ETHYPHARM S.A. FRANCE, Appellant v. ABBOTT LABORATORIES.
No. 11-3602.
United States Court of Appeals, Third Circuit.
Argued Sept. 25, 2012. Filed: Jan. 23, 2013.
223
Finally, the Committee raises the case of Zhou v. Ashcroft, 04-3994-ag as a violation of D.R. 2-110(B)(4) because I filed a motion for extension of time to file petitioner‘s brief subsequent to the petitioner‘s discharge of me on August 17, 2005. As I have explained above, I do not believe that I violated D.R. 2-110(B)(4) because after the petitioner had discharged me to obtain new counsel, no new counsel filed an appearance, and as the deadline for petitioner to file his brief approached, I telephoned the petitioner, and he orally consented to, agreed to, and authorized me to file a motion to extend the time for petitioner to file his brief. I believe that I therefore complied with D.R. 2-110(A)(2) (“[A] lawyer shall not withdraw from employment until the lawyer has taken steps to the extent reasonably practicable to avoid foreseeable prejudice to the rights of the client...“) by acting as I did.
III. Recommendation
In light of the relatively dated nature of the misconduct as to scheduling orders and the fact that I have not repeated this conduct for years before even the Referral was made, I believe that a private reprimand is appropriate. As discussed above, the Committee uses as an important basis for its criticism of my conduct with respect to scheduling orders a decision of this Court from 2010, years after my conduct occurred. This is not to say that I was blameless in my conduct with respect to scheduling orders. I should have more carefully ascertained what this Court expected from counsel for a petitioner who did not want to go forward with the Petition for Review.
I shall be pleased to complete no fewer than six hours of pre-approved CLE, in appellate immigration law from a CLE provider accredited by the Appellate Division, First Department, of the Supreme Court of the State of New York, over and above the required hours of CLE otherwise required of New York attorneys.
I respectfully ask this Court to understand that I have tried at all times to best represent my clients in light of many problems created by their physical transiency, their lack of a basic education and fluency in the English language, their lack of a cultural background to give them even an elementary understanding of the American legal system, and their frequent lack of cooperation with me.
I ask this Court to accept my sincerest apologies for all the inconvenience I caused.
Respectfully submitted,
/s/ Douglas B. Payne
DOUGLAS B. PAYNE
Dated: October 24, 2011
Carlos T. Angulo, Esq., Dwight P. Bostwick, Esq. [Argued], Zuckerman Spaeder, Washington, DC, Austen C. Endersby, Esq., Gregory B. Williams, Esq., Fox Rothschild, Wilmington, DE, for Appellant.
Sean M. Brennecke, Esq., Klehr Harrison Harvey Branzburg, David J. Margules, Esq., Bouchard, Margules & Friedlander, Wilmington, DE, William F. Cavanaugh,
Before: McKEE, Chief Judge, JORDAN, and VANASKIE, Circuit Judges.
OPINION OF THE COURT
JORDAN, Circuit Judge.
Ethypharm S.A. France (“Ethypharm“) appeals the judgment of the United States District Court for the District of Delaware granting Abbott Laboratories (“Abbott“) summary judgment on Ethypharm‘s antitrust and state law claims. Although the District Court ruled in Abbott‘s favor, it had earlier denied Abbott‘s motion to dismiss, a motion premised on the assertion that Ethypharm lacked standing to bring antitrust claims under §§ 1 and 2 of the Sherman Antitrust Act. Abbott has pressed its standing argument on appeal, and we conclude that the District Court erred in holding there is antitrust standing in this case. Because Ethypharm‘s state law claims have not been argued on appeal, the District Court‘s judgment on those claims will remain undisturbed, but we will vacate the District Court‘s grant of summary judgment as to the federal claims and will remand with directions that they be dismissed for Ethypharm‘s lack of standing.
