1:12-cv-02650 | S.D.N.Y. | Sep 22, 2015
Case 1:12-cv-02650-RWS Document 190 Filed 09/22/15 Page 1 of 40
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FERRING B.V., FERRING
INTERNATIONAL CENTER S.A., AND
FERRING PHARMACEUTICALS INC.,
Plaintiffs, 12 Civ. 2650
-agaiHSt- SEALED OPINON
ALLERGAN, INC., ALLERGAN USA, INC.,
ALLERGAN SALES, LLC, SERENITY
PHARMACEUTICALS CORPORATION,
SERENITY PHARMACEUTICALS, LLC,
REPRISE BIOPHARMACEUTICS, LLC,
SEYMOUR H. FEIN, AND RONALD V.
NARDI,
Defendants.
_______________________________________ X
A P P E A R A N C E S:
Attorneys for Plaintiffs
GIBBONS P.C.
One Gateway Center
Newark, NJ 07102
By: Elvin ESteveS, ESq.
William P. Deni, Jr., ESq.
FINNEGAN, HENDERSON, FARABOW, GARRETT
& DUNNER, LLP
901 New York Avenue, N.W.
Washington, D.C. 20001-4413
By: James B. Monroe, ESq.
Paul W. Browninq, ESq.
Adriana L. Burgy, Esq.
Charles T. COllinS-Chase, Esq.
Pier D. DeROO, ESq.
Case 1:12-cv-02650-RWS Document 190 Filed 09/22/15 Page 2 of 40
Attorneys for Defendants
GIBSON, DUNN & CRUTCHER LLP
200 Park Avenue
New York, NY 10166-0193
By: Joseph Evall, ESq.
Michael B. Adelman, Esq.
GIBSON, DUNN & CRUTCHER LLP
3161 Michelson Drive
Irvine, CA 92612
By: Jeffrey T. Thomas, Esq.
Zachariah J. Lloyd, Esq.
ZUCKERMAN SPAEDER LLP
1185 Avenue Of the Americas
New York, NY 10036
By: James Scottile, Esq.
Benjamin Voce-Gardner, Esq.
Case 1:12-cv-02650-RWS Document 190 Filed 09/22/15 Page 3 of 40
Sweet, D.J.
Pending before the Court are several motions filed by
Defendants Allergan, Inc., Allergan USA, Inc., Allergan Sales,
LLC (collectively “Allergan”), Serenity Pharmaceuticals
Corporation, Serenity Pharmaceuticals, LLC (collectively
“Serenity”), Reprise Biopharmaceutics, LLC (“Reprise”); Seymour
H. Fein (“Fein”), and Ronald V. Nardi (“Nardi” and together with
Serentiy, Reprise and Fein, the “Non-Allergan Defendants”), and
by Plaintiffs Ferring B.V., Ferring International Center S.A.,
and Ferring Pharmaceuticals Inc. (collectively, “Ferring” or the
“Plaintiffs”). First, Allergan has moved for summary judgment
pursuant to Rule 56 of the Federal Rules of Civil Procedure
against Plaintiffs (the “Summary Judgment Motion”). Second, the
Non-Allergan Defendants have filed a motion seeking to join in
Allergan’s motion for summary judgment (the “Joinder Motion”).
Third, Allergan has filed a letter seeking to compel Ferring to
provide additional corporate testimony regarding Ferring’s
inventorship claims (the “Motion to Compel”). Fourth, Ferring
has filed a letter requesting that the Non-Allergan Defendants
be barred from asserting privilege with respect to certain
Ferring documents under Non-Allergan Defendants’ control and
from sharing those documents with Non-Allergan Defendants’
Case 1:12-cv-02650-RWS Document 190 Filed 09/22/15 Page 4 of 40
patent prosecution outside counsel (the “Confidentiality
Motion”).
Upon the conclusions set forth below, the Summary
Judgment Motion and the Joinder Motion are granted, and the
Motion to Compel and Confidentiality Motion are rendered moot.
This action presents a dispute over the ownership of
certain patents involving desmopressin, a synthetic hormone,
used to treat disorders related to excessive urine production.
According to the Plaintiffs, Fein, Nardi and their companies
Serenity and Reprise improperly obtained the patents at issue
starting in 2003 and, in selling them to Allergan, violated
certain duties and obligation to which Allergan was compliant.
According to the Defendants, the Plaintiffs have delayed
advancing their claims and this litigation in order to impose
the risks and costs of drug development on Allergan and then to
obtain patent correction in their favor.
Prior Proceedings & Facts
Familiarity with the prior proceedings and facts as
alleged in the initial complaint filed by Ferring on April 5,
Case 1:12-cv-02650-RWS Document 190 Filed 09/22/15 Page 5 of 40
2012 is assumed and were set forth in the March 18, 2013 order
(the “March 18 Order”) granting Defendants’ motion to dismiss.
The Motion for Equitable Estoppel and Joinder Motion
were filed on April 17, 2015. The Motion to Compel was filed on
April 30, 2015. The Confidentiality Motion was filed on May 1,
2015. All four motions were marked fully submitted on May 20,
2015.
The synopsis below, derived from Allergan’s'Rule 56.1
Statement and Ferring’s Response to the 56.1 Statement, is used
in conjunction with the Summary Judgment and Joinder Motions.l
Denials that the evidence cited in support of a
particular statement does not support that statement, in
instances where the evidence uncontrovertibly does support that
statement, are treated as admissions. Denials without support
or explanation are treated as admissions. The inclusion of
statements in this Opinion that were challenged on admissibility
grounds by the parties reflect a ruling that the admissibility
challenge is overruled.
1 Citations to these Undisputed Facts in subsequent sections of this Opinion
will be made in the following format: UF 1 __.
3
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The following facts are not in material dispute except
as noted below:
1. On May 7, 2002, Ferring filed Great Britain
Patent Application No. GBO210397.6. Declaration of Zachariah J.
Lloyd in Support of Allergan Defendants’ Motion for Summary
Judgment of Equitable Estoppel (hereinafter “Lloyd Decl.”) Ex. 1
at 3; First Amended Complaint (hereinafter “FAC”) I 58.
2. The Great Britain 0210397.6 application disclosed
a “pharmaceutical dosage form of desmopressin adapted for
sublingual absorption,” but did not claim any specific dosage
ranges or serum concentrations of desmopressin. Lloyd Decl. Ex.
