Cipla Limited v Salix Pharmaceuticals, Inc

Salix’s primary position is that XIFAXAN® tablets are not Licensed Products because the Valid Claims would only be infringed if XIFAXAN® tablets were “essentially free of crystalline rifaximin” and/or were “characterized by the XRPD pattern shown in Figure 1” of the common specification…

…

As to the latter, the tablets are not “characterized by the XRPD pattern shown in Figure 1” even on Dr. Kaduk’s alleged evidence. Dr. Kaduk’s XRPD diffractograms of XIFAXAN® tablets do not have the characteristic pattern of amorphous material shown in Figure 1. XIFAXAN® tablets would have to have the XRPD pattern shown in Figure 1 for Cipla to prove infringement of claims with the “Figure 1” limitation, and they do not .” [emphasis added]

“Cipla has failed to meet its burden of proving infringement of these claims because it does not have even a single XRPD diffractogram of XIFAXAN® tablets or its API that has the halo pattern of Figure 1. Proof of infringement requires proof that the accused product meets each and every claim element. Proof of “rifaximin in an amorphous form characterized by the XRPD pattern of FIG.1” requires the accuser to provide an XRPD of the accused product that has the pattern of FIG. 1. Cipla has failed to do so.”

“I am of the view that the XRPD Claims only extend to products which contain amorphous rifaximin which produces a FIG 1 XRPD pattern (and, I should add for the avoidance of doubt that, if such a product also contains other rifaximin, whether amorphous or not, it would still infringe the XRPD Claims).”

“The Patent Claims, Claims (b) and (c), are each Valid Claims, but they only extend to products which include amorphous rifaximin which produces a FIG 1 XRPD pattern.”

The Tribunal held in this regard:

“142.

As to the second of the conclusions in paragraph 140 above, it means that Cipla can only succeed in establishing that XIFAXAN® tablets would be Licensed Product by virtue of the Patent Claims if it could establish that they contain amorphous rifaximin which produces a FIG 1 XRPD pattern. In other words, it is not enough for Cipla to establish that XIFAXAN® tablets contain amorphous rifaximin on the fourth issue: at least some of that amorphous rifaximin must produce a FIG 1 XRPD pattern.

143.

This gives rise to the third issue: Salix contended that, even if, contrary to its contention, Cipla is successful on the fourth issue, and I am persuaded by Dr Kaduk’s evidence that XIFAXAN® tablets contain amorphous rifaximin, Cipla would still fail to establish that XIFAXAN® tablets were Licensed Product because no evidence has been adduced to show that any of that amorphous rifaximin has a FIG 1 XRPD pattern, although each of the Parties tried to introduce such evidence.

144.

In the set of slides used in her presentation, Dr Linck included a slide which suggested that any amorphous rifaximin will inherently have a FIG 1 XRPD pattern. However, this had not been asserted in any of Cipla’s written evidence or submissions, and, when that point was made, the slide was withdrawn. In closing, Cipla argued that, in various passages, Salix’s pleaded case and Judge Rader’s declarations effectively accepted, or even contended, that amorphous rifaximin always produced an XRPD as shown in FIG 1. However, I consider that it is clear that the passages relied on were directed to the amorphous rifaximin as claimed in the relevant patents, and not to amorphous rifaximin generally. Thus, one of the passages relied on stated that “the characteristic shape of the XRPD pattern shown in Figure 1 pattern was an inherent property of the claimed amorphous rifaximin.”

145.

Salix also sought to put in late evidence, which suggested that amorphous rifaximin could produce different XRPDs, and that not all amorphous rifaximin produced a FIG 1 XRPD. I acceded to Cipla’s submission that this evidence was presented too late to be admitted, and accordingly it was excluded. In the course of his cross-examination, however, after referring to the fact that “the amorphous comes out as broad double halo”, i.e. the FIG 1 XRPD, Dr Swaminathan said that “there is more than one amorphous, it could come out as a different halo”.

146.

When it comes to the question whether the amorphous rifaximin in the XIFAXAN® tablets infringes the XRPD Claims, the onus is on Cipla to prove infringement, not on Salix to prove no infringement. It therefore appears to me to follow as a matter of principle that, in the light of the way in which I have concluded the XRPD Claims should be interpreted, it is up to Cipla to prove that, assuming that XIFAXAN® tablets contain amorphous rifaximin, at least some of that amorphous rifaximin has a FIG1 XRPD pattern. And Salix’s simple point was that, even assuming that Dr Kaduk’s evidence persuades me that XIFAXAN® tablets contain amorphous rifaximin, there is simply no evidence that any of that amorphous rifaximin has a FIG 1 XRPD pattern.

…

150.