I. Background
A. Facts1
Ethypharm is a privately held French corporation that develops and manufac-
Reliant “was responsible for obtaining regulatory approval for the drug, preparing appropriate packaging material, and then marketing the drug through the efforts of a large, motivated, and experienced sales force.” (J.A. at 122.) To that end, the DLS granted exclusive rights to Reliant in the United States and allowed it to seek approval with the U.S. Food and Drug Administration (“FDA“) to market and sell Antara.3 Ethypharm explains in its Complaint4 that Reliant‘s role in exclusively marketing, selling, and obtaining FDA approval for Antara was critical because, without the “mechanism of the license and distribution agreement, Ethypharm would be foreclosed from the United States market.” (J.A. at 122.) Thus, without Reliant‘s, or some similar distributor‘s, willingness to take on the risk and expense of gaining FDA approval and marketing Antara, the drug could never have reached the United States market.
Consistent with the DLS, Reliant sought FDA approval of Antara pursuant to
The Drug Price Competition and Patent Term Restoration Act of 1984 (the “Hatch-Waxman Act“), codified at
There is also a third kind of application that a drug manufacturer may use to obtain FDA approval, and that is the route Reliant chose for Antara. Under
Finally, much as when filing an ANDA application, a
Rather than conducting its own clinical studies, Reliant depended on the data of another, already approved, fenofibrate drug called TriCor®, which was developed by a French company named Laboratories Fournier (“Fournier“) and distributed by Abbott in the United States.5 Antara received FDA approval in November 2004, and Reliant began marketing the drug in February 2005. Reliant chose not to make a certification under
In April 2006, Abbott and Reliant settled their patent dispute. Fournier, TriCor‘s developer, was also a party to the settlement. The three entered into a Settlement Term Sheet (“STS“) providing that Abbott and Fournier would grant a non-exclusive license to Reliant for the patents that were the subject of the lawsuit, along with U.S. Patent No. 4,895,726 (the “‘726 patent“), another fenofibrate patent. (See J.A. at 247 (“Abbott and Fournier would grant Reliant a nonexclusive license ... under the [patents] to exploit [Antara®] in the United States....“).) In exchange, “Reliant would make quarterly royalty payments to Abbott and Fournier in the total amount of 7% of Net Sales.”9 (J.A. at 248.) If, however, Reliant was acquired or it sold off the Antara portion of its business,10 the new owner would not receive the benefit of a 7 percent royalty; instead, “the License Fee ... would increase to 10% of Net Sales.” (Id.) Relevant here, § 8 of the
The license would contain additional customary terms and conditions including, without limitation, the following: ... (ii) no assignment, sublicense or other transfer of any rights relating to the Relliant Products (including the right to market and promote the Reliant Products) except: ... (e) to acquirers ... of any portion of Reliant [or its business] relating to the Reliant Products other than pursuant to a Change of Control, provided that any assignment, sublicense or other transfer of rights granted pursuant to Section 8(ii)(e), (A) to a Restricted Entity or Affiliate thereof, shall require the prior written consent of Abbott and (B) to any entity other than a Restricted Entity or Affiliate thereof shall be limited to [the ‘726, ‘670, ‘405, ‘552 and ‘881 patents] unless Abbott consents to the assignment, sublicense or other transfer (in which case, Reliant‘s rights to [the patents and their continuations] may be included). (J.A. at 255-56.)
That provision effectively foreclosed Reliant from assigning its rights in Antara to any “Restricted Entity” or partnering with such an entity to market Antara in the United States. The term “Restricted Entity” was defined to include, as the District Court summarized it, “about 20 large pharmaceutical companies, 10 generic companies[,] and a few specialty pharmaceutical companies.” (J.A. at 10.)
In April 2006, Abbott and Reliant entered a stipulation of dismissal of the patent litigation in accordance with the STS. A few months later, in July 2006, Reliant sold to Oscient Pharmaceutical Company (“Oscient“) the exclusive rights to market and sell Antara in the United States. Oscient, a business that did not appear on the Restricted Entity list, paid Reliant $78 million for the exclusive rights to Antara, plus the cost of Reliant‘s remaining Antara inventory.11 Ethypharm had a right of first refusal under the DLS, pursuant to which it could “acquire all rights in relation with [Antara] and the relevant Intellectual Property and Confidential Information belonging to RELIANT....” (J.A. at 320.) But it declined to exercise that right and instead approved the sale to Oscient. Abbott, however, exercising its rights under the DLS, did not give its approval. As a result, Reliant was only able to assign its license to the five Abbott patents contained in the STS and not any future continuation or divisional applications. (See J.A. at 255 (noting that an assignment of Reliant‘s license from Abbott “to any entity other than a Restricted Entity or Affiliate thereof shall be limited to [the ‘726, ‘670, ‘405, ‘552 and ‘881 patents] unless Abbott consents to the assignment, sublicense or other transfer (in which case, Reliant‘s rights to [the patents and their continuations] may be included).“).)
