United States: Allegations Of Antitrust And Patent Misuse — Surviving A Motion To Dismiss

Otsuka Pharmaceutical Co. v. Apotex Corp. et al. (D.N.J. August 11, 2015)

The U.S. District Court for the District of New Jersey was tasked with determining whether allegations in Defendants' antitrust and patent misuse counterclaims set forth a plausible right to relief in order to survive a motion to dismiss under Rule 12(b)(6). Nearly a month prior to this decision, the court addressed Otsuka's similar motion to dismiss in Otsuka Pharmaceutical Co. v. Torrent Pharmaceuticals Limited, Inc. where the counterclaims were substantially identical. Plaintiff's motion to dismiss for the antitrust counterclaims was denied, and its motion to dismiss for the patent misuse counterclaims was granted with leave to amend. Otsuka Pharmaceutical Co. v. Apotex Corp. et al., Case No. 14-8074, 2015 WL 4756636 (D.N.J. August 11, 2015) (Simandle, D.J.).

This case involves Orange Book-listed patents 8,017,615, 8,580,796 8,642,760 and 8,759,350 covering Plaintiff's aripiprazole product, which is marketed as Ability® for the treatment of depression. The present patent infringement case is one of 26 related actions under the Hatch-Waxman Act, whereby Plaintiff alleges Defendants' proposed generic aripiprazole drug product will, if approved and marketed, infringe the Orange Book-listed patents. Defendants countered by alleging Otsuka has engaged in un-lawful monopolization by initiating objectively baseless and sham judicial proceedings causing Otsuka to enhance its monopolistic position in the aripiprazole market. Defendants also allege patent misuse by Otsuka for filing the present action with no basis. Plaintiff argued Defendants' counterclaims fail to allege facts pertaining to the "anticompetitive injury" required for antitrust standing and fail to overcome Otsuka's Noerr-Pennington immunity. Plaintiff also argued Defendants' patent misuse allegation fails as a matter of law for not stating a cognizable claim for patent misuse.

The court recognized a party suing under federal antitrust laws must meet the prudential requirement of "antitrust standing" which is determined by five factors, set forth in Ethypharm S.A. France. Of those factors, Otsuka only challenged Defendants' allegation of antitrust injury, which requires a showing (1) that it suffered an injury of the type the antitrust laws seek to prevent (e.g., anticompetitive behavior), and (2) that the injury resulted from the adversary's unlawful or anticompetitive acts. The pleaded facts must show the challenged action has had actual adverse effect on the competition as a whole in the relevant market, and not just an adverse effect on a specific competitor. The court held Defendants' allegations meet this requirement. Defendants allege Plaintiff initiated baseless patent infringement actions for the very purpose of excluding competitors from entering into the aripirazole market and to maintain its exclusivity in the market. As a result, Plaintiff has been able to maintain their monopoly over the aripirazole market. The court rejected Otsuka's position that Defendants lack antitrust standing, because it lacks approval from the U.S. Food and Drug Administration (FDA) holding that such a finding would create an "anomalous" result since generics have little incentive to pursue final FDA approval during the pendency of an infringement action.

Otsuka also argues Defendants have not pled sufficient facts to demonstrate the Noerr-Pennington immunity does not apply. Under the Noerr-Pennington doctrine, a patent owner is granted immunity from antitrust attacks when initiating patent infringement proceedings, unless it is shown that the filing was a "sham litigation." To prove sham litigation, a party must demonstrate (1) that the lawsuit is objectively baseless, and (2) that the baseless lawsuit was an attempt to interfere directly with the business relationships of a competitor. Here, the court determined Defendants' counterclaim contained sufficient facts showing that it provided Otsuka with a detailed statement of its non-infringement position and over 13,000 pages of supporting documentation, as well as raw materials and product samples associated with its abbreviated new drug application (ANDA) product. Despite the complete lack of evidence,

Otsuka initiated litigation. Defendants allege Otsuka filed the present action in bad faith for the purpose of frustrating their entry into the aripirazole market. The court held Defendants pled sufficient facts to overcome the antitrust immunity.
Finally Otsuka argues Defendants' patent misuse counterclaim fails to allege it impermissibly broadened the physical or temporal scope of the patent grant with an anticompetitive effect. Here, the court held Defendants sufficiently alleged that "Otsuka has wielded the Patents-in-Suite beyond their permissible 'physical or temporal scope' in order to gain market advantage."

Otsuka requested the court bifurcate and stay the antitrust and patent misuse counterclaims, pending resolution of the infringement issues. Following the practice of separating trial issues and antitrust issues, the Court separated the patent misuse and antitrust issues for trial.

Allegations Of Antitrust And Patent Misuse — Surviving A Motion To Dismiss

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