It therefore appears to me that, unless it can be said to be up to Salix to show that amorphous rifaximin does not always produce a FIG 1 XRPD, or unless there is some reason for thinking that that is the case, Cipla’s case that the XIFAXAN® tablets infringe the XRPD Claims must fail, because, even if those tablets contain amorphous rifaximin, Cipla has not established that any of that rifaximin has a FIG 1 XRPD. And in my view, there is no basis for saying that it is up to Salix to show that amorphous rifaximin does not always produce a FIG 1 XRPD. On a fair view of the evidence, there is no evidence to suggest even faintly that the FIG 1 XRPD is always thrown up by amorphous rifaximin. In so far as there is any evidence, it points the other way, namely in Dr Swaminathan’s somewhat throw-away line in cross-examination, but in my opinion that is an insufficiently clear or tested piece of evidence on which to base any conclusion.

151.

The essential point is that, given that there is no evidence which suggests that all amorphous rifaximin has a FIG 1 XRPD , one is thrown back on the proposition that, in order to establish infringement of a claim, a patentee must establish, albeit only on the balance of probabilities, that each aspect of a product claim is infringed by the allegedly infringing article, and therefore, even if XIFAXAN® tablets contain amorphous rifaximin, Cipla has failed to establish that they infringe the XRPD Claims.

152.

It might appear a little surprising to a notional outside observer of the six-day hearing that Cipla’s claim to recover what appears likely to be a very substantial sum of money is defeated by what may be characterised as a rather short and technical point, particularly given that relatively little time was spent in argument and even less time was spent in evidence on the point. However, that is not a reason for rejecting Salix’s case on the point, if, as I have concluded, it is a good case…”. [emphasis added]

A party to arbitral proceedings may (upon notice to the other parties and to the tribunal) apply to the court challenging an award in the proceedings on the ground of serious irregularity affecting the tribunal, the proceedings or the award.

A party may lose the right to object (see section 73) and the right to apply is subject to the restrictions in section 70(2) and (3).

Serious irregularity means an irregularity of one or more of the following kinds which the court considers has caused or will cause substantial injustice to the applicant—

(a)

failure by the tribunal to comply with section 33 (general duty of tribunal);

(b)...”

Section 33 of the 1996 Act provides:

“(1)

The tribunal shall—

(a)

act fairly and impartially as between the parties, giving each party a reasonable opportunity of putting his case and dealing with that of his opponent, and

(b)

adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or expense, so as to provide a fair means for the resolution of the matters falling to be determined.

(2)

The tribunal shall comply with that general duty in conducting the arbitral proceedings, in its decisions on matters of procedure and evidence and in the exercise of all other powers conferred on it.”

“To comply with its duty to act fairly under s.33(1) of the Arbitration Act 1996, the tribunal should give the parties an opportunity to deal with any issue which will be relied on by it as the basis for its findings. The parties are entitled to assume that the tribunal will base its decision solely on the evidence and argument presented by them prior to the making of the award. If the tribunal is minded to decide the dispute on some other basis, the tribunal must give notice of it to the parties to enable them to address the point. Particular care is needed where the arbitration is proceeding on a documents-only basis or where the opportunity for oral submissions is limited. That said, a tribunal does not have to refer back to the parties its analysis or findings based on the evidence or argument before it, so long as the parties have had an opportunity to address all the “essential building blocks” in the tribunal’s conclusion. Indeed, the tribunal is entitled to derive an alternative case from the parties’ submissions as the basis for its award, so long as an opportunity is given to address the essential issues which led the tribunal to those conclusions.”

Interbulk Ltd v Aidan Shipping Co Ltd (“The Vimeira”) [1984] 2 Lloyd’s Rep 60 where an award was remitted because the tribunal decided the arbitration on the basis of a point which was never raised as an issue or argued before the arbitrators;

Cameroon Airlines v Transnet Ltd [2004] EWHC 1829 (Comm), where the tribunal determined the restitutionary sum on a basis not contended by either party;

OAO Northern Shipping Co v Remol Cadores De Marin SL [2007] EWHC 1821 where the tribunal decided an issue where there had been no argument or discussion directed towards the issue;

Ducat Maritime Ltd v Lavender Shipmanagement [2022] EWHC 766 where Butcher J held that the irregularity was that an arbitrator had failed to adhere to the common ground between the parties, in deciding how much was owed on a basis which had not been argued by either party, without giving them the opportunity to comment on it;

Royal & Sun Alliance Insurance Ltd v Tughans (A Firm) [2022] EWHC 2589 (Comm), in which Foxton J found that a serious irregularity had occurred in circumstances where an issue had not formed part of one party’s case, the merits hearing proceeded on that basis, but the point was nonetheless raised in the party’s closing submission.