Oscient had some initial success with Antara. Sales in 2007 and 2008 were approximately $53.6 million and $73.8 million respectively, up from $42.5 million in 2006.
B. Procedural History
Believing that the failure of Antara to compete with TriCor was a direct result of Abbott‘s patent suit against Reliant and of the resulting STS, particularly the Restricted Entity provision, Ethypharm filed this action against Abbott. The Complaint features antitrust and sham litigation claims under
In addition to citing the allegedly anti-competitive nature of the Restricted Entity provision, Ethypharm averred that the 7 percent royalty payment Reliant owed to Abbott restrained Ethypharm‘s ability to compete because, by collecting a royalty from Ethypharm‘s exclusive distributor, Abbott weakened Antara‘s profitability. Ethypharm also claimed that the provisions of the STS preventing Oscient from developing new combination drugs or different doses of Antara further restricted the ability of Antara to compete against TriCor.
Abbott initially moved to dismiss the Complaint for lack of antitrust standing, but the District Court denied that motion, holding that Ethypharm had the necessary standing to sue. The Court determined that “a foreign name-brand manufacturer, which does not itself market and distribute its product in the United States but does so through an exclusive United States distributor, is entitled to avail itself of the protection of the antitrust laws for the purpose of challenging the conduct of a manufacturer of a competing brand name drug.” (J.A. at 11, 35.)12
Ethypharm timely appealed.
II. Discussion14
Abbott argues that the District Court erred in concluding that Ethypharm had standing to bring its antitrust claims. Specifically, Abbott says that Ethypharm does not compete with it because Ethypharm is not a supplier of Antara in the United States and, therefore, it cannot claim to have been harmed by any anti-
Standing is a threshold requirement in all actions in federal court. It is moored in the constitutional principle that the judiciary‘s power only extends to cases or controversies. See
The Supreme Court, in Associated General Contractors of California, Inc. v. California State Council of Carpenters, 459 U.S. 519 (1983), articulated several factors to be considered when deciding whether a complainant has antitrust standing. We have organized those factors (the “AGC factors“) into the following multifactor test: (1) the causal connection between the antitrust violation and the harm to the plaintiff and the intent by the defendant to cause that harm, with neither factor alone conferring standing; (2) whether the plaintiff‘s alleged injury is of the type for which the antitrust laws were intended to provide redress; (3) the di-
Generally, antitrust injury--that is, “injury of the type the antitrust laws were intended to prevent and that flows from that which makes [the] defendants’ acts unlawful,” Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977)--“is limited to consumers and competitors in the restrained market and to those whose injuries are the means by which the defendants seek to achieve their anticompetitive ends,” W. Penn Allegheny Health Sys., Inc. v. UPMC, 627 F.3d 85, 102 (3d Cir.2010). Ethypharm, of course, does not claim to be a consumer. Therefore, for Ethypharm to have standing it must be either a competitor in the defined relevant market or it must have suffered such injuries as “are the means by which the defendant[] seek[s] to achieve [its] anticompetitive ends.” Id.
Abbott contends that Ethypharm fits neither qualification. First, Abbott argues that Ethypharm is not a supplier of Antara in the United States but only an offerer of intellectual property licenses and raw materials, which are not interchangeable with the drug that Abbott offers. Second, Abbott contends that “Ethypharm‘s alleged injury is not the ‘means’ by which Abbott” allegedly restrained competition. (Appellee‘s Br. at 43.) Abbott reasons that it effectuated its allegedly illegal restraint of trade without any need to affect Ethypharm because Abbott needed only to place restrictions on Reliant, the sole United States distributor of Antara.
Ethypharm counters that it produces not just raw materials but a finished drug that directly competes with Abbott‘s product. According to Ethypharm, the fact that it markets and sells Antara through an exclusive distributor to bring that product to the United States is irrelevant. Thus, Ethypharm argues, its “offering of the manufactured product is reasonably interchangeable with Abbott‘s offering of TriCor.” (Appellant‘s Reply Br. at 17 (internal quotation marks omitted).) Ethypharm also contends that even if it did not directly compete with Abbott, it has suffered antitrust injury because the harm caused by Abbott to Ethypharm is “inextricably intertwined with Abbott‘s alleged wrongdoing.” (Id. (internal quotation marks omitted).)