1 at 34-36.
3. The Great Britain 0210397.6 application did not
list any inventors. Lloyd Decl. Ex. 1; FAC L 58.
4. On September 20, 2002, Ferring, through its
counsel, filed PCT application IB02/04036. Lloyd Decl. Ex. 2 at
1; FAC 1 59.
5. The PCT application IB02/O4036 claimed the same
subject matter as the Great Britain 0210397.6 application and
Case 1:12-cv-02650-RWS Document 190 Filed 09/22/15 Page 7 of 40
listed Dr. Fein among the inventors. Lloyd Decl. Ex. 2 at 31-
34; FAC I 59.
6. On May 6, 2003, Dr. Fein, through his counsel,
filed PCT application US2003/014463. Declaration of Michael
Adelman in Support of Allergan Defendants’ Motion for Summary
Judgment of Equitable Estoppel (hereinafter “Adelman Decl.”) Ex.
22 at l; FAC I 68.
7. PCT application US2003/014463 was published as
International Application WO 2004/041153 on May 21, 2004.
Adelman Decl. Ex. 22 at 1.
8. On May 7, 2003, Ferring, through its counsel,
filed PCT application IB03/O2368. Adelman Decl. Ex. 23 at 1.
9. Ferring's PCT application 1BO3/O2368 did not name
Dr. Fein as an inventor and did not include claims directed to
sublingual administration of desmopressin. Adelman Decl. Ex. 23
at 1; 32-34.
10. Ferring’s PCT/IBO3/02368 matured into U.S. patent
application 10/513,437, with a filing date of May 7, 2003.
Lloyd Decl. Ex. 11 at 2.
11. On November 12, 2003, Dr. Fein, through his
counsel, filed continuation-in-part U.S. patent application
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10/706,100 based off his PCT application 082003/014463. Adelman
Decl. Ex. 24 at 1.
12. U.S. patent application 10/706,100 published as
U.S. Patent Application 2004/0138098 A1 on July 15, 2004.
Adelman Decl. 24 at 1.
13. On May 4, 2007, Dr. Fein, through his counsel,
filed U.S. patent application 11/744,615 as a division of his
previously filed U.S. patent application 10/706,100. Lloyd
Decl. Ex. 7 at 2.
14. On July 15, 2008, Dr. Fein, through his counsel,
filed U.S. patent application 12/173,074 as a continuation of
his previously filed U.S. patent application 11/744,615. Lloyd
Decl. Ex. 8 at 2.
15. On July 29, 2008, Dr. Fein’s U.S. patent
application 11/744,615 issued as U.S. Patent No. 7,405,203 (“the
’203 patent”). Lloyd Decl. Ex. 7 at 2.
16. On June 18, 2009, Ferring, through its counsel,
filed U.S. patent application 12/487,116 as a continuation of
its previously filed U.S. patent application 10/513,437. Lloyd
Decl. Ex. 10 at 2.
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17. In a Preliminary Amendment dated November 6,
2009, Ferring amended U.S. Patent Application No. 12/487,116 to
add claims directed to “[a]n orodispersible pharmaceutical
dosage form of desmopressin acetate which disintegrates in the
mouth within 10 seconds.” Lloyd Decl. Ex. 12 at FERALL0001250.
Ferring added a dependent claim that additionally limited this
“orodispersible pharmaceutical dosage form of desmopressin
acetate which disintegrates in the mouth within 10 seconds” to
one “which is adapted for sublingual administration.” Id.
18. Ferring did not add back Dr. Fein as an inventor
when it reinserted a claim to U.S. patent application 12/487,116
for desmopressin adapted for sublingual administration. See
Lloyd Decl. Ex. 10 at 2.
19. On July 14, 2009 Ferring's U.S. patent
application 10/513,437 issued as U.S. Patent No. 7,560,429 (“the
’429 patent”). Lloyd Decl. Ex. 11 at 2.
20. On August 25, 2009, Dr. Fein’s U.S. patent
application 12/173,074 issued as U.S. Patent No. 7,579,321 (“the
’321 patent”). Lloyd Decl. Ex. 8 at 2.
21. On September 21, 2010, Dr. Fein’s U.S. patent
application 10/706,100 issued as U.S. Patent No. 7,778,761 (“the
’761 patent”). Lloyd Decl. Ex. 9 at 2.
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22. On May 24, 2011, Ferring’s U.S. patent
application 12/487,116 issued as U.S. Patent No. 7,947,654 (“the
’654 patent”). Lloyd Decl. Ex. 10 at 2.
23. On 0ctober 12, 2010, Adriana Burgy of Finnegan,
Henderson, Farabow, Garrett & Dunner, L.L.P., counsel of record
for Ferring, filed a request for reexamination of Fein's ’203
patent before the United States Patent and Trademark Office
(“PTO”). Lloyd Decl. Ex. 5 at 37.
24. Defendants contend that Ms. Burgy did not
disclose at the time that Ferring was responsible for the
request for reexamination. Lloyd Decl. Ex. 5. Plaintiffs deny
requesting that Ms. Burgy make ex parte reexamination request.
25. Ms. Burgy argued before the PTO that prior art
anticipated or rendered obvious the independent claims of the
’203 patent. Lloyd Decl. Ex. 5 at 20-36.
26. Dr. Fein had previously disclosed to the PTO U.S.
Patent No. 5,498,598 (“Harris”) and U.S. Patent No. 5,848,991
(“Gross”), relied upon by Ferring’s counsel when prosecuting the
’203 patent. Lloyd Decl. Ex. 5 at 10.
27. On January 19, 2011, the PTO rejected Ferring's
request for reexamination of the ‘203 patent.
Case 1:12-CV-02650-RWS Document 190 Filed 09/22/15 Page 11 of 40
28. The PTO withdrew its obviousness objections after
finding that the ‘203 patent demonstrated unexpected results.
29. On November 7, 2002, Ferring formally terminated
Dr. Fein’s consulting agreement. Adelman Decl. Ex. 21;
Declaration of Dr. Seymour in Support of Allergan Defendants’
Motion for Summary Judgment of Equitable Estoppel (hereinafter
“Fein Decl.”) I 10; FAC T 64.
30. On November 21, 2002, Dr. Fein’s attorney,
William Speranza, sent a letter to Ferring on Dr. Fein's behalf.
Adelman Decl. Ex. 13.