Thus, Ackner LJ in The Vimeira [1984] 2 Lloyd’s Rep 66 at page 76 stated:

The essential function of an arbitrator . . . is to resolve the issues raised by the parties. The pleadings record what those issues are thought to be and, at the conclusion of the evidence, it should be apparent what issues still remain live issues. If an arbitrator considers that the parties or their experts have missed the real point... then it is not only a matter of obvious prudence, but the arbitrator is obliged, in common fairness or, as it is sometimes described, as a matter of natural justice, to put the point to them so that they have an opportunity of dealing with it...

. . . the adequacy of the turning area was not at the conclusion of the evidence — even though it was a possible issue at the commencement of the arbitration — any longer a live issue. The arbitrators clearly thought otherwise. They should have so informed the parties ...

and (per Bingham LJ) in Zermalt Holdings SA v Nu Life Upholstery Repairs Ltd [1985] 2 EGLR 14 at page 15:

If an arbitrator is impressed by a point that has never been raised by either side then it is his duty to put it to them so that they have an opportunity to comment. If he feels that the proper approach is one that has not been explored or advanced in evidence or submission, then again it is his duty to give the parties a chance to comment . If he is to any extent relying on his own personal experience in a specific way, then that again is something that he should mention so that it can be explored. It is not right that his decision should be based on specific matters which the parties never had the chance to deal with, nor is it right that a party should first learn of adverse points in a decision against him. That is contrary both to the substance of justice and to its appearance...

These principles apply to unargued points of law or construction as they do to unargued questions of fact. In such cases, whilst it is not necessary for the tribunal to refer back to the parties each and every legal inference which it intends to draw from the primary facts on the issues placed before it, the tribunal must give the parties ‘‘a fair opportunity to address its arguments on all of the essential building blocks in the tribunal’s conclusion’’ (ABB AG v Hochtief Airport GmbH [2006] 2 Lloyd’s Rep 1 at para 70).

Here, the ‘‘representation’’ issue was one of the ‘‘essential building blocks’’ of the tribunal’s decision. Counsel for buyers had proceeded on the assumption that the point was no longer in issue (if it ever had been), and therefore did not need to be addressed. As Mr Wilson has stated, the tribunal did not invite submissions on the representation issue. This was not simply a case of a tribunal drawing a further inference on an issue which the parties had otherwise had the opportunity to address. Indeed, it is perhaps surprising that the tribunal received written submissions after the hearing as to which of the GL certificate and GA plan were relied upon (if either), but again did not invite submissions on its intended ‘no representation’ point”. [emphasis added]

“I have reluctantly come to the conclusion that the Arbitrator’s decision to grant the Disputed Declarations in circumstances in which:

i)

Tughans had expressly disclaimed any application for relief in respect of the Tughans Fee Damages Claim save on the basis of the Qualified Claim;

ii)

the merits hearing had been conducted by both parties on that basis; and

iii)

RSA had made it clear in its Defence and Counterclaim that there were alternative arguments it reserved the right to put forward had the point been advanced;

involved a serious irregularity. The decision involved a failure to allow RSA a reasonable opportunity to present its case and/or deal with Tughans’ case as newly formulated for the purposes of s.33(1)(a) and s.68(2)(a) of the 1996 Act and a failure to conduct the proceedings in accordance with the procedure agreed by the parties (namely by reference to the matters in issue as defined in the statements of case and submissions served before the merits hearing).”

“There can also be no dispute that an applicant, under section 68, has to surmount a “high hurdle”, as it was put in Bandwidth Shipping Corporation v Intaari (The ‘Magdalena Oldendorff’) [2007] 2 CLC 537 at [35], or “high threshold” as it was put in Lesotho Highlands Development Authority v Impregilo SpA and Others [2006] AC 221 at [28] and bears a “heavy burden”, as was said in New Age Alzarooni 2 Ltd and Another v Range Energy Natural Resources Inc [2014] EWHC 4358 (Comm) at [12]. As was explained in paragraph 280 of the DAC report on the Arbitration Bill which led to the Arbitration Act 1996, the section was “really designed as a long stop, only available in extreme cases, where the tribunal has gone so wrong in its conduct of the arbitration that justice calls out for it to be corrected”.”

“MR. WAUGH: You asked me specifically a question, "If all amorphous rifaximin has the XRPD of Figure 1". I may have misled you, but the answer is "No". I am told there are different amorphous forms. It is called polyamorphism.

THE ARBITRATOR: Right.

MR. WAUGH: Each has a different XRPD. What that means is that Figure 1 is not the inherent feature of all amorphous rifaximin. Figure 1 is a limitation to this particular form of amorphous rifaximin made by this patent . Figure 1 is the fingerprint or hallmark of rifaximin made by this patent if you follow the procedure, but not of all amorphous rifaximin.” [emphasis added]…

THE ARBITRATOR: Right. It is only one type of amorphous rifaximin, then, that you say is covered by this patent?

MR. WAUGH: Yes ” [emphasis added]

“It is a fair point Mr. Saunders, subject to being taken to some evidence, but as Mr. Waugh says, he was answering my question”.

