OPINION
This mаtter comes before the Court upon Plaintiffs’ (collectively, “Warner-Lambert”) Motion to Strike Certain Affirmative Defenses and to Dismiss Certain Counterclaims of Purepac Defendants (Docket #431), pursuant to Fed.R.Civ.P. 12(b) and 12(f). 1 The Court has considered the briefs of the parties, and oral argument held on April 22, 2009.
I. Background And Procedural Posture
A detailed account of the factual and procedural backdrop to this case is set forth in the Opinion issued by this Court today, deciding Plaintiffs’ separate, though similar, Motion to Strike Certain Affirmative Defenses of the Teva, IVAX and Eon Defendants (the “Teva Opinion”). Background information concerning Warner-Lambert’s gabapentin patents, Neurontin products and related Orange Book listings need not be reiterated in full for purposes of the instant motion, and is incorporated herein by reference. 2 To the extent that there are facts unique to Purepac and specifically relevant to the resolution of the present motion, they are set forth below.
Purepac was the first generic drug manufacturer to file ANDAs seeking FDA approval to market generic gabapentin products after the expiration of the '544 Patent (and its pediatric extension). Purepac filed two ANDAs: No. 75-370 for gabapentin capsules on March 30, 1998 and No. 75-694 for gabapentin tablets on September 3, 1999. When Purepac initially filed ANDAs, it submitted a Paragraph IV Certification concerning the '476 Patent and a section viii statement concerning the '479 Patent.
Relying on the Paragraph IV Certifications in these ANDAs, Warner-Lambert sued Purepac for infringement of the '476 and '479 Patents.
3
Purepac filed counterclaims alleging, in pertinent part, violation of the antitrust laws and unfair competition.
4
In a motion similar to that now
Judge Lifland ultimately granted summary judgment in Purepac’s favor in May 2003.
Warner Lambert Co. v. Purepac Pharm. Co., et al.,
Nos. 98-2749, 99-5948,
Once the '482 Patent was issued and listed in the Orange Book, Purepac amended its ANDAs to include Paragraph IV Certifications concerning that patent. This second certification forms the basis for the current patent infringement litigation. Like the Teva, IVAX and Eon Defendants, Purepac launched its gabapentin capsules and tablets despite the pending litigation, first offering its gabapentin capsules for sale in October 2004, and its gabapentin tablets in December 2004.
Purepac filed an Answer to Plaintiffs’ Amended Complaint on April 21, 2008. In addition to the affirmative defenses and counterclaims raised by its co-Defendants, Purepac has also requested declarations of unenforceability of the '482 Patent on grounds of patent misuse and unclean hands, and has raised counterclaims asserting (1) monopolization and attempted monopolization in violation of Section 2 of the Sherman Act and (2) common-law unfair competition. 8 Purepac bases these counterclaims on allegations that Warner-Lambert engaged in an “overall scheme to forestall, preclude, and delay generic competition” for Neurontin. Amended Answer and Amended and Supplemental Counterclaims ¶ 104, In re Gabapentin Patent Litig., No. 00-2931 (D.N.J. Apr. 21, 2008) (“Purepac Answer”).
According to Purepac, Warner-Lambert perpetrated this sсheme by: (1) intentionally withholding material prior art from the Patent Office during prosecution of the '482 Patent, resulting in a delayed issuance of the patent and ultimately allowing Warner-Lambert to obtain a successive 30-month stay of FDA approval for Purepac’s products; (2) abusing FDA regula
On June 16, 2008, Warner-Lambert moved to strike Purepac’s unclean hands and patent misuse defenses and moved to dismiss Purepac’s counterclaims for declaratory relief, monopolization, attempted monopolization and unfair competition, claiming that they are not viable as a matter of law.
II. Standard of Review
Warner-Lambert moves to strike certain of Purepac’s affirmative defenses pursuant to Fed.R.Civ.P. 12(f) and moves to dismiss certain of Purepac’s counterclaims pursuant to Fed.R.Civ.P. 12(b)(6). As discussed in the Teva Opinion, Fed.R.Civ.P. 12(f), which allows the Court to “strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter,” offers the primary opportunity for plaintiffs to object to affirmative defenses. An affirmative defense is insufficient as a matter of law if it cannot succeed under any circumstances.
Eisai Co., Ltd. v. Teva Pharm. USA Inc.,
As also discussed in the Teva Opinion, striking an affirmative defense “is a drastic remedy, to be resorted to only when required for the purposes of justice.”
North Penn Transfer, Inc. v. Victaulic Co. of America,
To survive a motion to dismiss filed under Rule 12(b)(6), “[fjactual allegations must be enough to raise a right to relief above the speculative level on the assumption that all of the complaint’s allegations are true,” even if doubtful in fact.
Bell Atlantic Corp. v. Twombly,
Although a court does not need to credit “bald assertions” or “legal conclusions,” it must view all of the allegations in the counterclaim as well as all reasonable inferences that can be drawn therefrom in the light most favorable to the counter-claimant.
Morse v. Lower Merion Sch. Dist.,
Antitrust complaints, in particular, are to be liberally construed at this stage of the proceeding.
See In re Hypodermic Prods. Antitrust Litig.,
MDL No. 1730,
III. Discussion
The instant motion raises issues of both patent and antitrust law. For the sake of clarity, the Court will address the patent issues first and then turn to the antitrust issues separately.
A. Purepac’s Unclean Hands And Patent Misuse Affirmative Defenses
Purepac has asserted affirmative defenses of unclean hands and patent misuse on the same facts relied upon by its co-Defendants. Warner-Lambert has, as a result, raised arguments in support of its motion to strike those defenses that are virtually identical to those asserted against Teva, IVAX and Eon. Warner-Lambert again argues that there is no connection between its alleged off-label marketing misconduct and its current efforts to enforce the '482 Patent, and again stresses that Purepac has asserted nothing more than a shift in the 17-year patent term, which does not constitute an actionable temporal expansion of the patent. For the reasons set
B. Purepac’s Counterclaims For Declaratоry Judgment Of Unenforceability
Purepac, unlike its co-Defendants, has also requested affirmative relief on the basis of unclean hands and patent misuse, by seeking a declaration that the '482 Patent is unenforceable on either, or both, of those grounds. Warner-Lambert has moved to dismiss these counterclaims, arguing that neither allegations of unclean hands nor allegations of patent misuse can form the basis for affirmative relief. This motion will be granted in part and denied in part.