31. In his letter, Mr. Speranza stated that Dr. Fein
considered himself the inventor of a “sublingual, transmucosal
route of delivery which affords a number of advantages
including enabling the effective use of formulations having
reduced concentrations of desmopressin.” Adelman Decl. Ex. 13
at 1.
32. Mr. Speranza asserted that Dr. Fein had not
assigned any inventorship rights to Ferring during his
consultancy, and therefore retained ownership rights in any
patents that might develop from Ferring’s patent applications.
Adelman Decl. Ex. 13 at 1.
Case 1:12-CV-02650-RWS Document 190 Filed 09/22/15 Page 12 of 40
33. He also noted that Ferring had filed a PCT
application naming Dr. Fein as an inventor, and asked for
“copies of the PCT application and all related application
papers already filed” and “all communications related to ongoing
proceedings in the PCT or eventual national phase applications.”
Adelman Decl. Ex. 13 at 2.
34. On January 30, 2003, Mr. Speranza sent another
letter to Ferring on Dr. Fein’s behalf. Adelman Decl. Ex. 14.
35. In his letter, Mr. Speranza reiterated that Dr.
Fein “possesse[d] ownership rights in the invention, the pending
application therefor and any patents that may issue on his
invention.” Adelman Decl. Ex. 14 at 1.
36. Mr. Speranza informed Ferring that Fein intended
to determine whether he would choose to “take steps independent
of Ferring” to protect his patent rights, if Ferring did not
acknowledge Fein's interests in the existing patent applications
and if Ferring did not ensure that it would “take no actions
which would in any manner affect, limit or compromise his
inventorship rights and ownership interests” without obtaining
Dr. Fein’s consent. Adelman Decl. Ex. 14 at 1-2.
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37. On April 9, 2003, Patricia Barclay, Ferring’s
counsel, sent a letter to Mr. Speranza. Adelman Decl. Ex. 15;
FAC 11 65-66.
38. In her letter, Ms. Barclay advised Dr. Fein that
Ferring decided to drop the feature “adapted for sublingual
administration” from its PCT application because sublingual
administration “does not in this context confer a delimitation
i.e. novelty.” Adelman Decl. Ex. 15.
39. As a consequence, Ms. Barclay stated that Ferring
would remove Dr. Fein as an inventor from the PCT application.
Adelman Decl. Ex. 15.
40. On April 17, 2003, Mr. Speranza sent an email to
Ms. Barclay and Helle Aufeldt of Ferring. Adelman Decl. Ex. 16.
41. In his letter, Mr. Speranza acknowledged that
Ferring was dropping Dr. Fein from its patent application, and
made no objection to that decision. Adelman Decl. Ex. 16 at 1.
42. Mr. Speranza informed Ferring that Fein’s alleged
invention was “a sublingual, transmucosal route of delivery
which affords a number of advantages in the efficacy and safety
of desmopressin administration, including enabling the effective
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use of formulations having reduced concentrations of
desmopressin.” Adelman Decl. Ex. 16 at 1.
43. Mr. Speranza informed Ferring that “Dr. Fein is
planning to himself proceed with pursuing patent protection
covering the sub-lingual administration route and the associated
low dosage possibilities enabled by same which he invented, all
at his own expense going forward and with the understanding that
Ferring relinquishes any ownership claims thereto.” Adelman
Decl. Ex. 16 at 1.
44. On April 29, 2003, Ms. Barclay sent a letter to
Mr. Speranza. Adelman Decl. Ex. 17.
45. Ms. Barclay acknowledged receipt of the April 17,
2003 letter, Adelman Decl. Ex. 17.
46. Ms. Barclay advised that Ferring believed that
the “low dosage possibilities enabled by the sublingual
administration route are already available in the public domain
as exemplified by the enclosed abstract from Anne M Fjellestad-
Paulsen’s doctor’s thesis published in 1996.” Adelman Decl. Ex.
17. She added that “I cannot of course say now that Ferring
will not make any claim as to ownership of any other material Dr
Fein may include in any patent application as without seeing the
text and knowing what claims for novelty or inventive steps he
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has in mind 1 cannot be sure that this does not cover matters to
which employees of the Ferring Group have contributed or
regarding which Dr Fein is bound to us by terms of
confidentiality.” ld.
47. She stated that as a consequence, Ferring would
not be pursuing claims directed at “the low dosage possibilities
enabled by the sublingual administration route.” Adelman Decl.
Ex. 17.
48. Ms. Barclay provided Dr. Fein the application
number for Ferring’s 2002 Great Britain patent application.
Adelman Decl. Ex. 17.
49. On December 9, 2004, Ms. Barclay sent a letter to
Mr. Speranza. Adelman Decl. Ex. 18.
50. In her letter, Ms. Barclay stated that she was
“truly surprised to see that Dr. Fein had proceeded with [his
PCT] application to which we believe he has no entitlement and
which in particular discloses information confidential and
proprietary to Ferring to which Dr Fein had confidential access
during his engagement as consultant.” Allergan Ex. 18. Ms.
Barclay added that “Ferring will take all necessary steps to
protect its rights and interests.” ld.
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51. Ms. Barclay stated that PCT/USZOO3/014463
“contain[s] an invention to which we believe he has no
entitlement and which in particular discloses information
confidential and proprietary to Ferring to which Dr Fein had
confidential access during his engagement as consultant.” Id.
52. Ms. Barclay stated Ferring would “take all
necessary steps to protect its rights and interests,” and
concluded by warning Dr. Fein that “if l do not receive a full
and satisfactory explanation within 14 days of this letter we
will commence formal action.” Adelman Decl. Ex. 18.
53. On December 14, 2004, Mr. Speranza sent two
letters to Ms. Barclay. Adelman Decl. Ex. 19; Adelman Decl. Ex.
20.
54. In the first letter of December 14, 2004, Mr.
Speranza reminded Ferring that his April 17, 2003 email informed
Ferring that “Fein is planning to himself proceed with pursuing
patent protection covering the sub-lingual administration route
and the associated low dosage possibilities enabled by same.”
Adelman Decl. Ex. 19 at 1.
55. Mr. Speranza’s letter referred to the “dealings
and communications throughout 2003” with Ferring that “made
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clear that Ferring made no claim to low dosage desmopressin as
its invention.” Adelman Decl. Ex. 19 at 2.
56. Mr. Speranza concluded his letter by saying,
“[w]e trust this response will put this matter to rest.”
