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HOFFMAN-LA ROCHE INC. v. GENPHARM INC.

June 8, 1999

HOFFMAN-LA ROCHE INC. AND SYNTEX (U.S.A.) INC., PLAINTIFFS,
v.
GENPHARM INC., DEFENDANT.



The opinion of the court was delivered by: Walls, District Judge.

  OPINION

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.

FACTS

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 anti-competitive purposes.

DISCUSSION

A. Plaintiffs' Motion to Voluntarily Dismiss Their Complaint
   Without Prejudice
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 counterclaims.

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 (1946)).

  2. Plaintiffs' Motion to Dismiss Defendant's First Counterclaim
     for Lack of ...

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