First, the Court notes that because Purepac’s affirmative defense of unclean hands has been stricken, Purepac’s claim for declaratory relief on the basis of unclean hands necessarily fails as well.
See Reid-Ashman Mfg, Inc. v. Swanson Semi-conductor Serv., L.L.C.,
No. 06-4693,
Moreover, Warner-Lambert has correctly argued that, as a matter of law, unclean hands cannot form the basis for a declaration of unenforceability of a patent.
Aptix Corp. v. Quickturn Design Sys., Inc.,
a case upon which Plaintiffs rely, establishes that a patent cannot be invalidated by the patentee’s unclean hands.
The Aptix Court found substantial evidence of litigation misconduct, which supported the district court’s finding of unclean hands and thereby barred the plaintiff patentee from suing to enforce the patent in question. However, the court also held that “[t]he doctrine of unclean hands does not reach out to extinguish a property right based on misconduct during litigation to enforce the right.” Id. at 1375. While misconduct will prevent a litigant from suing in a particular instance, “[t]he property right itself remains independent of the conduct of the litigant.” Id. The Aptix Court concluded, therefore, that the patent should not be declared completely invalid or unenforceable due to the patentee’s unclean hands. 11
Indeed, the
Aptix
Court indicated this conclusion, noting that “[Unequitable conduct in the process of procuring a patent taints the property right itself.... Upon a showing of inequitable conduct during acquisition of the patent, courts declare the patent unenforceable because the property right is tainted
ab initio.” Aptix Corp.,
C. Antitrust Counterclaims
Purepac alleges that Warner-Lambert perpetrated an “overall scheme to forestall, preclude, and delay generic competition” for Neurontin by manipulating the prosecution of the '482 Patent to delay its issuance, improperly listing the '476 and '479 Patents in the Orange Book to obtain additional stays of approval for generic applicants, and filing objectively baseless patent infringement actions concerning the '476 and '479 Patent. Purepac Answer ¶ 104. Warner-Lambert argues that these antitrust counterclaims should be dismissed for two primary reasons. First, Warner-Lambert asserts that Purepac has not suffered an antitrust injury and thus has no standing to bring antitrust claims. Second, Warner-Lambert argues that Purepac has failed to state an antitrust claim as a matter of law because the allegedly anticompetitive conduct cited by Purepac is either immune
1. Antitrust Claims Within The Context Of Patent Litigation
The purpose of the Sherman Act is “to protect the public from the failure of the market.” 15 U.S.C.A. § 2 n. 5 (quoting
Spectrum Sports, Inc. v. McQuillan,
A claim for monopolization has two elements: “(1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic aсcident.”
United States v. Grinnell Corp.,
A claim for attempted monopolization has three elements: (1) predatory or exclusionary conduct; (2) the possession of the specific intent to monopolize; and (3) a dangerous probability of achieving monopoly power or succeeding in the attempt to monopolize.
Ideal Dairy Farms, Inc. v. John Labatt, Ltd.,
Purepac contends that Warner-Lambert undertook an overarching scheme to delay and preclude generic competition for Neurontin by: (1) intentionally withholding material prior art from the Patent Office during prosecution of the '482-Patent in order to delay the issuanсe of that patent and obtain successive 30-month stays of FDA approval for Purepac’s products; (2) abusing FDA regulations by certifying that the '476 and '479 Patents covered the approved compounds in and uses of Neurontin, while knowing that such certifications were false; and (3) filing objectively baseless patent-infringement lawsuits asserting the '476 and '479 Patents against Purepac. Purepac alleges that Warner-Lambert’s objective was to obtain more market exclusivity for Neurontin than the patent laws and regulatory system allow,
a. Allegations Of Patent Prosecution Misconduct
Purepac alleges that Warner-Lambert intentionally withheld material prior art from the Patent Office during the prosecution of the '482 Patent, so that the patent would issue at a more optimal time. Beyond the allegations presented in support of its patent misuse affirmative defense, which also apply here, Purepac alleges that Warner-Lambert breached its duty of candor during the prosecution process by failing to cite all known, relevant prior art in its initial patent applications. Purepac claims that Warner-Lambert purposefully relied on regulations requiring confidentiality for pending patent applications to conceal its allegedly inequitable conduct until the '482 Patent finally issued.
Furthermore, Purepac argues that Warner-Lambert sought to delay the issuance of the '482 Patent in order to obtain an additional, successive 30-month stay of generic approval that would not run consecutively with those already in place. If Warner-Lambert had not withdrawn the '270 Application and the '482 Patent had issued in 1995, Purepac would have been able to address all of Warner-Lambert’s gabapentin patents in its initial ANDAs. Any 30-month stays triggered by the ANDAs would, therefore, have run concurrently. Purepac alleges that instead “Warner-Lambert’s inequitable conduct and failure to prosecute expeditiously enabled it to trigger a first 30-month stay based on the earlier-issued ... '476 Patent, followed by a second 30-month stay based on the later-issued '482 Patent.” Purepac Answer ¶ 122.
b. Allegations Of Improper Orange Book Listings
Purepac alleges that Warner-Lambert abused FDA regulations and the Orange Book listing process by improperly certifying that the '476 and '479 Patents covered Neurontin, with anticompetitive intent and effect.
First, Purepac alleges that the listing of these patents was tied to the withdrawal of the '270 Application. Warner-Lambert, according to Purepac, felt that it was commercially able to withdraw the '270 Application and delay the '482 Patent because these listings, and the subsequent 30-month stays and litigation they enabled, protected the company’s control over the gabapentin market in the interim. Without the Orange Book listings, it would allegedly have been in Warner-Lambert’s better interests to prosecute the '482 Patent expeditiously in order to gain similar protections.