Adelman Decl. Ex. 19 at 2.
57. Later the same day, Mr. Speranza sent a follow up
letter referencing Dr. Fein's continuation-in-part U.S. patent
application. Adelman Decl. Ex. 20 at 2.
58. Following this final exchange of correspondence
between Ferring and Dr. Fein’s counsel, Ferring took no direct
action on Dr. Fein’s patent applications, and later patents, for
OV€I S€V€l'l yearS .
59. On the basis of his communications with Ferring,
Dr. Fein inferred that he was free to independently pursue
patent protection for his invention without interference. Fein
Decl. 1 12.
60. In August 2003, Dr. Fein was the sponsoring
signatory of a clinical study titled “CNF Desmo PK 200301.”
Adelman Decl. Ex. 25 at 1.
61. CNF Desmo PK 200301 purportedly tested the
antidiuretic effect of three low doses of desmopressin
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administered via intravenous solution in healthy volunteers.
Adelman Decl. Ex. 25 at 3.
62. In November and December 2004, Dr. Fein was the
sponsoring signatory of a clinical study titled “CNF Desmo SC
200401.” Adelman Decl. Ex. 26 at 1.
63. CNF Desmo SC 200401 purportedly tested the
antidiuretic effect of three low doses of desmopressin
administered via subcutaneous infusion in healthy volunteers.
Adelman Decl. Ex. 26 at 3.
64. Herschkowitz testified that Dr. Fein and his
colleagues at CNF Pharma, LLC spent approximately $380,000 to
conduct the CNF Desmo PK 200301 and CNF Desmo SC 200401 studies,
as reflected in a draft submission to the International Trade
Commission (“ITC”). Adelman Decl. Ex. 27 (Herschkowitz Dep. at
299:20-300:15).
65. ln 2005, Dr. Fein provided the correspondence
between Mr. Speranza and Ms. Barclay to his business partners’
counsel as they conducted due diligence in anticipation of
forming a new company, Serenity Pharmaceuticals Corporation, for
the purposes of commercially developing Dr. Fein’s invention.
Adelman Decl. Ex. 27 (Herschkowitz Dep. at 53:5-57:20).
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66. Dr. Herschkowitz relied upon this correspondence
in deciding to proceed with the commercialization of Dr. Fein’s
invention. Adelman Decl. Ex. 27 (Herschkowitz Dep.) at 57:16-
20.
67. Dr. Fein and others subsequently formed Serenity
Pharmaceuticals Corporation. Adelman Decl. Ex. 33 at 1; FAC I
76.
68. In early 2007, Dr. Fein and others formed Reprise
Biopharmaceuticals, LLC. Lloyd Decl. Ex. 3 at 1; FAC I 78.
69. Dr. Fein testified that he transferred his
intellectual property rights related to his desmopressin
invention to Reprise. Adelman Decl. Ex. 29 (Fein Dep. at
292:14-293:4).
70. On December 10, 2007, Serenity had a pre-IND
meeting with the FDA and the FDA agreed to a 505(b)(2) NDA
pathway for Serenity’s desmopressin treatment. Adelman Decl.
Ex. 34 at ll.
71. In early 2008, Serenity conducted a Phase l
clinical trial of its nasal spray desmopressin product. Adelman
Decl. Ex. 34 at 47.
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72. On August 4, 2008, Serenity issued a press
release announcing that it had filed its 1ND to initiate Phase 1
clinical testing. Lloyd Decl. Ex. 4.
73. 1n late 2008, Serenity conducted a Phase 11
clinical study. Adelman Decl. Ex. 34 at 47.
74. From 2009 to 2010, Serenity conducted a Phase 111
study. Adelman Decl. Ex. 35 at 1.
75. On May 13, 2008, in response to an inquiry from
Allergan, Dr. Fein identified the Speranza correspondence as
establishing his freedom to practice his patents without
interference from Ferring in an email to Herschkowitz. Adelman
Decl. Ex. 32. That correspondence was not sent to Allergan.
Allergan Estoppel Reply Mem. 9-10.
76. On March 31, 2010, Reprise and Serenity entered
into agreements with Allergan to develop and commercialize a
desmopressin product known as SER120. Adelman Decl. Ex. 30;
Adelman Decl. Ex. 31.
77. As part of the March 31, 2010 agreements, Reprise
and Serenity assigned all interests in Dr. Fein’s patents to
Allergan. Adelman Decl. Ex. 30 at 27; Adelman Decl. Ex. 31 at
16-23.
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78. As part of the March 31, 2010 agreements, Reprise
and Serenity represented and warranted that they held exclusive
and uncontested rights to Dr. Fein’s patents. Adelman Decl. Ex.
30 at 15-17; Adelman Decl. Ex. 31 at 67-72.
79. The March 31, 2010 agreements included warranties
from Reprise and Serenity that there was not even a threat of
litigation from any third party regarding Dr. Fein’s patents.
Adelman Decl. Ex. 30 at 17; Adelman Decl. Ex. 31 at 68.
80. Pursuant to the March 31, 2010 agreement,
Allergan made an upfront payment of $43 million to Serenity for
the rights to Dr. Fein’s patents. Adelman Decl. Ex. 31 at 51,
Ex. 1.8.
81. March 31, 2010 agreement required Allergan to
assume limited responsibility for certain development costs.
Adelman Decl. Ex. 31 at 31-33.
82. 1f Serenity were able to gain regulatory
approval, if the product met certain sales goals, and if certain
other conditions were established, Allergan could make milestone
payments totaling over $300 million. Adelman Decl. Ex. 31 at
51-53.
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83. On April 1, 2010, Serenity and Allergan released
a press release announcing their agreement to develop SER120, a
Phase 111 investigational drug for treatment of nocturia.
Adelman Decl. Ex. 35.
84. From 2003 to 2012, Defendants (including Drs.
Fein and Nardi, Serenity Pharmaceuticals Corporation, Serenity
Pharmaceuticals, LLC, and Allergan) invested over $60 million
dollars in design, clinical research, and manufacturing, among
other expenses, to develop a desmopressin product protected by
Dr. Fein’s patents. Adelman Decl. Ex. 27 (Herschkowitz Dep.) at
298:15-299:19.
The Applicable Standard
Summary judgment is appropriate only where “there is
no genuine issue as to any material fact and . . . the moving
party is entitled to a judgment as a matter of law.” Fed. R.
