The opinion of the court was delivered by: Walls, District Judge.
This matter comes before the Court on the motions of plaintiffs
Hoffman-La Roche Inc. ("Roche") and Syntex (U.S.A.) Inc.
("Syntex") to voluntarily dismiss their complaint against
defendant Genpharm Inc. ("Genpharm") without prejudice and to
dismiss Genpharm's counterclaims against them for lack of subject
matter jurisdiction and for failure to state a claim upon which
relief may be granted. Genpharm moves for an award of expenses
incurred in defending this action and for summary judgment on its
third counterclaim. Pursuant to Fed. R. Civ.P. 78, the Court
decides these motions without oral argument. Plaintiffs'
complaint is dismissed with prejudice. Plaintiffs' motion to
dismiss. Genpharm's counterclaims is granted in part and denied
in part. Defendant's motion for an award of expenses is denied
without prejudice to renew. Defendant's cross-motion for summary
judgment on its third counterclaim is denied.
Plaintiffs Roche and Syntex manufacture and distribute
pharmaceutical products. Roche is a New Jersey corporation with
its principal place of business in Nutley, New Jersey, and Syntex
a Delaware corporation with its principal place of business in
Palo Alto, California. Genpharm, a Canadian corporation with its
principal place of business in Etobicoke, Ontario, is engaged
primarily in the manufacture in Canada and sale in various
countries of generic pharmaceutical products that sometimes have
brand-name counterparts. This Court exercises jurisdiction over
this action under the patent laws, 28 U.S.C. § 1338(a), the
Declaratory Judgment Act, 28 U.S.C. § 2201 and 2202, and
supplemental jurisdiction over the state law claims under
28 U.S.C. § 1367.
Syntex owns a number of patents pertaining to the composition
and synthesis of ticlopidine hydrochloride, a blood platelet
aggregation inhibitor. These Syntex patents include patent number
4,906,756 ("`756") issued March 6, 1990, patent number 4,997,945
("`945") issued March 5, 1991, patent number 5,068,360 ("`360")
issued November 26, 1991, patent number 5,191,090 ("`090") issued
March 2, 1993, patent number 5,342,953 ("`953") issued August 30,
1994, and patent number 5,516,910 ("`910") issued May 14, 1996.
Roche is the exclusive distributor of the TICLID brand of
ticlopidine hydrochloride under the Syntex patents. Genpharm and
a number of other manufacturers of generic pharmaceutical
products each are seeking, by filing an Abbreviated New Drug
Application ("ANDA"), approval from the Food and Drug
Administration ("FDA") to market tablets which contain
ticlopidine hydrochloride. In its application, pursuant to
21 U.S.C. § 355(j)(2)(A)(vii)(IV), Genpharm certified that it
would not infringe plaintiffs' patent number 4,591,592 ("`592"),
the patent listed by plaintiffs pertaining to ticlopidine
hydrochloride in the FDA publication entitled "Approved Drug
Products with Therapeutic Equivalence Evaluations," commonly
known as the "Orange Book." The "Orange Book" is the FDA's
publication that lists approved drug products and the patent
information supplied by a drug manufacturer when filing a New
Drug Application ("NDA"). See 21 U.S.C. § 355(j)(7).