Purepac also alleges that Plaintiffs listed these patents despite knowing that the patents did not actually cover Neurontin. In order to have them listed, Plaintiffs certified that the '476 and '479 Patents “cover a crystal form and the use of Neurontin,” respectively. Purepac Answer ¶ 125. Purepac alleges that such certifica
Purepac’s allegations that Warner-Lambеrt knew these listings were improper rest in large part on internal Warner-Lambert projections of generic competition, which were tied to the expiration of the '544 Patent in 2000, rather than the expiration of the '476 and '479 Patents in 2008 and 2010. Other internal documents indicate that Warner-Lambert chose not to seek FDA approval for additional indications because there was not enough time to do so before the expiration of the patents that Warner-Lambert believed were protecting the market. According to Purepac, if Warner-Lambert had “expected these patents to provide real protection for its Neurontin monopoly, its contemporaneous documents would have projected patent protection out until 2008 or 2010,” rather than 2000. Id. ¶ 147.
c. Allegations Of Sham Patent Litigation
Purepac’s final category of alleged anti-competitive conduct concerns the “objectively baseless” patent-infringement lawsuits filed to enforce the '476 and '479 patents against Purepac. As discussed, Warner-Lambert sued Purepac, on the basis of its ANDAs, for infringing the '476 and '479 Patents. Purepac now alleges that these lawsuits were objectively baseless and initiated solely to prevent or delay the approval and launch of Purepac’s generic products by imposing additional regulatory hurdles and extra costs.
Purepac rests these allegations on the following claims: (1) that Warner-Lambert filed its lawsuits before testing samples of Purepac’s generic product, which do not contain the gabapentin monohydrate compound covered by the '476 Patent; (2) that Warner-Lambert initiated the Tablet Lawsuit notwithstanding discovery in the Capsule Lawsuit revealing that the gabapentin anhydrous used by Purepac was manufactured abrоad, and, therefore, not actionable; (3) that Warner-Lambert initiated the Tablet Lawsuit notwithstanding discovery in the Capsule Lawsuit revealing that Purepac’s supplier manufactured gabapentin anhydrous, not gabapentin monohydrate, as claimed in the '476 Patent; and (4) that Warner-Lambert withdrew its claims of infringement of the '476 Patent before even reaching trial because information developed in discovery undermined the contention that Purepac was infringing the '476 Patent.
3. Antitrust Injury
Warner-Lambert argues that Purepac’s antitrust counterclaims should be dismissed because Purepac has not suffered an antitrust injury from Warner-Lambert’s allegedly anticompetitive conduct. Antitrust plaintiffs must establish standing to pursue their claims. A threshold requirement for antitrust standing is proof of “antitrust injury,” which rеquires that the injury be “causally linked to an illegal presence in the market.”
Brunswick v. Pueblo Bowl-O-Mat, Inc.,
Courts have regularly held that such conduct creates the type of anticompetitive effect that the antitrust laws were designed to prevent, and therefore constitutes antitrust injury.
See, e.g., Abbott Labs. v. Mylan Pharm., Inc.,
No. 05-6561,
Warner-Lambert argues, however, that Purepac has failed to establish that it has suffered an antitrust injury because none of Warner-Lambert’s allegedly anticompetitive activities proximately caused the delayed launch of Purepac’s generic gabapentin products. These arguments focus on the second element of the Gulfstream standard and are essentially causation arguments. Warner-Lambert claims, for example, that any roadblocks imposed by its own actions were removed well before Purepac actually launched its products, and that Purepac has failed to allege facts establishing that Purepac would have launched any earlier but for such roadblocks.
Warner-Lambert is correct that proving antitrust injury depends, at least in part, on establishing proximate cause.
See Brunswick,
First, the Court notes that “the existence of antitrust injury is not typically resolved through motions to dismiss.”
Schuylkill Energy Res., Inc. v. Pa. Power & Light Co.,
Second, in arguing that none of its alleged anticompetitive activities proximately caused the delay in Purepac’s launch, Warner-Lambert inappropriately compartmentalizes or fragments Purepae’s allegations concerning an overall monopolization schеme. Purepac need not allege proximate cause or antitrust injury separately for each component of the alleged scheme. The injuries inflicted by Warner-Lambert’s allegedly anticompetitive aetivi
Similarly, Purepac need not allege that Warner-Lambert’s anticompetitive actions were the sole cause of its injury.
See Zenith Radio Corp. v. Hazeltine Research, Inc.,
Nor must Purepac completely discredit in its initial pleadings all possible intervening causes of its delayed launch, particularly Purepac’s failure to obtain tentative generic approval from the FDA. Several courts have held that a finding of antitrust injury cannot be tied to the status of FDA aрproval of a generic applicant.
See Bristol-Myers Squibb Co. v. Ben Venue Labs.,
Finally, and perhaps more importantly, Judge Lifland has already determined that Purepac has sufficiently alleged antitrust injury and the requisite causal connection.
18
In his December 22 Opinion, Judge
Warner-Lambert did not argue in the papers now before the Court that any of the exceptions to the law of the case doctrine should apply. Indeed, Warner-Lambert’s briefs were written without any mention of the law of the case doctrine. When pressed by the Court at oral argument, counsel explained that Warner-Lambert seeks to revisit this issue primarily because Judge Lifland failed to consider the intervening causes that delayed Purepac’s launch.
See
April 22 Transcript at 77-109. The arguments concerning intervening causes are, however, unpersuasive as a basis to depart from the law of the case here. Purepac need not “allege (or dispose of) all alternative theories of causation to survive a motion to dismiss.”
In re K-Dur Antitrust Litig.,
Accordingly, on the basis of Judge Lifland’s earlier analysis as well as the factual allegations in Purepac’s Amended Answer, this Court finds that Purepac has sufficiently alleged that it suffered an antitrust injury and that such injury flowed from Warner-Lambert’s allegedly unlawful conduct. When evaluated as a whole, the Court need not determine whether each element of the alleged scheme imposed its own antitrust injury. Warner-Lambert’s motion to dismiss Plaintiffs’ antitrust counterclaims is, therefore, denied.