“ The XRPD pattern for amorphous rifaximin is an inherent property of amorphous Rifaximin , i.e., it necessarily has such a pattern.

Thus, once the presence of amorphous rifaximin has been established, no additional evidence is necessary to establish that claim forms (b), (c), and (e) are also infringed”. [emphasis added]

“…I have to consider what may either be called an application to put in some new evidence or an objection to the putting in of new evidence and, indeed, the putting of certain documents to a witness .

I am not going to set out the background, but basically, the point is that this evidence may – I have not seen it – may call into question an assumption which is said to have been made that amorphous rifaximin produces one XRPD pattern and, if that assumption is wrong then it may call into question the conclusions reached by the witness concerned, Dr. Kaduk, in his evidence.

The objection to this evidence being put, or these documents, as I will call them, being put is that nowhere in the respondent's case has that point, namely, that amorphous rifaximin may have more than one XRPD pattern, been raised as a reason for doubting Dr. Kaduk's conclusion and it would operate as, effectively, an ambush on the claimant's case and, on his evidence, and wholly contrary to the cards-on-the-table approach.

The answer that is given is that it arises from a question I put yesterday on the first day of the hearing, namely, whether there was more than one XRPD pattern for amorphous rifaximin and/or from evidence given by the first, and so far only, witness in this case, Dr. Linck, on slide 29 of her set of slides. In addition, the respondents rely on paragraph 18 of the ruling I gave on 2nd October.

The natural instinct of any judge or arbitrator is to allow in evidence if it can possibly be justified on the basis that: (a) the evidence can be ignored in due course, unlike with a jury trial, if the tribunal considers it appropriate; and (b) in any event, it is better to have a decision based on all available information rather than keeping information out.

But, in this case, I have reached the conclusion that it would be wrong to allow this evidence in. It seems to me that to base it on a question I raised cannot be right, because the proper answer to the question is it does not arise. So far as Dr. Linck’s evidence is concerned, the evidence has been withdrawn and, in any event, it is right to record that I read it as not expressing a view from someone who had no basis or expertise for the view that there was only one XRPD pattern for the amorphous rifaximin, but merely that that was what the patent provided, because she was put forward as an expert on how a patent would be read. So far as the evidence is concerned, the respondent has had a full opportunity to comment on Dr. Kaduk's evidenc e and has produced, I think, well over 350 pages of expert evidence relating to Dr. Kaduk's evidence and in the form of four witness statements, at least, dealing with that in some detail and has not raised this point . In addition, it does seem to me that passages in some of the evidence suggests that there is only one XRPD pattern for amorphous rifaximin . For instance, and perhaps most notably, Dr. Myerson says that "amorphous rifaximin is known to provide an XRPD signal. That pattern is provided in Figure 1 of Cipla's own patent". There is no suggestion there is any other pattern or signal that might be made…

In those circumstances, to raise a point which could have been raised at any time before and, if it was going to be raised, should have been raised in accordance with normal principles, and to raise it at this stage for the first time when Dr. Kaduk is about to be cross-examined, does seem to me to be unfair . The temptation to let it in at this stage and see what happens is considerable, but once it is out there, the danger is that the damage is done. It is one thing to say one will ignore a piece of evidence because it is unfair to do so, but it seems to me in relation to this evidence, there is a real risk that that would not be possible. Once it was out, it was out. Therefore, one has to make a decision now. Mr. Waugh, understandably, pressed paragraph 18 of my decision, as I have mentioned. That has to be read, as Mr. Saunders said, in context. It is quite clear from paragraphs 4 and 5 that if a party wanted to push a whole new case or an important new argument which relied on evidence and so on, then they were meant to produce that evidence well in advance . Paragraph 18, which does deal with points to be put, is not concerned with wholly new points which have not been raised before, but has to be read together with paragraphs 4 and 5 and, it seems to me, it is concerned with matters such as, "You said something inconsistent in a previous case" and the like, but not something as fundamental as this. I take heart from the fact that it is not the case that the respondent relied on paragraph 18 and kept this up its sleeve, which would not be very attractive, but would give rise to a point of fairness in their favour. It is only a point which occurred to them as part of their case yesterday.

With some regret but bearing in mind my duty is to ensure a fair hearing, I have concluded this evidence should not be put and should not be put in and should not be put to the witness .” [emphasis added]

The parties cases had been advanced that amorphous rifaximin necessarily exhibited the Fig 1 pattern;

Any evidence to the contrary was expressly excluded;

It was not open to Salix to argue that there could be more than one form of amorphous rifaximin (the polyamorphous argument) or that amorphous rifaximin might produce an XRPD pattern different from the Fig 1 pattern (the inherency argument).