On March 18, 1998, Roche and Syntex filed this action against
Genpharm and seven other generic pharmaceutical manufacturers
alleging that the process by which those manufacturers prepared
the ticlopidine hydrochloride infringed the `756, `945, `360,
`090, `953, and `910 Syntex patents. On April 2, 1998, plaintiffs
filed a first amended complaint which withdrew their claims
related to the `756 and `945 patents. Before the seven generic
pharmaceutical manufacturers other than Genpharm filed their
Answers, they provided information to plaintiffs which
demonstrated that the ticlopidine hydrochloride in their
respective products was made by a process outside the scope of
the Syntex patents. Roche and Syntex voluntarily dismissed their
amended complaint without prejudice as to those seven
manufacturers pursuant to Fed.R.Civ.P. 41(a)(1). On June 19,
1998, Genpharm filed an amended answer to plaintiffs' amended
complaint and counterclaims. Through its five counterclaims,
Genpharm seeks (1) a declaratory judgment of non-infringement
with regard to the `360, `090,-`953, and `910 Syntex patents, (2)
a declaratory judgment of non-infringement as to two expired
patents, the `756 and `945 patents, which were asserted in
plaintiffs' original complaint but not in the amended complaint,
(3) a declaratory judgment of non-infringement of the `592
patent, (4) a declaration of unenforceability of the six patents
initially asserted in plaintiffs' original complaint due to
plaintiffs' alleged bad faith and filing of sham litigation for
anti-competitive purposes, and (5) treble damages for plaintiff's
initiation of this litigation in bad faith and for
A. Plaintiffs' Motion to Voluntarily Dismiss Their Complaint
Pursuant to Fed.R.Civ.P. 41(a)(2), a plaintiff may not dismiss
an action against a defendant after that defendant has filed an
answer except by a stipulation of all parties or by order of the
court. "If a counterclaim has been pleaded by a defendant prior
to the service upon the defendant of the plaintiff's motion to
dismiss, the action shall not be dismissed against the
defendant's objection unless the counterclaim can remain pending
for independent adjudication by the court." Fed. R.Civ.P.
41(a)(2). Rule 41(a)(2) also provides that "[u]nless otherwise
specified in the order, a dismissal under this paragraph is
without prejudice." Fed.R.Civ.P. 41(a)(2).
Here, Genpharm has filed an answer and counterclaims. Genpharm
does not object to the dismissal of plaintiffs' complaint. The
point of contention between the parties is whether the dismissal
should be with or without prejudice. Plaintiffs argue that the
dismissal should be without prejudice to enable them to bring an
action later if Genpharm changes its process so as to infringe
the Syntex patents. Genpharm insists that plaintiffs' complaint
be dismissed with prejudice to definitively end the case and
controversy over the four patents asserted in the amended
complaint. Genpharm further asserts that the complaint should not
be dismissed unless the Court retains supplemental jurisdiction
over the state law claims in its fourth and fifth counterclaims.
Pursuant to Fed.R.Civ.P. 41(a)(2), this Court cannot dismiss
plaintiffs' action against Genpharm unless Genpharm's
counterclaims can remain pending for independent adjudication by
the court. The Court has federal question jurisdiction pursuant
to 28 U.S.C. § 1331 over Genpharm's first three counterclaims
under the patent laws, 28 U.S.C. § 1338 and the Declaratory
Judgment Act, 28 U.S.C. § 2201 and 2202. It has federal
question jurisdiction pursuant to 28 U.S.C. § 1331 over
Genpharm's fourth counterclaim under the Sherman Act
15 U.S.C. § 2. The Court has supplemental jurisdiction under
28 U.S.C. § 1367 over Genpharm's state law claims in its fourth and
fifth counterclaims. Notwithstanding the dismissal of plaintiffs'
complaint, this Court will retain jurisdiction over defendant's
Dismissal on a motion under Rule 41(a)(2) is within the sound
discretion of the court. See Ockert v. Union Barge Line Corp.,
190 F.2d 303 (3d Cir. 1951). Generally, dismissal is allowed
"unless the defendant will suffer some plain legal prejudice
other than the mere prospect of a second lawsuit." 9 Charles Alan
Wright & Arthur R. Miller, Federal Practice and Procedure §
2364 (1971); see Westinghouse
Elec. Corp. v. United Elec. Radio & Mach. Workers of America,
194 F.2d 770, 771 (3d Cir.), cert. denied 343 U.S. 966, 72 S.Ct.
1060, 96 L.Ed. 1362 (1952). Here, the parties do not dispute that
the complaint should be dismissed. Because Genpharm will not be
prejudiced by the dismissal of plaintiffs' complaint and the
parties agree that the complaint should be dismissed, the Court
will dismiss plaintiffs' complaint.