4. Purepac’s “Overall Scheme” Claim
Purepac contends that Warner-Lambert undertook an “overall scheme to forestall, preclude, and delay generic competition” for Neurontin. Purepac Answer
Warner-Lambert moves to dismiss Purepac’s antitrust counterclaims because none of the three anticompetitive acts alleged by Purepac independently states an antitrust claim. Purepac cannot, according to Warner-Lambert, “lump together otherwise lawful conduct to state an antitrust claim.” Plaintiffs’ Reply Brief in Support of Their Motion to Strike Certain Affirmative Defenses and to Dismiss Certain Counterclaims of Purepac Defendants at 17,
In re Gabapentin Patent Litig.,
No. 00-2931 (D.N.J. Sept. 17, 2008) (“Plaintiffs’ Reply Brief’). Warner-Lambert further emphasizes that not only are the categories of conduct at issue lawful, they are expressly authorized, if not encouraged, by the legal or regulatory framework in which they occur. “Conduct expressly authorized by one law or governmental agency cannot be simultaneously subject to antitrust scrutiny,” Warner-Lambert asserts, in part because “allowing a plaintiff to combine a defendant’s lawful and unlawful activities effectively would eliminate the requirement that an antitrust plaintiff must show a ‘casual connection between the [defendant’s] antitrust violations and [plaintiffs] injury.’ ”
In re Indep. Serv. Org. Antitrust Litig.,
Warner-Lambert’s arguments are not supported by the prevailing case law on this issue. When determining antitrust liability based on a collection of factual allegations, such as those made by Purepac, “courts must look to the monopolist’s conduct taken as a whole rather than considering each aspect in isolation.”
Le-Page’s,
Indeed, courts have routinely upheld the validity of “overall monopolization scheme” claims in the patent context.
See, e.g., Remeron,
Reviewing Purepac’s allegations of anti-competitive conduct in their totality, it is clear that Purepac has adequately pled antitrust counterclaims. Purepac has alleged in detail how Warner-Lambert engaged in a comprehensive multifaceted scheme to monopolize the market for gabapentin anhydrous and how that scheme was designed to obtain more market exclusivity for Neurontin than the patent laws allow, thereby constituting the willful acquisition or maintenance of otherwise allowable monopoly power. The Court need not determine whether the three underlying elements of Purepac’s alleged scheme are violations of the antitrust laws in their own right. As the Supreme Court stated in the context of evaluating a Section 2 claim:
It is not the form of the combination or the particular means used but the result to be achieved that the statute condemns. It is not of importance whether the means used to accomplish the unlawful objective are in themselves lawful or unlawful. Acts done to give effect to the conspiracy may be in themselves wholly innocent acts. Yet, if they are part of the sum of the acts which are relied upon to effectuate the conspiracy which the statute forbids, they come within its prohibition.
Am. Tobacco Co. v. United States,
Warner-Lambert’s arguments that certain of the anticompetitive acts alleged by Purepac are immune from antitrust liability under the
Noerr-Pennington
doctrine require further consideration. Conduct protected by
Noerr-Pennington
immunity cannot be properly included within the scope of the monopolization scheme at issue.
United Mine Workers v. Pennington,
a. The Noerr-Pennington Doctrine And Its Exceptions
The
Noerr-Pennington
doctrine protects activities by parties to influence
The
Noerr-Pennington
doctrine is not, however, without limit. The
Noerr
Court acknowledged that activity “ostensibly directed toward influencing governmental action” would not be immune from antitrust liability if it constituted “a mere sham to cover what is actually nothing more than an attempt to interfere directly with the businеss relationships of a competitor.”
Noerr,
b. Sham Infringement Actions
Purepac claims that Warner-Lambert initiated the Capsule and Tablet Lawsuits “without an objective basis” and “with an intent to delay, hamper, hinder, and impede Purepac from obtaining immediate or early FDA approval of its proposed gabapentin anhydrous” products. Purepac Answer ¶¶ 158, 164. Warner-Lambert asserts immunity for the Capsule and Tablet Lawsuits because “[l]itigation, including litigation to protect one’s patent rights, is presumptively immune from antitrust scrutiny under Noerr-Pennington.” Plaintiffs’ Opening Brief in Support of Their Motion to Strike Certain Affirmative Defenses and to Dismiss Certain Counterclaims of Purepac Defendants at 38, In re Gabapentin Patent Litig., No. 00-2931 (D.N.J. June 16, 2008) (“Plaintiffs’ Opening Brief’). Warner-Lambert is entitled to such immunity unless Purepac can establish that the Capsule and Tablet Lawsuits were “sham litigation.”
The Supreme Court has established the following test for sham litigation:
First, the lawsuit must be objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits. If an objective litigant could conclude that the suit is reasonably calculated to elicit a favorable outcome, the suit is immunized under Noerr, and an antitrust claim premised on the sham exception must fail. Only if challenged litigation is objectively merit-less may a court examine the litigant’ssubjective motivation. Under this second part of our definition of sham, the court should focus on whether the baseless lawsuit conceals “an attempt to interfere directly with the business relationships of a competitor.”
PRE,
Warner-Lambert encourages the Court to decide whether the Capsule and Tablet Lawsuits were sham, as a matter of law and at this relatively early stage of the current litigation, because “[wjhere, as here, there is no dispute over the predicate facts of the underlying legal proceeding, a court may decide probable cause as a matter of law.”
Id.
at 63,
Purepac, however, does dispute the predicate facts of the Capsule and Tablet
Although “the Court may take judicial notice of the opinions filеd in the underlying actions ... the scope of that notice is subject to important limitations. The Court may take judicial notice only of the ‘existence of the opinion, which is not subject to reasonable dispute over its authenticity.’ ”
In re Wellbutrin SR Antitrust Litigation,
Moreover, when the predicate facts of an allegedly sham lawsuit are disputed, sham litigation claims should not be decided by the court as a matter of law.
In re Relafen Antitrust Litig.,
Courts have rejected claims of Noerr-Pennington immunity made through motions to dismiss in situations similar to that now before this Court. In Hoffman-LaRoche, Inc. v. Genpharm, Inc., for example, the court determined that:
The resolution of the question whether plaintiffs’ suit is objectively baseless as to Genpharm involves the determination of whether plaintiffs undertook a reasonable investigation before filing suit, whether plaintiffs knew or should have known that Genpharm had not infringed the Syntex process patents, and whether a reasonable litigant could have realistically expected success on the merits at the time the suit was filed. Reasonableness is a question of fact, and the Court cannot make such factual determinationson a factual controversy roiled by a motion to dismiss.