In making their arguments about whether Ethypharm and Abbott are competitors in the relevant market, the parties focus on two of our precedents in particular, Barton & Pittinos, Inc. v. SmithKline Beecham Corp., 118 F.3d 178 (3d Cir.1997), and Carpet Group International v. Oriental Rug Importers Association, Inc., 227 F.3d 62 (3d Cir.2000), abrogated on other grounds by Animal Sci. Prods., Inc. v. China Minmetals Corp., 654 F.3d 462 (3d Cir.2011).18 In Barton & Pittinos, we de-
We held that Barton & Pittinos had no standing to avail itself of the antitrust laws because it was not a competitor in the market and, accordingly, could not suffer antitrust injury. Speaking for the court, then-Judge Alito reasoned that Barton & Pittinos was essentially an advertiser and not a competitor in the relevant drug market. Id. at 182. We first defined the proper market, as Barton & Pittinos had, as “all hepatitis-B vaccine sold to nursing homes in the United States.” Id. at 182 (internal quotation marks omitted). Then, we considered whether Barton & Pittinos was a competitor by determining if there was cross-elasticity of demand between the pharmacists’ offerings and Barton & Pittinos‘s offerings. In analyzing that question, we focused not on the overall marketing program devised by SmithKline, but on what Barton & Pittinos itself offered. That is, Barton & Pittinos offered marketing services but did not have direct access to the vaccine and could not supply the vaccine to nursing homes without GIV. The pharmacists, in contrast, could supply nursing homes directly with the vaccine. Because nursing homes only had indirect access to the vaccine through Barton & Pittinos, “there was no cross-elasticity of demand as between the pharmacists’ offerings and [Barton & Pittinos‘s] offerings; no matter how much the pharmacists raised the price of the package of the goods and services that they offered, the nursing homes could not have switched to [Barton & Pittinos].” Id. at 183.
We concluded that Barton & Pittinos‘s position as an advertiser made its injury different from the type of injury that the antitrust laws were designed to redress. See id. at 184 (“Because [Barton & Pittinos] was thus not a competitor or consumer in the market in which trade was allegedly restrained by the antitrust violations pledged by [Barton & Pittinos], we hold that [its] alleged injury is not ‘antitrust injury,’ meaning injury ‘of the type that the antitrust statute was intended to forestall.’ ” (quoting Associated Gen. Contractors, 459 U.S. at 540)). Barton & Pittinos thus lacked antitrust standing.
In contrast to Barton & Pittinos, we concluded in Carpet Group International that a plaintiff did have antitrust standing. Carpet Grp. Int‘l, 227 F.3d at 78. In that case, Carpet Group International sought to provide a direct link between oriental rug manufacturers and domestic retailers, cutting out middlemen wholesalers, who were united by a trade group, the Oriental Rug Importers Association. Carpet Group In-
Oriental Rug Importers relied on Barton & Pittinos to argue that Carpet Group International did not have antitrust standing. We noted, however, that Carpet Group International‘s role in the oriental rug market was different from Barton & Pittinos‘s role in the relevant drug market. Barton & Pittinos, as an unlicensed entity, could not supply drugs to consumers, but, in contrast, Carpet Group International and Oriental Rug Importers could and did offer the exact same service to consumers--a way to procure rugs from manufacturers. “In other words, there [was] a cross-elasticity of demand between the plaintiffs’ offering and the defendants’ offering.” Id. at 77; see id. (“If the wholesaler/importers raised the prices at which they sold oriental rugs to domestic retailers, those retailers could go to [Carpet Group International‘s] trade shows and purchase rugs there directly from manufacturers.“). Thus, the injury that Carpet Group International claimed to have suffered was an antitrust injury.