The parties disagree whether the dismissal should be with or
without prejudice. Genpharm argues that the complaint should be
dismissed with prejudice in order to definitively end the
litigation. Generally, a dismissal under Rule 41(a)(2) is without
prejudice. Fed.R.Civ.P. 41(a)(2). A dismissal with prejudice may
be granted "where it would be inequitable or prejudicial to
defendant to allow plaintiff to refile the action." Chodorow v.
Roswick, 160 F.R.D. 522, 523 (E.D.Pa. 1995). "The prejudice to
defendant must be something other than the mere prospect of a
second lawsuit," Chodorow, 160 F.R.D. at 523 (citing Miller v.
Trans World Airlines, Inc., 103 F.R.D. 20, 21 (E.D.Pa. 1984)).
Here, plaintiffs have admitted that Genpharm's process of
manufacturing ticlopidine hydrochloride does not infringe upon
the `360, `090, `953, or `910 Syntex process patents. After such
an admission at this stage in the litigation, it would be
inequitable to give plaintiffs the opportunity to refile this
action. If Genpharm alters its process in such a way that it
comes within the scope of the Syntex process patents, Roche and
Syntex may bring an infringement action at that time. This
dismissal does not affect plaintiffs' rights to bring such future
actions. Plaintiffs' complaint is dismissed with prejudice.
B. Genpharm's Motion for an Award of Expenses
Genpharm contends that the Court should award it the expenses
it incurred in defending this action because it was a baseless
suit. As discussed below, whether this action is objectively
baseless remains to be seen. Genpharm's motion is denied without
prejudice to renew.
C. Plaintiffs' Motion to Dismiss Defendant's Counterclaims for
Lack of Subject Matter Jurisdiction
1. Standard for a Rule 12(b)(1) Motion to Dismiss
Unlike a motion to dismiss for failure to state a claim
pursuant to Fed. R.Civ.P. 12(b)(6), in a motion to dismiss for
lack of subject matter jurisdiction pursuant to Fed.R.Civ.P.
12(b)(1), no presumption of truthfulness attaches to the
allegations in the complaint, or in this case the counterclaims,
and the court may consider matters outside the pleadings such as
affidavits and other material properly before the court.
Mortensen v. First Federal Savings & Loan Ass'n, 549 F.2d 884,
891 (3d Cir. 1977). In a Rule 12(b)(1) motion, "the trial court
is free to weigh the evidence and satisfy itself as to the
existence of its power to hear the case." Mortensen, 549 F.2d at
891. "[T]he existence of disputed material facts will not
preclude the trial court from evaluating for itself the merits of
jurisdictional claims. Moreover, the plaintiff will have the
burden of proof that jurisdiction does in fact exist." Mortensen,
549 F.2d at 891. In the case of a counterclaim, the
counterclaimant bears this burden. The claimant must not only
demonstrate that a controversy existed at the time it filed suit
but that it continues to exist throughout the litigation.
Spectronics Corp. v. H.B. Fuller Co., 940 F.2d 631, 635 (Fed.Cir.
1991). A motion to dismiss for lack of subject matter
jurisdiction predicated on the legal insufficiency of a claim may
be granted if the claim "clearly appears to be immaterial and
made solely for the purpose of obtaining jurisdiction or . . . is
wholly insubstantial and frivolous." Kehr Packages, Inc. v.
Fidelcor, Inc., 926 F.2d 1406, 1408-09 (3d Cir.), cert. denied,
501 U.S. 1222, 111 S.Ct. 2839, 115 L.Ed.2d 1007 (1991)(quoting
Bell v. Hood, 327 U.S. 678, 683, 66 S.Ct. 773, 90 L.Ed. 939
2. Plaintiffs' Motion to Dismiss Defendant's First Counterclaim
for Lack of ...