Additionally, in arguing that Purepac’s allegations of sham litigation must be rejected, Warner-Lambert seeks to relitigate rulings already made by Judge Lifland, without addressing the doctrine of law of the case or arguing that an exception to that doctrine applies. In its initial motion to dismiss, Warner-Lambert had argued that because the Capsule Lawsuit survived summary judgment, it could not be considered objectively baseless. Judge Lifland, however, determined that the denial of summary judgment did not, in and of itself, deem either that lawsuit or related lawsuits objectively reasonable, without specific examination of the basis for the denial. He further concluded that the denial of summary judgment in one proceeding “does not necessarily relate to the asserted basis for antitrust relief’ in this proceeding, suggesting that the sham litigation and overall antitrust claims were premised on a broader range of facts and issues. December 22 Opinion,
In sum, Purepac has adequately alleged facts, which, if proven, will show that Warner-Lambert’s Capsule and Tablet Lawsuits are not entitled to
Noerr-Pennington
immunity under the sham litigation exception. Accordingly, such lawsuits will not be deemed immune from antitrust liability under
Noerr-Pennington
at this stage of the proceeding.
28
Purepac’s allegations of sham litigation will not be dismissed and can properly be considered within the scope of Warner-Lambert’s overall
c. Patent Prosecution Misconduct
Purepac also alleges that, in their attempts to “gam[e] the regulatory and patent systems to secure more exclusivity than Warner-Lambert was lawfully entitled to receive,” Plaintiffs purposefully manipulated the patent prosecution of the '482 Patent in order to expand and secure patent protection for the Neurontin franchise. Purepac Answer ¶ 104. Warner-Lambert’s manipulations allegedly included “repeatedly making the same arguments to the patent examiner in response to claim rejections and repeatedly filing continuation applications,” as well as withholding material, known, prior art in order to delay the ultimate issuance of the '482 Patent. Id. ¶¶ 105, 110-13. Warner-Lambert asserts immunity for its prosecution of the '482 Patent because its “actions constitute quintessential petitioning activity that are protected under the NoerrPennington doctrine.” Plaintiffs’ Opening Brief at 28. Plaintiffs claim that “[t]he only exception to immunity under NoerrPennington in prosecuting and later enforcing a patent is where the petitioning party is shown to have committed fraud on the Patent Office, under Walker Process Equipment, Inc. v. Food Machinery and Chemical Corp.” Id. at 29.
Under the
Walker Process
doctrine, the “[fraudulent procurement of a patent or the enforcement of a patent obtained by fraud,” although an act or result of government petitioning, may provide the basis for antitrust liability,
¡temerón,
Warner-Lambert argues that Purepac has failed to allege any of the elements of the Walker Process exception to NoerrPennington immunity. According to Plaintiffs, Purepac has alleged an initial failure to disclose the '326 Patent, but not a false representation or omission material to patentability. Furthermore, the '326 Patent was cited to the Patent Examiner before the '482 Patent issued, which arguably prevents Purepac from claiming that but for the misrepresentation or omission the '482 Patent would not have issued. Without pleading a Walker Process claim, Warner-Lambert concludes, “Purepac’s antitrust claim based on any alleged misconduct with respect to the '482 Patent prosecution must be dismissed.” Plaintiffs’ Opening Brief at 30.
Wаrner-Lambert correctly asserts that Purepac has not pled a Walker Process claim. Warner-Lambert’s argument that the prosecution of the '482 Patent is therefore necessarily immune from antitrust liability is, however, incorrect. Purepac is not asserting that the '482 Patent should not have issued because of fraud on the Patent Office. Indeed, Purepac has conceded that the '482 Patent was not procured by fraud, as contemplated by the Walker Process exception. Rather, Purepac is challenging “Warner-Lambert’s abuse of Patent Office process to cause the '482 [Patent] to issue in 2000 instead of 1995 for the purpose of triggering a second 30-month stay of FDA approval and extending Warner-Lambert’s monopoly.” Purepac’s Opposition Brief at 24. To that end, Purepac’s allegations implicate not the Walker Process exception but rather a more generalized “sham” or “sham petitioning” exception to Noerr-Pennington immunity.
While not referencing “sham petitioning” in those words, Purepac’s Answer does contain factual allegations which, if proven, are sufficient to warrant an exception to Noerr-Pennington immunity under this theory. Purepac has clearly alleged that Warner-Lambert manipulated the prosecution of the '482 Patent, not to promptly obtain government action in its favor, but rather to delay its issuance, forestall generic competition for Neuron-tin, and improperly preserve its patent monopoly. Purepac alleges that Warner-Lambert, acting with the specific intent to monopolize or maintain its monopoly in the gabapentin anhydrous market, withheld prior art, abandoned a patent application that had already been approved approximately one month before the patent was scheduled to issue, and filed unnecessary continuation applications. If such allegations are proven, Warner-Lambert’s patent prosecution misconduct could reasonably be considered “nothing more than an attempt to interfere directly with the business” of Warner-Lambert’s generic competitors. As such, this Court cannot declare such conduct immune as a matter of law at this stage of the litigation. 29
Courts have held that abuse of the patent prosecution process and inequitable conduct before the Patent Office similar to what is alleged here may form the basis for a viable antitrust claim. In
DiscoVision Associates v. Disc Manufacturing, Inc.,
the court denied a motion to dismiss Disc Manufacturing’s monopolization claim based on, among other things, allegations that DiscoVision “committed fraud and misrepresentations in prosecuting its patents” and “committed these acts and filed continuation applications with the specific intent to monopolize or maintain its monopoly” in the relevant markets.
DiscoVision
Assoc.,
Similarly, in denying a motion to dismiss antitrust claims based on the “late listing” of patents in the Orange Book, this Court held that:
Within the maze of Hatch-Waxman, if a patent-holder’s actions unlawfully maintain otherwise lawful monopoly power or use a lawful patent to manipulate the ANDA process, such actions could lead to anticompetitive effects in the relevant market.... At this stage in the instant action, it cannot be said to a legal certainty that no relief could be granted under Section 2.