“the proper answer to the question is it does not arise.”

in light of the 26 October ruling Cipla was entitled to proceed on the assumption that the question of whether amorphous rifaximin might produce more than one XRPD pattern was no longer in issue.

In the 26 October ruling the Tribunal ruled that the suggestion that amorphous rifaximin might produce more than one XRPD pattern had not been properly raised by Salix and moreover that it was too late to raise it on Day 2 of the hearing. The merits hearing therefore proceeded on the basis that the point was not being run.

the 26 October ruling was to the effect that it was unfair to put the questions to Dr Kaduk given that Dr Kaduk had led no evidence on point.

it was clear that throughout the arbitration the question of proof was always live; the 26 October ruling was not determinative on this point.

in oral closings Cipla sought to rely on the evidence of Judge Rader; Cipla did not submit that the arbitrator should look to the evidence of Professor Myerson, nor did it submit that the arbitrator had already ruled on that evidence.

Cipla should have raised the issue in closing submissions if it wanted to say that the arbitrator had already ruled on the issues and that it had therefore been deprived of an opportunity to put the case to witnesses. It was submitted that Cipla in its skeleton ignored the dialogue with the arbitrator and in particular the closing submissions.

the arbitrator dealt properly and fairly with the issues and did not overlook any evidence.

It was Cipla’s burden to prove inherency. But Cipla adduced no evidence that there is only one form of amorphous rifaximin or that any amorphous rifaximin will inherently have the XRPD pattern of FIG. 1 . The unchallenged testimony of Dr. Swaminathan was that there is “more than one amorphous” rifaximin and that other amorphous forms would have a different halo pattern… It is not Salix’s burden to prove non‐inherency, but the only related evidence in the record nonetheless supports Salix.

Cipla have neither produced an XRPD diffractogram showing that the amorphous rifaximin they allege to be present in XIFAXAN® tablets has the XRPD pattern of FIG. 1, nor have they established that the alleged amorphous rifaximin will inherently have the XRPD pattern of FIG. 1. Thus, Cipla have not proved that the amorphous rifaximin they allege to be present in XIFAXAN® tablets is the claimed amorphous rifaximin, even accepting Dr. Kaduk’s evidence at face value. Since the only Valid Claims are claims [b] and [c], and both contain the FIG. 1 limitation, Cipla have not proved infringement (absent the license) of claims [b] and [c] and this is fatal to Cipla’s case.” [emphasis added]

“THE ARBITRATOR: … I have a product, it contains amorphous rifaximin, but the amorphous rifaximin has a different XRPD pattern from Figure 1. My question is, does that product infringe?

MR. PATEL: If you have an amorphous rifaximin sample and the X-ray diffraction pattern of that does not reflect the amorphous rifaximin pattern of Figure 1, then it would not be covered by the claim. We do not have that. There is no factual scenario in this case, there is no factual evidence of that. I am going to point you to Salix's admission and Judge Rader's admission that when amorphous rifaximin is present, Figure 1 is an inherent property of that amorphous rifaximin .” [emphasis added]

“MR SAUNDERS…I think there may have been a certain, a little bit of, there is a slight risk that when you are approaching that question of amorphous rifaximin and Figure 1, that you do so on the basis of the evidence as it was before you in the record, I think as Mr. Patel emphasised. You may recall that we had a bit of an argument, Mr. Waugh and I, before you, about whether some very late evidence could come in which suggested that there was a polymorphism so there were multiple different forms of amorphous content. You ruled that it was too late and that was to be excluded. So for present purposes, whenever you are approaching the question about amorphous content and Figure 1 and characterisation of amorphous content, then there is nothing on the record in the case that would suggest that it is anything else other than Figure 1 and that is something on which you have already ruled . I did note that in Salix's closing, at paragraph 10, there is a slight attempt to resurrect this point, but it is not open to them and there is no evidence on it . And the reason, just to recall why it was excluded, was because it was introduced so late that we did not have a proper opportunity to respond to it, so you ruled it would be put out of your mind, as it were . So I just wanted you to be ----

THE ARBITRATOR: I understand that, but what I was wondering, and I do not know if it is the case, whether it could be argued that it was for you to show that when it comes to the claims which have a specific reference to a particular XRPD pattern, that the amorphous rifaximin in the relevant samples did have that pattern.

MR. SAUNDERS: We do not need to do that, as this arbitration stands, because amorphous equals Figure 1 for the present purpose. So it is not as if -- that is in effect the point that you ruled against Salix on , which is that there are different forms, or the potential that there are different forms of amorphous content which might have different characterising XRPD patterns that make ----

THE ARBITRATOR: That may depend on -- I quite accept that they cannot put in evidence that I stopped them putting evidence in on that, positive evidence in on that, but it still raises the question about whether that can be run as a "it is for you to show", rather than it is for them to show otherwise . It is for you to show that the amorphous rifaximin in these tablets had this diffraction pattern, not for them to show that there are others to show that it did not.