Civ. P. 56(c). A dispute is “genuine” if “the evidence is such
that a reasonable jury could return a verdict for the nonmoving
party.” Anderson v. Liberty Lobby, 1nc., 477 U.S. 242" date_filed="1986-06-25" court="SCOTUS" case_name="Anderson v. Liberty Lobby, Inc.">477 U.S. 242, 248
(1986). The relevant inquiry on application for summary
judgment is “whether the evidence presents a sufficient
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disagreement to require submission to a jury or whether it is so
one-sided that one party must prevail as a matter of law.” 1§;
at 251-52. A court is not charged with weighing the evidence
and determining its truth, but with determining whether there is
a genuine issue for trial. Westinghouse Elec. Corp. v. N.Y.
City Transit Auth., 735 F. Supp. 1205" date_filed="1990-04-13" court="S.D.N.Y." case_name="Westinghouse Electric Corp. v. New York City Transit Authority">735 F. Supp. 1205, 1212 (S.D.N.Y. 1990)
(quoting Anderson, 477 U.S. 242" date_filed="1986-06-25" court="SCOTUS" case_name="Anderson v. Liberty Lobby, Inc.">477 U.S. at 249).
The Elements for Equitable Estoppel Are Met
A defendant asserting equitable estoppel bears the
burden of establishing the following three elements by a
preponderance of the evidence: (1) the plaintiff, through
misleading conduct, led the defendant to reasonably infer that
the claimant does not intend to enforce his claim-“conduct” may
include specific statements, action, inaction, or silence where
there is a duty to speak; (2) the defendant relied upon that
conduct; (3) due to its reliance, the defendant will be
materially prejudiced if the claiming party is allowed to
proceed with its claim. Pannu v. IOlab Corp., 96 F. Supp. 2d
1359, 1368 (S.D. Fla. 2000) (citing A.C. Aukerman Co. v. R.L.
Chaides Constr. Co., 960 F.2d 1020" date_filed="1992-05-19" court="Fed. Cir." case_name="A.C. Aukerman Company v. R.L. Chaides Construction Co.">960 F.2d 1020, 1042-43, 1046 (Fed. Cir.
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Case 1:12-CV-02650-RWS Document 190 Filed 09/22/15 Page 24 of 40
1992) (en banc)). “Silence alone is not sufficient . . . to
give rise to estoppel.” Meyers v. Asics Corp., 974 F.2d 1304" date_filed="1992-09-04" court="Fed. Cir." case_name="Stuart R. Meyers v. Asics Corp., and Asics Tiger Corp., and Hyde Athletics Industries">974 F.2d 1304,
1308 (Fed. Cir. 1992).
The purportedly misleading conduct at issue here stems
mainly from the series of letters and emails exchanged between
Ms. Barclay, on Ferring’s behalf, and Mr. Speranza, on Dr.
Fein’s behalf, from 2002 to 2004, See, generally, UF 11 29-58.
1n 2002 and 2003, Dr. Fein told Ferring that he was the inventor
of the low-dose/sublingual improvements to desmopressin.
1n his November 2002 letter to Ferring, Dr. Fein
asserted that he invented a “sublingual, transmucosal route of
delivery which affords a number of advantages . . . including
enabling the effective use of formulations having reduced
concentrations of desmopressin.” 1§. Fein reiterated that he
retained the rights to this invention, separate from Ferring, in
at least three separate communications between November 2002 and
April 2003. See, e.g., UF 11 32, 35, 43, 54. 1n 2003, he told
Ferring that he was applying for patents directed to those
improvements to desmopressin technology. UF 1 40. 1n 2004,
Ferring threatened Dr. Fein with legal action unless he
responded to Ferring’s accusations that his patent applications
22
Case 1:12-CV-02650-RWS Document 190 Filed 09/22/15 Page 25 of 40
were improper, stating “if 1 do not receive a full and
satisfactory explanation within 14 days of this letter we will
commence formal action.” UF 1 52. Dr. Fein responded, and
explained his position to Ferring, asserting that: he had
disclosed his intention to pursue his own patents in his April
17, 2003 email; Ferring had acknowledged receipt of that email
in its April 29, 2003 letter; and their “dealings and
communications throughout 2003” had “made clear that Ferring
made no claim to low dosage desmopressin as its invention.” UF
11 54-55. He concluded: “We trust this response will put this
matter to rest.” UF 1 56. Subsequently, Ferring made no
response and took no further action for over seven years, while
Defendants expended significant resources prosecuting,
developing and commercializing Dr. Fein's patents. See,
generally, UF 11 57-84.
As Ferring notes in its opposition brief, the
\\
correspondence here referenced a PCT application for a
sublingual, transmucosal route of delivery that enabled reduced
dosages,” rather than any of the three actual patents-in-suit.
Pls.’ Estoppel Mem. in Opp’n 17. Allergan, in its reply,
contends that “[t]he fact that the misleading conduct and
reliance occurred or began before the patent issued does not
23
Case 1:12-CV-02650-RWS Document 190 Filed 09/22/15 Page 26 of 40
render the doctrine of equitable estoppel inapplicable.”
Allergan's Estoppel Reply Mem. 5.
Whether misleading conduct may precede an actual
patent is a close question. Commentators have noted this
conflict in the case law. Compare Raymond T. Nimmer and Jeff C.
Dodd, Modern Licensing Law, § 10:13 (2014) (“[T]he Federal
Circuit held that silence or misleading statements with respect
to an unissued patent would not give rise to estoppel. This
rule does not seem to have been generally followed and we do not
believe that it correctly states the law of estoppel.”) with
Robert A. Matthews, Jr., Annotated Patent Digest, 2 § 11:194
(2015) (“Since patent rights are not effective until the patent
issues, a patentee’s conduct towards an accused infringer at a
time before the patent issued, may not give rise to an
estoppel.”).