Remeron,
The same principles should apply to the conduct at issue in this proceeding. The Hatch-Waxman regulatory scheme presents unique opportunities for gamesmanship, and offers substantial benefits, particularly the imposition of 30-month stays, to pioneer drug manufacturers who may manipulate the process and timing of patent prosecutions in order to expand the otherwise lawful monopoly granted by a patent or a series of patents. Fraudulently delaying the issuancе of a patent could lead to anticompetitive effects in the relevant market, if such delays were intended to obtain control over or exclude competitors from such market. Such abuse of the Patent Office’s administrative and regulatory process itself is not entitled to immunity.
In sum, Purepac has adequately alleged facts, which, if proven, will show that Warner-Lambert’s prosecution of the '482 Pat
IV. Conclusion
For the reasons set forth in this Opinion, the Court grants Plaintiffs’ Motion to Strike with respect to Purepac’s affirmative defense of unclean hands and denies the Motion to Strike with respect to Purepac’s affirmative defense of patent misuse. The Court grants Plaintiffs’ Motion to Dismiss Purepac’s counterclaim for declaratory judgment of unenforceability to the extent such counterclaim relies on the concept of unclean hands, and denies the motion to the extent such counterclaim relies on the patent misuse doctrine. Finally, the Court denies Plaintiffs’ Motion to Dismiss Purepac’s federal antitrust and common-law unfair competition counterclaims as pled in Counts Four, Five, and Six of Purepac’s Amended Answer. An appropriate Order will issue.
Notes
. Thе Purepac Defendants ("Purepac”) are Purepac Pharmaceutical Co., a Delaware corporation; Faulding Inc., a Delaware corporation; and Actavis Elizabeth LLC, a Delaware limited liability company. Purepac was a wholly-owned subsidiary of Faulding, and was the initial holder of the ANDAs at issue in this proceeding. Actavis is the successor to Purepac Pharmaceutical Co. and is the current holder of the relevant ANDAs.
. The Court recommends that this Opinion be read in conjunction with the Teva Opinion as well as the Opinion handed down today deciding Warner-Lambert’s Motion to Dismiss the Direct Purchaser Plaintiffs' Claims in a related matter, In re Neurontin Antitrust Litig. (No. 02-1390, MDL No. 1479) (the "Neuron-tin Antitrust Opinion”). The Court presumes familiarity with the facts and arguments set forth in such Opinions, as well as with the abbreviations and acronyms used therein.
. Warner-Lambert filed two separate lawsuits against Purepac, one based on the ANDA for generic gabapentin capsules and the other based on the ANDA for generic gabapentin tablets. The "Capsule Lawsuit” was initiated in June 1998 (No. 98-2749) and the "Tablet Lawsuit” was initiated in December 1999 (No. 99-5948). In each lawsuit, Warner-Lambert asserted actual infringement of the '476 Patent and induced infringement of the '479 Patent. The lawsuits were consolidated for trial purposes in April 2001 in front of Hon. John C. Lifland, U.S.D.J.
. Purepac alleges in its counterclaims that Warner-Lambert fraudulently included the '476 and '479 Patents in its NDA for approval of gabapentin anhydrous, which led to the listing of those patents in the Orange Book. According to Purepac, Warner-Lambert listed the '476 Patent even though the gabapentin monohydrate covered by that patent was not used at any point during the production of
. Judge Lifland held that Purepac had standing to bring antitrust counterclaims, because Purepac had sufficiently alleged a causal connection between Warner-Lambert’s actions and its injuries. Judge Lifland also held that the fact that Warner-Lambert's infringement actions had survived motions for summary judgment did not, on its own, preclude Purepac’s antitrust claims, which were based on allegations that those infringement actions constituted "sham litigation” instituted for the sole purpose of precluding competition. Finally, with respect to the allegations of fraudulent Orange Book listings, Judge Lifland held that Purepac had adequately alleged "that Warner-Lambert knowingly made misrepresentations to the FDA with the specific intent to prevent competition,” such that discovery might develop proof that Warner-Lambert engaged in actionable anticompetitive conduct. Id. at *6.
. Purepac moved for summary judgment of noninfringement, arguing that its gabapentin product did not infringe the '476 Patent because it did not contain the monohydrate form of gabapentin claimed in that patent, and did not infringe the '479 Patent because the generic product would not be labeled for treating the neurodegenerativo diseases covered by that patent. Warner-Lambert responded that Purepac's gabapentin compounds may "pass through” the patentеd monohydrate form during the production process, thereby infringing the '476 Patent. Furthermore, Purepac’s products would be prescribed and dispensed for off-label uses, thereby infringing the '479 Patent.
Judge Lifland granted summary judgment of noninfringement of the '476 Patent in light of evidence that Purepac’s gabapentin anhydrous was produced outside of the United States. Because United States patent laws are territorially limited, a U.S. patent cannot be infringed by acts entirely committed in a foreign country.
See Pellegrini v. Analog Devices, Inc.,
Judge Lifland granted summary judgment of noninfringement of the '479 Patent on the basis of the summary judgment decision issued in
Warner-Lambert Co. v. Apotex Corp.,
. The Capsule and Tablet Lawsuits also triggered a collateral proceeding between Purepac and the FDA concerning the section viii statement Purepac initially filed with respect to the '479 Patent. Purepac submitted a section viii statement, rather than a Paragraph IV Certification, because the '479 Patent covered a use other than the labeled use for which Purepac sought generic approval. Section viii statements do not require notice to the patent-holder and do not allow the patent-holder to automatically initiate infringement litigation. The FDA, however, demanded that Purepac change its certification to one under either Paragraph III or Paragraph IV, arguing that a section viii statement was only appropriate when a label has more than one indication and the generic applicant seeks approval for only one of the many approved uses. Believing the demands made by the FDA, which would result in formal notice to Warner-Lambert, and likely result in another infringement action, 30-month stay and the loss of generic exclusivity, to be untenable, Purepac successfully sued the FDA to compel acceptance of the section viii statement.
Purepac Pharm. Co. v. Thompson,
. Purepac asserts that its counterclaims arise under both Section 2 of the Sherman Act and Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15(a), 26. These antitrust counterclaims, discussed in greater detail below, are substantially similar to the claims raised in In re Neurontin Antitrust Litig. and examined in the Neurontin Antitrust Opinion. Where appropriatе, the Court will refer herein to arguments made or conclusions reached in connection with that Opinion.