MR. SAUNDERS: Yes. I think they certainly make the point that amorphous rifaximin -- that we have not shown Figure 1.

THE ARBITRATOR: Exactly.

MR. SAUNDERS: Yes, they say there is nothing, where do we see the Figure 1 trace in any of the evidence?

THE ARBITRATOR: That was the point. I quite accept there is not any evidence positively to show that other amorphous -- there is more than one amorphous rifaximin XRPD pattern. But that does not quite deal with, necessarily deal with the point.

MR. SAUNDERS: No. We would accept that that is a criticism that is open to them to make.

THE ARBITRATOR: Yes.

MR. SAUNDERS: Of course what it is not open to them to make is to say, "and the particular variety of amorphous that you have got is different to some other variety of amorphous which is not in the case". I suspect that there is actually, it is not really that much of a distinction, but it is important that we are absolutely square about the effect of the ----

THE ARBITRATOR: If I accept that they have not -- there is no evidence to show that there is more than one form, but, anyway, we have the point.

MR. SAUNDERS: Sir, that is the point.” [emphasis added]

“I quite accept that they cannot put in evidence that I stopped them putting evidence in on that, positive evidence in on that, but it still raises the question about whether that can be run as a “it is for you to show”, rather than it is for them to show otherwise.”

“THE ARBITRATOR: …I quite accept there is not any evidence positively to show that other amorphous -- there is more than one amorphous rifaximin XRPD pattern. But that does not quite deal with, necessarily deal with the point.

MR. SAUNDERS: No. We would accept that that is a criticism that is open to them to make .” [Emphasis added]

“The way that this worked out was that Salix wanted to put in a patent late in the day that said there were multiple different polymorphs of, sorry, there are multiple different amorphous forms of rifaximin and that they had different XRPD patterns. We objected, you ruled on that and said it could not come in, it was too late. We also removed , in order to deal with an objection in the light of that ruling, we took out Dr. Linck's slide where she said it was an inherent property, because it just was not necessary to rely on that because we did not have to deal with this point . So there is, the evidential record in this case is there is nothing before you, sir, that says that there are different XRPD patterns for different forms, or even that there are multiple amorphous forms of rifaximin. That would have opened up a very big subsidiary issue which was raised too late for Dr. Kaduk to have dealt with…

What that pleading did not say is it did not aver that there were multiple amorphous forms with different XRPDs. It was just a general plea that you have to satisfy the burden of proof. So if he was going to raise this as the specific point, that was the time it should have been done and that was a point that is why, amongst other things, we said all this was much too late. So to suggest now that it is still okay to run the point on a sort of, "Who has the burden", "Who has not responded", "We have pulled the Linck slide", "No we have not", and so on, it does not work. And the evidence and the record before you in this arbitration is that there is, that there is one amorphous form and Figure 1 is its XRPD pattern and there is nothing more on the go.

THE ARBITRATOR: You say that is the evidence. This could be quite an important point, so let me examine that a bit. Why do you say that is the evidence? I can understand, the only evidence I have, as I see it, is that amorphous rifaximin, there is at least one type, possibly the only type of amorphous rifaximin, that has a particular XRPD pattern. Is it up to you to show that the amorphous rifaximin, if I accept Dr. Kaduk's evidence in the relevant product, is has that particular x-ray PD diffraction pattern , if it is required to have it under the terms of the patent, which again you say it is not, but let us put that to one side for the moment. Or is it for the other side to show that there are other amorphous rifaximins with different XRPD patterns? Why is the fact that they have not raised it or tried to raise it late, how does that help me to know where the onus is?

MR. SAUNDERS: Well, so the way the evidential record developed was that this was not -- so looking for different forms of amorphous rifaximin was not part of the case at all . Dr. Kaduk was tasked with looking for rifaximin, which he did by reason of the deficit.

THE ARBITRATOR: Yes.

MR. SAUNDERS: If this was a case about looking for a particular characterisation of amorphous rifaximin, then what would have been necessary was in some way to purify the rifaximin to isolate it out of the tablets and then purify it so it could be tested and then test that. That was never in issue because it was never, it was never averred against us that there were multiple forms. It was only very late in the case where there was an attempt to introduce that , because somebody had mentioned it in a patent. Nobody had thought anything about it at all until that was raised. And so at that stage, that was raised, and Dr. Linck put that point in her slide and both of them were withdrawn. So where one is left is that the experiments that had been conducted were to investigate the amorphous content. That protocol was sent to Salix a long, long time ago. If there had been a major, if there had been a problem with that, it was, we would say, rather incumbent upon them to say, "Look, you know", they should have put in a proper pleading and said, "This is deficient because you are not looking at the right thing here at all. You should have done some chemical characterisation study, where you should have purified and done some further testing". That was never an issue at all until someone on Salix's side had a bright idea to put a last-minute patent in to suggest that there was a distinction here which had never been in the case, was not in any of their expert reports and was not dealt with by Dr. Kaduk at all. It came as a complete surprise to everybody. In those circumstances ----

THE ARBITRATOR: I think the fact they tried to put in evidence later on and did not succeed and so on, that is all irrelevant. They cannot be worse off as a result of having done that than if they had not. So the question really, what you are really saying is that if they wanted to run that argument, they should have raised it earlier?