Several post-Aukerman Federal Circuit opinions appear
to require an issued patent in order to apply the doctrine. 1n
Ricoh Co. v. Nashua Corp., the Federal Circuit held that a
patent owner cannot be estopped for failing to speak up with
respect to a pending patent. 185 F.3d 884 (Fed. Cir. 1999)
(after noting that “[t]he law is clear that a party can be
24
Case 1:12-CV-02650-RWS Document 190 Filed 09/22/15 Page 27 of 40
misled by inaction,” distinguishing “between inaction in light
of an issued patent [that satisfies the misleading action prong]
and inaction in light of a pending patent application
[that does not].”). Similarly, in Radio Sys. Corp. v. Lalor,
one of the issues on appeal before the Federal Circuit was
whether equitable estoppel could be applied to a patent that had
not been issued at the time of the misleading conduct. 709 F.3d
1124, 1131 (Fed. Cir. 2013). There, one patent was issued prior
to the misleading conduct while a second continuation-in-part
patent was issued several years after the misleading conduct.
ld; at 1126. The Federal Circuit held that the lower court
abused its discretion in holding that equitable estoppel applied
to the later patent, holding that “[r]egardless of whether the
[later] patent claims are supported by the subject matter in the
[earlier] patent-and therefore entitled to claim priority to its
filing date-the patents contain claims of different scope.
Quite simply, the [later] patent claims could not have been
asserted . . . until those claims issued.” 1§. Finally, in
Meyers v. Asics Corp., the Federal Circuit held that no
equitable estoppel could apply to two of the three asserted
patents against one of the accused infringers since the patentee
had no contact with the accused infringer after the two patents
issued, therefore, he “could not have communicated acquiescence,
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Case 1:12-CV-02650-RWS Document 190 Filed 09/22/15 Page 28 of 40
or threatened litigation with respect to [the accused
infringer]’s alleged infringement of these patents.” 974 F.2d
1304, 1309 (Fed. Cir. 1992).
However, “the Federal Circuit, both before and after
Aukerman, has applied the equitable estoppel defense in
circumstances in which there was not an issued patent at the
time of the misleading communication.” Rambus, 1nc. v. 1nfineon
Technologies AG., 326 F. Supp. 2d 721" date_filed="2004-07-13" court="E.D. Va." case_name="Rambus, Inc. v. Infineon Technologies AG.">326 F. Supp. 2d 721, 738 (E.D. Va. 2004)
(citing MCV, 1nc. v. King-Seeley Thermos Co., 870 F.2d 1568" date_filed="1989-05-12" court="Fed. Cir." case_name="McV Inc. v. King-Seeley Thermos Company">870 F.2d 1568
(Fed. Cir. 1989) and Wang Laboratories, 1nc. v. Mitsubishi
Electric Corp., 103 F.3d 1571" date_filed="1997-03-12" court="Fed. Cir." case_name="Wang Laboratories, Inc. v. Mitsubishi Electronics America, Inc. And Mitsubishi Electric Corporation, Defendants/cross-Appellants">103 F.3d 1571 (Fed. Cir. 1997) in support of the
the proposition that “[t]he mere fact that, at the time of the
misleading communication (whether by conduct or inaction), a
patent has not been issued should not permit the actor, upon the
defendant’s proof of the other elements of equitable estoppel,
to escape the consequences of its misleading communications
after the patent has in fact been issued.”). Most recently, the
Federal Circuit has also applied the doctrine in instances where
the misleading communication did not identify a specific
infringing product and did not explicitly threaten brining an
infringement action, See Aspex Eyewear 1nc. v. Clariti Eyewear,
1nc., 605 F.3d 1305" date_filed="2010-05-24" court="Fed. Cir." case_name="Aspex Eyewear, Inc. v. Clariti Eyewear, Inc.">605 F.3d 1305, 1310 (Fed. Cir. 2010).
26
Case 1:12-CV-02650-RWS Document 190 Filed 09/22/15 Page 29 of 40
Ultimately, “equitable estoppel is not limited to a
particular factual situation nor subject to resolution by simple
or hard and fast rules,” and this issue must be decided on the
unique facts of each case measured against the Aukerman test.
§ee Aukerman, 960 F.2d 1020" date_filed="1992-05-19" court="Fed. Cir." case_name="A.C. Aukerman Company v. R.L. Chaides Construction Co.">960 F.2d at 1041. 1n this case, Ferring’s
inaction does give rise to an estoppel claim. To be sure,
Ferring pled claims under 35 U.S.C. § 256 for correction of the
named inventor of the three patents-in-suit, and a condition
precedent to Ferring’s Section 256 claim is issuance of the
patents. §e§ Hor v. Chu, 699 F.3d 1331" date_filed="2012-11-14" court="Fed. Cir." case_name="Pei-Herng Hor v. Ching-Wu "Paul" Chu">699 F.3d 1331, 1335 (Fed. Cir. 2012).
However, in his correspondence with Ferring, Mr. Speranza
explicitly referred to “low dosage” applications of desmopressin
as Fein’s inventions. See, e.g., UF 11 43, 54-55. Ferring’s
response to Fein’s claim of inventorship was not that the low-
dosage invention was Ferring’s intellectual property, but that
it was not patentable at all, and that Ferring would no longer
be pursuing claims directed toward it. UF 1 51. Ferring's
present application to correct inventorship contradicts its
earlier position in the Speranza correspondence. The low-dosage
invention as described in the PCT at issue in the Speranza
correspondence is the same subject matter detailed in the
patents-in-suit, down to the specific numerical quantity of
27
Case 1:12-CV-02650-RWS Document 190 Filed 09/22/15 Page 30 of 40
desmopressin to be used. See, e.g., Lloyd Exs. 1-2, 7-9.
Consequently, this case is distinguishable from Radio Systems,
where the patent not covered by equitable estoppel was held to
contain claims “different in scope” from those of the patents
that were the focus of the misleading communication. §§e §adio
Systems, 709 F.3d at 1131.
Despite having threatened immediate legal action with
respect to the patent application, Ferring did not disagree or
otherwise challenge Mr. Speranza’s assertion that low dosage
development was Fein’s intellectual property. Ferring was aware
of two Fein patent applications that include claims for low
desmopressin doses and low desmopressin plasma concentration
levels. Ferring’s December 9, 2004 letter reflects that the
parties were discussing Dr. Fein’s 2003 PCT application. UF 11
49-52. Then, on December 14, 2004, Mr. Speranza sent Ms.
Barclay Dr. Fein’s first U.S. patent application. UF 1 53.
Both of those applications contained claims for specific low
doses and specific low plasma concentration levels. §ee Adelman
Decl. Exs. 20, 22. 1n sum, Ferring’s inaction satisfies the
misleading communication prong under Aukerman.