As one might expect, Abbott contends that this case is controlled by Barton & Pittinos, and Ethypharm says it is not and that Carpet Group is the pertinent authority. Although this is a closer case than Barton & Pittinos because Ethypharm does manufacture a product ultimately sold in the relevant market, we think Abbott has the better of the arguments. Ethypharm is not a competitor because, in the highly regulated pharmaceutical market in this country, there is no cross-elasticity of demand between Ethypharm‘s offerings and Abbott‘s offerings. In this case, as in Barton & Pittinos, customers in the United States cannot purchase the drug at issue from Ethypharm. Ethypharm structured its business in a way that assured that only Reliant or someone to whom Reliant sold the rights to Antara could supply the drug. Ethypharm has chosen, for reasons sufficient to itself, not to seek the necessary approval to sell pharmaceuticals in the United States.19 It is thus forbidden to compete in the relevant market. Because of its choice to leave to an exclusive licensee the responsibility of obtaining FDA approval for Antara and of selling and marketing that drug in the United States, there is no cross-elasticity of demand between what Ethypharm can lawfully offer, i.e., bulk drug sales from outside the United States to an FDA-approved entity, and what Abbott offers, a finished pharmaceutical product within the United States.
Indeed, Ethypharm‘s own Complaint defines the relevant market in this case as the sale of fenofibrate products in the United States. (J.A. at 143 (“For purposes of this Complaint, the relevant geographic market is the United States. The relevant product market is products containing fenofibrate.“)). When looking through that market lens, Ethypharm does
While Ethypharm develops, formulates, and manufactures its fenofibrate product for sale in the United States, it does not directly sell and distribute this product in this country. Instead, Ethypharm sought a business partner who would enter into an agreement to: license Ethypharm‘s underlying patent and intellectual property rights; obtain U.S. regulatory approval for the product; and market the product in the U.S. (J.A. at 113.) And without a license of its own, Ethypharm admits that it “would be foreclosed from the United States market.” (J.A. at 122.)
Therefore, just like the pharmacists’ ability to raise prices of the vaccine in Barton & Pittinos and the nursing homes’ inability to procure that vaccine directly from Barton & Pittinos, Abbott could raise the price of TriCor and consumers could not turn to Ethypharm for Antara.
Ethypharm argues, and the District Court appeared to agree, that “Reliant‘s role as the holder of the Antara NDA makes no difference” with respect to the antitrust injury inquiry. (Appellant‘s Reply Br. at 17.) We disagree; Ethypharm‘s inability to participate in the United States fenofibrate market makes all the difference. Contrary to Ethypharm‘s contention, Reliant was not a mere conduit in bringing Antara to market. Reliant was the entity that took the risk and bore the expense of filing the NDA and gaining FDA approval. The FDA carefully regulates the pharmaceutical industry and imposes stringent requirements on entities seeking to sell drugs in the United States. See generally
Ethypharm wants to have it both ways: it wants to pass on to a licensee the expense and risk of qualifying to compete in the United States pharmaceutical market, but, when that arrangement fails to achieve success, Ethypharm seeks to avail itself of the United States laws protecting fair competition. The rules of antitrust standing do not permit that tactic. We stress that it is not the general arrangement of manufacturer and distributor that is problematic; it is the fact that Ethypharm cannot sell Antara in the United States because of legal barriers particular to the pharmaceutical market, barriers that Ethypharm chose not to surmount. Ethypharm is literally not a lawful competitor in the United States fenofibrate market, and so it cannot be considered a competitor for purposes of antitrust injury.20
Accordingly, we conclude that Ethypharm did not suffer antitrust injury because it does not and indeed cannot compete in the United States fenofibrate market, unless and until it acquires the required FDA approval to do so. As a result, Ethypharm lacks antitrust standing to sue Abbott.22
III. Conclusion
For the reasons above, we will vacate the grant of summary judgment as to Ethypharm‘s federal claims, leave undisturbed
Notes
[T]he 43 mg, 87 mg and 130 mg fenofibrate capsule products that are the subject of Reliant‘s New Drug Application 21-695, as supplemented and/or amended from time to time. Reliant Products do not include (i) any pharmaceutical products where fenofibrate is not the sole active ingredient, (ii) any combination therapy products or (iii) any products in a form other than a 43 mg, 87 mg or 130 mg fenofibrate capsule. (J.A. at 246.) Thus, the STS would not allow Reliant to create new doses or combination drugs that would be covered by the non-exclusive license.