United States: ‘Sham Litigation' Sufficiently Plead When Generic Provides Detailed Statement And Access To ANDA

Otsuka Pharm. Co., Ltd. v. Torrent Pharms. Ltd., Inc., (D.N.J. June 22, 2015)

Explaining the differences between the pleading standards for antitrust and patent misuse defenses, the U.S. District Court for the District of New Jersey denied Otsuka's motion to dismiss Torrent's antitrust counterclaim but granted Otsuka's motion dismissing a counter claim for patent misuse. Otsuka Pharm. Co., Ltd. v. Torrent Pharms. Ltd., Inc., No. 2014-1078, __ F.Supp.3d ___, 2015 WL 3869677 (D.N.J. June 22, 2015) (Simandle, C.J.).

Otsuka brought over 25 patent infringement actions seeking to block generic versions of Otsuka's antipsychotic drug Abilify® (aripiprazole) from the market. Torrent brought antitrust and patent misuse counterclaims alleging Otsuka monopolized the aripiprazole market by bringing objectively baseless and sham litigation in order to delay and eliminate competition and improperly maintain its exclusive monopoly over the aripiprazole market. Otsuka moved to dismiss Torrent's antitrust and patent misuse counterclaims under Rule 12(b)(6) arguing Torrent: (1) failed to allege an anticompetitive injury required for antitrust standing; (2) failed to overcome the presumption of Noerr-Pennington immunity; and (3) failed as a matter of law to state a claim for patent misuse.

Otsuka challenged only the "antitrust injury" factor of the multi-factor test used by the U.S. Court of Appeals for the Third Circuit to determine antitrust standing. Otsuka argued that its infringement lawsuit has not caused Torrent to suffer any anticompetitive injury, because Torrent voluntarily chose to delay seeking regulatory approval until after the main compound patent for aripiprazole expired and Torrent's allegations of delayed market entry lacked the immediacy required for antitrust standing. In rejecting these arguments, Chief Judge Jerome B. Simandle found a real and immediate injury because expiration of the compound patent did not create a present barrier for Torrent to enter the market, and the U.S. Food and Drug Administration (FDA) had already approved Torrent's generic application for Abilify. The only barrier to market entry for Torrent was the lawsuit brought by Otsuka.

The court then found that Torrent pleaded sufficient facts to confer antitrust standing. The court focused on the "hallmark" for evaluating an allegation of antitrust injury—whether the actions alleged to be anticompetitive affect the overall market, rather than only an individual competitor. The court determined that pursuit of litigation that prevents generic competition constitutes anticompetitive behavior. It also found that Torrent's counterclaim sufficiently alleged injury because Otsuka's "pursuit of 'objectively baseless and sham judicial proceedings' has adversely affected competition in the overall aripiprazole market by encumbering the path of generic entry and effectively extending Otsuka's long-held monopoly." The district court stated that the pendency of the instant lawsuit against Torrent—and the 24 other lawsuits against other generic defendants—constituted the only encumbrance to Torrent's and other generic manufacturers' free ability to enter the market, making the injuries to these generic companies both real and immediate.

Next, the district court analyzed Otsuka's argument that it was immune—under the Noerr-Pennington doctrine. Under that doctrine, Supreme Court precedent holds that a patent owner is presumptively immune from an antitrust violation when it initiates patent infringement litigation. Parties filing sham litigations, however, do not receive the benefit of the immunity. Judge Simandle determined that Torrent alleged specific facts that the lawsuit was objectively baseless and that the lawsuit was an attempt to interfere with the business of a competitor. Torrent specifically alleged that it provided a detailed statement setting forth why Torrent's generic product would not infringe Otsuka's Orange Book-listed patents. It further alleged that it provided its abbreviated new drug application (ANDA) to Otsuka, yet Otsuka still brought the lawsuit after viewing the detailed statement and Torrent's ANDA. The court, accepting the allegations as true for purposes of Otsuka's Rule 12(b)(6) motion, found these fact sufficient to overcome the Noerr-Pennington doctrine. The court noted that the ultimate question of whether Otsuka undertook reasonable investigation in advance of filing the lawsuit, whether it bought the lawsuit for an anticompetitive purpose and whether a reasonable litigant could have expected success on the merits were all questions of fact that could not be resolved prior to discovery and on a motion to dismiss under Rule 12(b)(6).

Judge Simandle granted each party's request to bifurcate the antitrust portion of the case until after the patent infringement claims were tried, since if Otsuka prevailed on the patent infringement claims, their counterclaim for antitrust violations would be rendered moot. The court also stayed discovery of the antitrust counterclaim pending resolution of the infringement claims.

Finally, the court granted Otsuka's motion to dismiss Torrent's counterclaim for patent misuse. Making short work of the patent misuse defense, the court concluded that Torrent failed to plead a key element of the defense—that the patentee attempted to impermissibly broaden the physical or temporal scope of the patent by extending the term of the monopoly beyond that granted by law. Accordingly, the court dismissed the patent misuse claim without prejudice and allowed Torrent 14 days to submit an amended counterclaim.

'Sham Litigation' Sufficiently Plead When Generic Provides Detailed Statement And Access To ANDA

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.