MR. SAUNDERS: Yes, exactly that.

THE ARBITRATOR: That is why the onus, because on the face of it, I see force in the point that it is for you to show, if you are wrong on the ungranted claims and you are limited to the granted claims, and if the granted claims do require the amorphous rifaximin to be, have that particular XRPD, and if I accept Dr. Kaduk's evidence, then it can still be said that it is up to you to show that the amorphous rifaximin in question had the relevant XRPD, and you have not done that. That is Mr. Waugh's point. On the face of it, it is for you to show infringement, so that seems to me to have force. But you say, given the way the pleadings developed, and we were doing the pleadings, it was for them to plead that point rather than blindside you with it and say the onus is on you . Is that a fair summary? I do not want to ----

MR. SAUNDERS: That is a fair summary. It is a pleading point and an evidential one, in that when Dr. Kaduk did his testing, this is not something that was raised by either Dr. McClurg or Professor Myerson , so nobody was saying anything about polyamorphism or different multiple amorphous forms at any point. This is not something that was picked up in evidence.

…

MR. SAUNDERS: No, no. It is just not known. So that is where, I think, we come out on that. So we say it is not a failure to -- I mean, if you think about it, if that had been pleaded, the arbitration would have taken a very different tack evidentially , because we would have known that we would have had to have dealt with this point and we would have been having lots of arguments about whether the extent to which amorphous things tend to produce that particular XRPD or whether that was in some way a fingerprint of some particular type of amorphous thing and whether, you know, there is a more fundamental question, which is actually if something is amorphous, what does it mean to say there are different types of amorphous things? There is a sort of categorical question which, you know, amorphous means glassy and sort of devoid of structure. So having different types of amorphous things is somewhat of a surprise to the material scientist. There is quite a lot of evidential points which would need to have been dealt with and none of them were picked up. That is why we say it is just too late to raise this ”. [emphasis added]

“ …In those circumstances, to raise a point which could have been raised at any time before and, if it was going to be raised, should have been raised in accordance with normal principles, and to raise it at this stage for the first time when Dr. Kaduk is about to be cross-examined, does seem to me to be unfair…

With some regret, but bearing in mind my duty is to ensure a fair hearing, I have concluded this evidence should not be put and should not be put in and should not be put to the witness .” [emphasis added]

Salix also sought to put in late evidence, which suggested that amorphous rifaximin could produce different XRPDs, and that not all amorphous rifaximin produced a FIG 1 XRPD. I acceded to Cipla’s submission that this evidence was presented too late to be admitted, and accordingly it was excluded.”

“I quite accept that they cannot put in evidence that I stopped them putting evidence in on that, positive evidence in on that, but it still raises the question about whether that can be run as a "it is for you to show", rather than it is for them to show otherwise.”

“There is quite a lot of evidential points which would need to have been dealt with and none of them were picked up. That is why we say it is just too late to raise this”.

Although the suggestion was not pressed hard, Cipla suggested that the point was something of an ambush on the part of Salix. It is fair to say that, until closing submissions, it did not appear to be a point of which a great deal was made by Salix , but, unlike many of the other points that were in contention, this is a very short point, particularly in the light of the dearth of much if any directly relevant evidence. But more importantly, the point was in fact specifically raised by Salix, as it should have been, in its Statement of Defence and Cross-Claim on 27th January 2021 : in para 207, it contended that “XIFAXAN® tablets are neither ‘essentially free of crystalline rifaximin’ nor are they ‘characterized by the XRPD pattern shown in Figure 1’”, and two paragraphs later, it stated that “XIFAXAN® tablets would have to have the XRPD pattern shown in Figure 1 for Cipla to prove infringement of the ‘Figure 1’ limitation, and they do not”.