. Because a Rule 12(f) motion also challenges the legal sufficiency of the pleading, it is governed by the same standards as a motion to dismiss filed pursuant to Fed.R.Civ.P. 12(b)(6).
Eisai Co.,
. In evaluating a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), the Court may consider only the allegations pled in the counterclaim, exhibits attached to the counterclaim, matters of public record, and undisputedly authentic documents if the counterclaims are based on those documents.
Pension Ben. Guar. Corp. v. White Consol. Indus.,
. The Court notes, however, that even though Purepac’s unclean hands defense is
. Warner-Lambert hаs also moved to dismiss Purepac's unfair competition, counterclaims, arguing that the allegations in Purepac’s Answer fail to satisfy the standards set by the U.S. Supreme Court in
Twombly.
Warner-Lambert further argues that even assuming Purepac has survived the pleading requirements, the
Noeir-Pennington
doctrine immunizes petitioning activity not only from federal antitrust laws but also from related state law claims of unfair competition.
See VIM, Inc. v. Somerset Hotel Ass’n,
Purepac argues in response that the factual allegations presented in support of its federal claims also support its common law claims. Purepac claims that, accordingly, its unfair competition counterclaims survive this motion for the same reasons that its federal antitrust counterclaims do.
Purepac is correct. In reviewing motions to dismiss both federal and New Jersey antitrust or unfair competition claims, when an antitrust plaintiff sufficiently alleges federal antitrust violations in the pleadings, "it is fair to say that the conduct states a claim under the much broader common law tort of unfair competition."
Biovail Corp. Int'l v. Hoechst AG,
. Monopoly power is defined as "the power to control prices or to exclude competition.”
Barr Labs., Inc. v. Abbott Labs.,
. As one court observed, "[t]he presence of a patent informs our entire analysis here, because patent laws and antitrust laws exist in tension, as the patent laws protect monopoly power while antitrust laws seek to restrain it.... Thus, any allegation of antitrust resulting from a patent must extend beyond the rights granted in the patent, and conduct permissible under the patent laws cannot trigger antitrust liability.”
Sheet Metal Duct, Inc.,
Patent holders can, however, violate antitrust laws if they seek to expand the limited monopoly granted by their patents.
See, e.g., DiscoVision Assoc. v. Disc Mfg., Inc.,
Nos. 95-21 & 95-345,
. "[Allthough the size of a defendant's market share is a significant determinant of whether a defendant has a dangerous probability of successfully monopolizing the relevant market, it is not exclusive.”
Barr Labs.,
. According to Purepac, "Gabapentin monohydrate is not a component in Warner-Lambert’s Neurontin products. Warner-Lambert tested formulations containing gabapentin monohydrate as the active ingredient and found them unsuitable because the additional water caused problems. Thus, gabapentin monohydrate and gabapentin anhydrous result in formulations with dissimilar characteristics. The FDA never authorized Warner-Lambert to use gabapentin monohydrate as a component in any Neurontin products. Neurontin products employ gabapentin anhydrous as the active ingredient.” Purepac Answer ¶ 130. Purepac cites to statements made by Warner-Lambert to the Patent Office during the prosecution of the '476 Patent which indicated that the claimed gabapentin monohydrate differed from the prior art of the '175 or '544 Patents.
With respect to the '479 Patent, Purepac emphasizes that Warner-Lambert certified that the '479 Patent covered "the use of Neurontin,” even though the only approved use of Neurontin was as a secondary treatment for epilepsy. Id. ¶ 136. Purepac further alleges that "[w]hen Warner-Lambert submitted the '479 patent for listing in the Orange Book, Warner-Lambert knew that it could not truthfully declare that the '479 patent covers the formulation, composition and/or method of use of Neurontin®.” Id. ¶ 138
. Antitrust standing requirements insure that litigants will use the antitrust laws to prevent anticompetitive actions and to deal only with economic problems whose solutions those laws were intended to effect. To this end, an antitrust plaintiff must allege more than constitutional standing {i.e., allegations of a case or controversy) to establish standing to pursue antitrust violations. See 54 Am. Jur. 2d Monopolies and Restraints of Trade § 400. In reaching a determination on standing, courts must consider the following:
(1) whether there is a causal connection between an antitrust violation and harm to the plaintiff and the defendants intended to cause that harm; (2) whether the nature of the plaintiff's alleged injury was of the type the antitrust laws were intended to forestall; (3) the directness or indirectness of the asserted injury; (4) whether the claim rests on some abstract or speculative measure of harm; and (5) the strong interest in keeping thе scope of complex antitrust trials within judicially manageable limits, avoiding both duplicative recoveries and the complex apportionment of damages.
December 22 Opinion,
Nevertheless, there is no black-letter rule for determining standing in every antitrust case.
Steamfitters Local Union No. 420 Welfare Fund v. Philip Morris, Inc.,
. Warner-Lambert appears to overlook the "law of the case” doctrine, which "limits re-litigation of an issue once it has been decided” in an earlier stage of the same litigation.
Hamilton v. Leavy, 322
F.3d 776, 786-87 (3d Cir.2003);
In re Cont’l Airlines, Inc.,
The law of the case doctrine does not limit a federal court's power; rather, it directs its exercise of discretion.... A court has the power to revisit prior decisions of its own or of a coordinate court in any circumstance, although as a rule courts should be loathe to do so in the absence of extraordinary circumstances such as where the initial decision was clearly erroneous and would work a manifest injustice. This Circuit has recognized several "extraordinary circumstances” that warrant a court's reconsideration of an issue decided earlier in the course of litigation. They include situations in which: (1) new evidence is available; (2) a supervening new law has been announced; or (3) the еarlier decision was clearly erroneous and would create manifest injustice.
Pub. Interest Research Group of N.J., Inc. v. Magnesium Elektron, Inc.,
. While additional facts and evidence may have developed since Judge Lifland issued the December 22 Opinion, a review of Purepac's Amended Answer indicates that Purepac has provided additional allegations concerning the antitrust injuries it has suffered, and in support of its standing to pursue them, beyond those that Judge Lifland initially deemed sufficient.