28
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The reliance prong is also satisfied as to all
Defendants. Reliance can be demonstrated through evidence of
activities premised on the patent's validity, such as preparing
a business plan and making capital investments. See, e.g.,
Frugoli v. Fougnies, No. C1V 02-957-PHX R, 2004 WL 3372012, at
*10 (D. Ariz. Aug. 25, 2004); Stewart & Stevenson Servs., 1nc.
v. Serv-Tech, 1nc., 794 F. Supp. 202" date_filed="1992-06-18" court="S.D. Tex." case_name="Stewart & Stevenson Services, Inc. v. Serv-Tech, Inc.">794 F. Supp. 202, 206 (S.D. Tex. 1992)
aff’d, 996 F.Zd 318 (Fed. Cir. 1993) (preparing a business plan
and making capital investments are evidence of reliance). Dr.
Fein relied upon Ferring’s inaction by spending several years
commercializing his invention, including research and
investments by both himself and the entities he helped form,
Reprise and Serenity. He also asserted unchallenged ownership
over the inventions to the companies that acquired his
intellectual property based on Ferring’s misleading silence. UF
1 59.
Reprise is a holding company with five members,
including Drs. Fein and Nardi, created for the sole purpose of
holding Fein’s intellectual property. §ee UF 11 68-69. Dr.
Fein's knowledge of Ferring’s misleading conduct is imputed to
Reprise and to Dr. Nardi. See Forest Labs., 1nc. v. Abbott
Labs., No. 96-CV-159-A, 1999 WL 33299123, at *9 (W.D.N.Y. June
29
Case 1:12-CV-02650-RWS Document 190 Filed 09/22/15 Page 32 of 40
23, 1999) aff’d, 239 F.3d 1305" date_filed="2001-02-13" court="Fed. Cir." case_name="Forest Laboratories v. Abbott Laboratories">239 F.3d 1305 (Fed. Cir. 2001) (misleading
conduct directed at a doctor before he formed a small, closely
held pharmaceuticals development company was considered by the
court when determining whether the company had been misled).
When the patent rights were assigned to Allergan,
Serenity warranted to Allergan that it had full rights to the
patents. UF 11 78-79. Until Ferring began asserting its
inventorship claims, none of the Defendants had reason to
believe Ferring would dispute inventorship of the low-dosage
inventions.
1n its opposition on this prong, Ferring contends that
Reprise, Serenity, Dr. Nardi and Allergan never received the
Speranza correspondence and that, even if they had, they cannot
rely on Ferring’s statements to Fein to establish their own
reliance on Ferring’s alleged conduct. §§e Pls.’ Estoppel Mem.
in Opp’n 12-13; Pls.' Joinder Mem. in Opp’n 2-5. However, Dr.
Fein was unquestionably aware of the Speranza correspondence,
and he is the person whose inventorship is being challenged.
Allergan and the other corporate Defendants, as the entities
that purchased Dr. Fein’s inventions, stand in his shoes for the
purposes of reliance. See Radio Systems, 709 F.3d at 1130-31
30
Case 1:12-CV-02650-RWS Document 190 Filed 09/22/15 Page 33 of 40
(affirming summary judgment because “equitable estoppel applies
to successors-in-interest where privity has been established”).
That Allergan, Reprise and Serenity are not the corporate
successor-in-interest in the sense that they merged with or
completely acquired of any of the other Defendants is of no
moment, because the Federal Circuit did not “explicitly or
implicitly narrowly define a successor or privity as requiring a
complete transfer of a corporation or financial control.” §nel
Co., LLC v. SChaefer, No. 12-CV-l369-1EG WMC, 2013 WL 5727421,
at *4 (S.D. Cal. Oct. 22, 2013) (citing to Radio Systems).
Here, the transfer of Fein’s rights to Reprise, Serenity and
Allergan make those entities successors-in-interest with respect
to the issue of reliance.
Finally, the prejudice prong is satisfied under these
facts. “Prejudice may be shown by a change of economic position
flowing from actions taken or not taken by” the party asserting
equitable estoppel. §§pe§, 605 F.3d 1305" date_filed="2010-05-24" court="Fed. Cir." case_name="Aspex Eyewear, Inc. v. Clariti Eyewear, Inc.">605 F.3d at 1312. Non-recoupable
capital investments, such as manufacturing and marketing, are
the clearest evidence of material economic prejudice to a
defendant that is asserting equitable estoppel. Wafer Shave,
857 F. Supp. at 125; see also Scholle Corp. v. Blackhawk Molding
Co., 1nc., 133 F.3d 1469" date_filed="1998-01-15" court="Fed. Cir." case_name="Scholle Corporation v. Blackhawk Molding Co., Inc.">133 F.3d 1469, 1472 (Fed. Cir. 1992) (finding
31
Case 1:12-CV-02650-RWS Document 190 Filed 09/22/15 Page 34 of 40
sufficient economic prejudice to justify summary judgment on
equitable estoppel grounds because the defendant had invested
$700,000 in tooling and machinery for manufacture of patented
technology with respect to which plaintiff had remained silent
after initially leveling an accusation of infringement).
Defendants can also demonstrate material prejudice by showing
that the present suit would result “in damages which likely
would have been prevented by an earlier suit.” ABB Robotics,
1nc. v. GMFanuc Robotics Corp., 52 F.3d 1062" date_filed="1995-05-22" court="Fed. Cir." case_name="Abb Robotics, Inc. And Cincinnati Milacron, Inc. v. Gmfanuc Robotics Corporation">52 F.3d 1062, 1065 (Fed. Cir.
1995) (quoting Aukerman, 960 F.2d 1020" date_filed="1992-05-19" court="Fed. Cir." case_name="A.C. Aukerman Company v. R.L. Chaides Construction Co.">960 F.2d at 1033). The patents need
not be issued for a defendant to show prejudice; expenditures to
procure a patent are also economic prejudice. ABB Robotics, 52
F.3d at 1065.
Since Dr. Fein and Ferring ended their collaboration
in November 2002, Defendants have invested tens of millions of
dollars to secure patent protection for Dr. Fein’s desmopressin
invention and pursue associated commercial opportunities. §§§L
generally, UF 11 80-89. After Dr. Fein’s counsel made contact
with Ferring and informed it of Dr. Fein’s intent to pursue his
patents independently, Dr. Fein, via CNF Pharma, ran two
clinical trials at an out-of-pocket expense of approximately
$380,000. UF 1 64. After the proof-of-concept studies provided
32
Case 1:12-CV-02650-RWS Document 190 Filed 09/22/15 Page 35 of 40
data to support the prosecution of Dr. Fein’s patents, Dr. Fein
and Mr. Herschkowitz helped to form Serenity. UF 1 67.
