates by reference the allegations in Paragraphs

1-56 of these Counterclaims, and Paragraphs 1-57 of this Answer.

58. A present, genuine and justiciable controversy exists between Watson Labs and

Counterclaim Defendant regarding, inter alia, the validity of the '334 patent.

59. The claims of the '334 patent are invalid under one or more provisions of 35

u.s.C. §§ 101, 102, 103 and/or 112.

60. Watson Labs is entitled to a declaration that the claims of the '334 patent are

invalid.

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COUNT VI Declaration of Noninfringement of the '334 Patent

61. Watson Labs realleges and incorporates by reference the allegations in Paragraphs

1-60 of these Counterclaims, and Paragraphs 1-57 of this Answer.

62. A present genuine and justiciable controversy exists between Watson Labs and

Counterclaim Defendant regarding, inter alia, the issue of whether the manufacture, use, offer

for sale, sale or importation of the products described in ANDA No. 20-675 would infringe any

valid and enforceable claim of the '334 patent.

63. The manufacture, use, offer for sale, sale or importation of the products described

in ANDA No. 20-675 would not infringe any valid and enforceable claim of the '334 patent.

64. Watson Labs is entitled to a declaration that the manufacture, use, offer for sale,

sale or importation of products described in ANDA No. 20-675 would not infringe any valid and

enforceable claim of the '334 patent.

JURY DEMAND

Watson Labs demands trial by jury as to all issues so triable.

PRAYER FOR RELIEF

WHEREFORE, Watson Labs respectfully requests that this Court enter a Judgment and

Order in its favor and against Counterclaim Defendant as follows:

A. Dismissing Endo' s Complaint with prejudice;

B. Declaring that the claims of U.S. Patent No. 5,741,510 are invalid and/or not infringed by Watson Labs;

C. Declaring that the claims of U.S. Patent No. 6,096,333 are invalid and/or not infringed by Watson Labs;

D. Declaring that the claims of U.S. Patent No. 6,096,334 are invalid and/or not infringed by Watson Labs;

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E. Finding that this case is exceptional under 35 U.S.C. § 285 and awarding Watson Labs its costs, expenses and attorneys' fees in this action; and

F. Awarding Watson Labs any further and additional relief as the Court deems just and proper.

Dated: July 27, 2011

Of Counsel: James F. Hurst Michael K. Nutter Ivan M. Poullaos Samantha L. Maxfield WINSTON & STRAWN LLP 35 West Wacker Drive Chicago, IL 60601 (312) 558-5600 (telephone) (312) 558-5700 (facsimile)

Respectfully submitted,

By: /s/ John C. Phillips, Jr. John C. Phillips, Jr. (#110) Megan C. Haney (#5016) PHILLIPS, GOLDMAN & SPENCE, P.A. 1200 North Broom Street Wilmington, DE 19806 (302) 655-4200 (telephone) (302) 655-4210 (facsimile) [email protected]

Attorneys for Defendant/Counterclaim Plaintiff Watson Laboratories, Inc.

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