. Warner-Lambert explains that
Remeron,
for example, involved the late listing of a patent in the Orange Book in violation of regulatory requirements,
. See
also SmithKline Beecham Corp. v. Apotex Corp.,
. Purepac has, moreover, sufficiently alleged that some of the activities that make up the challenged monopolization scheme may con
. Warner-Lambert does not move to dismiss Purepac's allegations of improper Orange Book listings on immunity grounds, arguing instead that Purepac's claims based оn improper listing of the '476 and '479 Patents fail because both listings were proper as a matter of law. This approach is consistent with case law establishing that the listing of patents in the Orange Book is not government petitioning as defined by the
Noerr-Pennington
doctrine and therefore not eligible for
Noerr-Pennington
immunity.
In re Buspirone Patent Litig.,
Nonetheless, the Court notes that Purepac has amply pled that Warner-Lambert listed the '476 and '479 Patents in the Orange Book with anticompetitive purpose and effect. Judge Lifland allowed Purepac to pursue improper listing claims on the basis of its original pleadings. December 22 Opinion,
Viewing such allegations in the light most favorable to Purepac, discovery could demonstrate fraudulent, anticompetitive, or improper conduct by Warner-Lambert that proves that these listings were made in furtherance of an overall scheme to monopolize. Purepac is entitled to attempt to mеet its burden of proof by developing facts that will show that the listings were improper because they did not cover the drugs or uses in the NDA and because a claim of patent infringement could not be reasonably asserted against the generic applicants. Warner-Lambert’s arguments that such listings were proper as a matter of law address the merits of Purepac's claims, rather than the sufficiency of the pleadings. Because Warner-Lambert’s Orange Book listings for the '476 and '479 Patents are not eligible for Noeir-Pennington immunity and because Purepac has adequately alleged that such listings were a part of an overall pattern of abuse of the Hatch-Waxman regulatory process, these allegations are properly included within the scope of the alleged monopolization scheme at issue. Warner-Lambert’s arguments would be better addressed at the summary judgment stage than upon a motion to dismiss.
. As the Supreme Court further explained in PRE:
The existence of probable cause to institute legal proceedings precludes a finding that an antitrust defendant has engaged in sham litigation. The notion of probable cause, as understood and applied in the common law tort of wrongful civil proceedings, requires the plaintiff to prove that the defendant lacked probable cause to institute an unsuccessful civil lawsuit and that the defendant pressed the action for an improper, malicious purpose. Probable cause to institute civil proceedings requires no more than a "reasonable] belie[f] that there is a chance that [a] claim may be held valid upon adjudication.” ... When a court has found that an antitrust defendant claiming Noerr immunity had probable cause to sue, that finding compels the conclusion that a reasonable litigant in the defendant’s position could realistically expect success on the merits of the challenged lawsuit. Under our decision today, therefore, a proper probable cause determination irrefutably demonstrates that an antitrust plaintiff has not proved the objective prong of the sham exception and that the defendant is accordingly entitled to Noerr immunity.
Id.
at 62,
. In support of this argument, Warner-Lambert cites a long list of prior rulings: (1)
Warner Lambert Co. v. Purepac Pharm. Co.,
Nos. 98-2749, 98-5948,
.
See also Abraxis Bioscience, Inc. v. Navinta LLC,
No. 07-1251,
. Warner-Lambert does, however, assert that "[m]uch has changed since 2000,” and attempts to point the Court to the subsequent decisions denying Rule 11 motions and allegedly finding that Warner-Lambert's infringement claims were not objectively baseless. Plaintiffs’ Reply Brief at 26. As noted above, these decisions are not dispositive where, as here, Purepac disputes some of the predicate facts underlying the actions in which those decisions were issued.
. The Court notes, however, that after litigation of Warner-Lambert's patent infringement claims and upon discovery as to Purepac's counterclaims, if Purepac is unable to meet its burden of proof as to the sham exception, Plaintiffs may renew their claims for Noerr-Pennington immunity.
. The Court notes again that if Purepac is unable to meet its burden of proof as to the sham exception, Plaintiffs may renew their claims for Noerr-Pennington immunity at a later stage of the proceeding.
. The FTC has recently applied a similar analysis to claims of systematic abuse of the Hatch-Waxman regulatory framework, in evaluating a complaint that Bristol-Myers Squibb (''BMS”) had engaged in a scheme to obstruct the launch of generic competitors to its BuSpar, Taxol, and Platinol drug products. Faced with imminent competition for these drugs, BMS allegedly undertook a course of conduct that included: paying potential competitors to abandon a challenge to a BMS patent and stay off the market until the patent expired; abusing FDA regulations to block generic entry; making false statements to the FDA in connection with listing рatents in the Orange Book; engaging in inequitable conduct before the PTO to obtain patents; and filing baseless patent infringement suits. The FTC expressed concerns with such conduct, explaining that:
the logic and policy underlying the Supreme Court's decision in California Motor Transport Co. v. Trucking Unlimited,404 U.S. 508 [92 S.Ct. 609 ,30 L.Ed.2d 642 ] (1972), which held a pattern of filings undertaken without regard to their merits to be outside the protections of Noerr, supports the application of a pattern exception for BMS's alleged pattern of conduct across its buspirone, paclitaxel, and cisplatin products, and thus provides a separate reason to reject Noerr immunity here. As is reflected in the complaint, the overall course of conduct challenged here constitutes a clear and systematic pattern of anticompetitive misuse of governmental processes, that is, abusive filings undertaken without regard to the merits, in order to use administrative and judicial processes — rather than the outcome of those processes — as a weapon to obstruct competition. Just as the repeated filing of lawsuits brought without regard to the merits, and for the purpose of using the judicial process (as opposed to the outcome of the process), warrants rejection of Noerr immunity, so too do the alleged repeated filing of patents on the Orange Book without regard to their validity, enforceability, or listability; repeated filing of recklessly or deliberately false statements with government agencies; and filing of lawsuits brought with or without regard to the merits, also cause the actions challenged here to fall outside the scope of Noerr's protection.
Analysis to Aid Public Comment, In re Bristol-Myers Squibb Co., No. C-4076 (F.T.C. Mar. 7, 2003), available at http://www.ftc.gov/ os/2003/03/bristolmyersanalysis.htm. The Court reaches a similar conclusion about Warner-Lambert's overall course of conduct before the Patent Office with respect to the '482 Patent.