Serenity, in turn, raised millions of dollars in funding from
investors and used those funds to clinically develop a new low-
dose desmopressin treatment. UF 1 84. Allergan has invested
over $43 million to acquire the patents-in-suit. UF 1 80. 1f
Drs. Norgaard and Senderovitz were added as co-inventors to Dr.
Fein’s patents, Allergan would be unable to prevent other
competitors from selling infringing products if these
competitors obtain a license from Ferring or if Ferring would
not agree to join Allergan’s infringement suit as a co-owner.
See, e.g., Schering Corp. v. Roussel-UCLAF SA, 104 F.3d 341" date_filed="1997-01-08" court="Fed. Cir." case_name="Schering Corporation v. Roussel-Uclaf Sa, Involuntary v. Zeneca Inc. And Zeneca Holdings Inc.">104 F.3d 341, 344
(Fed. Cir. 1998). 1n lieu of a financial investment in Reprise,
Dr. Nardi committed several years of work to helping develop low
dosage desmopressin and has a substantial ownership stake in
Reprise, which would be prejudiced by Ferring's claim. §ee
Declaration of Pier DeRoo, Esq. in Support of Ferring’s
Opposition to Defendants’ Motion for Summary Judgment on
Equitable Estoppel (Nardi Dep.) 279:22-282:10.
1f Dr. Fein were no longer a named inventor, Allergan
would not only lose the ability to prevent other competitors
from practicing Dr. Fein’s patents, but it would be selling
33
Case 1:12-CV-02650-RWS Document 190 Filed 09/22/15 Page 36 of 40
desmopressin products at the risk of an infringement suit from
Ferring. Serenity and Reprise, and therefore their shareholders
such as Drs. Fein and Nardi, stand to lose millions of dollars
in non-recoverable investments if Ferring is successful in this
action. This is sufficient to establish prejudice. §f; 1§§§
Corp. v. Advanced Power Tech., 1nc., 321 F. Supp. 2d 1156" date_filed="2004-06-16" court="N.D. Cal." case_name="IXYS Corp. v. Advanced Power Technology, Inc.">321 F. Supp. 2d 1156, 1164
(N.D. Cal. 2004). Moreover, Reprise would not have entered into
a contract to license its intellectual property to Serenity and
Allergan but for its belief that the intellectual property it
held would not be challenged by Ferring.
These facts are an adequate basis upon which to find
prejudice. That Allergan refused to provide testimony on its
post-acquisition development expenditures of the patents-in-suit
does not call into question the fact that it has already
invested $43 million to acquire those rights. Defendants
adequately demonstrated that they pursued development of a
desmopressin treatment while reasonably relying on Ferring’s
acquiescence to Dr. Fein pursuing his own patents, as required
under Federal Circuit precedent. §§e id; at 1312-13.
Consistent with above analysis, the non-Allergan
Defendants’ joinder motion is also granted. Ferring’s principle
34
Case 1:12-CV-02650-RWS Document 190 Filed 09/22/15 Page 37 of 40
argument in opposition to the joinder motion is Allergan’s 56.1
statement does not adequately establish the non-Allergan
Defendants’ right to equitable relief. See, generally, Pls.'
Joinder Mem. in Opp’n 2-5. Under these facts, however, the non-
Allergan Defendants have established that Ferring engaged in
misleading conduct by first threatening suit and then taking no
further action, that Dr. Fein, and derivatively, the non-
Allergan Defendants, relied on Ferring’s silence, and that the
non-Allergan Defendants were economically prejudiced as a
result.
The Court has also considered and rejects Ferring’s
unclean hands arguments. §f; Pls.’ Estoppel Opp’n 23-25. The
Court has previously addressed Ferring's fraudulent concealment
claim and dismissed allegations that Dr. Nardi’s use of
documents from his personal computer was illegitimate.
Ferring’s allegations of witness collusion are
likewise unpersuasive. 1§; at 24. That Allergan points to oral
conversations as proof of actions of inventorship is not, as
Ferring would have it, objectionable or grounds for denial of
the summary judgment motion. The facts are what they are, and
neither party can be faulted for the absence of documentation
35
Case 1:12-CV-02650-RWS Document 190 Filed 09/22/15 Page 38 of 40
substantiating an assertion. The only specific example of
witness collusion to which Ferring refers is a 2012 meeting
between Dr. Fein, Dr. Nardi and Ms. Cheng, organized by
Allergan's attorneys in preparation for proceedings in The
Hague. ld. Ferring points to the fact that Ms. Cheng and Dr.
Fein subsequently altered their witness statements as proof that
the meeting was collusive in nature. ld. However, an equally
plausible explanation for the alterations is the review of
additional documents, which Ferring concedes occurred during the
meeting. See id. Ferring has not demonstrated anything
nefarious by this set of facts.
Finally, the Court is satisfied that Allergan’s
misstatement that it reviewed the text of the Speranza
correspondence during its diligence process leading up the March
2010 agreements was inadvertent rather than the type of
particularly egregious conduct warranting denial of equitable
relief.
Granting Defendants’ Summary Judgment and Joinder
Motions terminates this action, and consequently, renders moot
the Motion to Compel and the Confidentiality Motion.
36
Case 1:12-CV-02650-RWS Document 190 Filed 09/22/15 Page 39 of 40
Conclusion
For the foregoing reasons, Defendants’ motions for
summary judgment and joinder are granted. The remaining Motion
to Compel and Confidentiality Motion are rendered moot. The
parties shall meet and confer and provide the Court with a
proposed redacted version of this Gpinion within a week.
1t is so ordered.
New York, NY
August , 2015 ROBERT W. SWEET
U.S.D.J.
37
Case 1:12-CV-02650-RWS Document 190 Filed 09/22/15 Page 40 of 40
Conclusion
FOI‘ the foregoing reasons, Defendantsr motions for
Summary judgment and joinder are granted- The remaining Motion
to Compel and Confidentiality Motion are rendered moot. The
parties shall meet and confer and provide the Court with a
proposed redacted version of this Opinion within a week-
It is so ordered.
New xorx, N! Z/{,$L€Lf:;;f_
‘-’f
Augustz{ , 2015 ROBERT w-. swEET
U.s.D.J.
37