It can be said that these statements concern the XRPD pattern of XIFAXAN® tablets rather than the rifaximin therein contained, but I consider that those two paragraphs put, or should have put, Cipla on notice as to the point at issue. And, if there is still any remaining doubt, it is surely put to rest by what Salix contended in paras 136 and 139 of its Rejoinder and Defence to Counterclaim dated 6th October 2021 . In para 136: “Cipla has failed to meet its burden of proving infringement of [the XRPD] claims because it does not have even a single XRPD diffractogram of XIFAXAN® tablets or its API that has the halo pattern of Figure 1” (emphasis added). And in para 139: “Cipla has not produced any XRPD of the tablets that has the pattern shown in Figure 1, and it has not proved that the amorphous rifaximin it alleges is present in the tablets has the XRPD pattern of Fig 1, rather than a different XRPD pattern” (emphasis added). It therefore appears to me that, unless it can be said to be up to Salix to show that amorphous rifaximin does not always produce a FIG 1 XRPD, or unless there is some reason for thinking that that is the case, Cipla’s case that the XIFAXAN® tablets infringe the XRPD Claims must fail, because, even if those tablets contain amorphous rifaximin, Cipla has not established that any of that rifaximin has a FIG 1 XRPD. And in my view, there is no basis for saying that it is up to Salix to show that amorphous rifaximin does not always produce a FIG 1 XRPD . On a fair view of the evidence, there is no evidence to suggest even faintly that the FIG 1 XRPD is always thrown up by amorphous rifaximin. In so far as there is any evidence, it points the other way, namely in Dr Swaminathan’s somewhat throw-away line in cross-examination, but in my opinion that is an insufficiently clear or tested piece of evidence on which to base any conclusion.” [emphasis added]

“…In closing, Cipla argued that, in various passages, Salix’s pleaded case and Judge Rader’s declarations effectively accepted, or even contended, that amorphous rifaximin always produced an XRPD as shown in FIG 1. However, I consider that it is clear that the passages relied on were directed to the amorphous rifaximin as claimed in the relevant patents, and not to amorphous rifaximin generally…”

“It is a pleading point and an evidential one, in that when Dr. Kaduk did his testing, this is not something that was raised by either Dr. McClurg or Professor Myerson…”

“… if that had been pleaded, the arbitration would have taken a very different tack evidentially , because we would have known that we would have had to have dealt with this point … There is quite a lot of evidential points which would need to have been dealt with and none of them were picked up. That is why we say it is just too late to raise this ” [emphasis added]

“I think the fact they tried to put in evidence later on and did not succeed and so on, that is all irrelevant. They cannot be worse off as a result of having done that than if they had not.”

“It is for you to show that the amorphous rifaximin in these tablets had this diffraction pattern, not for them to show that there are others to show that it did not.”

“In addition, it does seem to me that passages in some of the evidence suggests that there is only one XRPD pattern for amorphous rifaximin. For instance, and perhaps most notably, Dr. Myerson says that "amorphous rifaximin is known to provide an XRPD signal. That pattern is provided in Figure 1 of Cipla's own patent". There is no suggestion there is any other pattern or signal that might be made”. [emphasis added]

“…There is also an important distinction between, on the one hand, a party having no opportunity to address a point, or his opponent’s case, and, on the other hand, a party failing to recognise or take the opportunity which exists. The latter will not involve a breach of section 33 or a serious irregularity…”

“Having considered these authorities my understanding of the law regarding allegations that an arbitral tribunal has overlooked evidence is as follows. A contention that the tribunal has ignored or failed to have regard to evidence relied upon by one of the parties cannot be the subject matter of an allegation of a serious irregularity within section 68(2)(a) or (d), for several reasons . First, the tribunal’s duty is to decide the essential issues put to it for decision and to give its reasons for doing so. It does not have to deal in its reasons with each point made by a party in relation to those essential issues or refer to all the relevant evidence. Second, the assessment and evaluation of such evidence is a matter exclusively for the tribunal. The court has no role in that regard. Third, where a tribunal in its reasons has not referred to a piece of evidence which one party says is crucial the tribunal may have (i) considered it, but regarded it as not determinative, (ii) considered it, but assessed it as coming from an unreliable source, (iii) considered it, but misunderstood it or (iv) overlooked it. There may be other possibilities. Were the court to seek to determine why the tribunal had not referred to certain evidence it would have to consider the entirety of the evidence which was before the tribunal and which was relevant to the decision under challenge . Such evidence would include not only documentary evidence but also the transcripts of factual and expert evidence. Such an inquiry (in addition to being lengthy, as it certainly would be in the present case) would be an impermissible exercise for the court to undertake because it is the tribunal, not the court, that assesses the evidence adduced by the parties . Further, for the court to decide that the tribunal had overlooked certain evidence the court would have to conclude that the only inference to be drawn from the tribunal’s failure to mention such evidence was that the tribunal had overlooked it. But the tribunal may have had a different view of the importance, relevance or reliability of the evidence from that of the court and so the required inference cannot be drawn. Fourth, section 68 is concerned with due process. Section 68 is not concerned with whether the tribunal has made the “right” finding of fact, any more than it is concerned with whether the tribunal has made the “right” decision in law. The suggestion that it is a serious irregularity to fail to deal with certain evidence ignores that principle . By choosing to resolve disputes by arbitration the parties clothe the tribunal with jurisdiction to make a “wrong” finding of fact.” [emphasis added]