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Bristol-Myers Squibb Co. v. Ivax Corp.

January 6, 2000


The opinion of the court was delivered by: William H. Walls, U.S.D.J.


Walls, District Judge


Bristol-Myers Squibb ("Bristol"), a drug manufacturer, has sued Zenith Goldline and IVAX Corporation for infringement of two patents *fn1 owned by Bristol that claim methods of using the anti-cancer drug Taxol(TM), a drug based on a natural agent known as paclitaxel. The plaintiff alleges that Zenith Goldline, with the assistance of IVAX, has filed Abbreviated New Drug Application ("ANDA") 75-297 with the Food and Drug Administration, to request approval to market paclitaxel. Bristol claims that the filing of the ANDA constitutes infringement of Bristol's rights under U.S. Patent No. 5,641,803 ("the `803 patent") and No. 5,670,537 ("the `537 patent"), pursuant to the Hatch-Waxman Act, 35 U.S.C. § 271(e)(2)(A).

Zenith Goldline and Baker Norton (a subsidiary of IVAX Corporation) assert numerous counterclaims based on federal antitrust provisions and state law. The counterclaimants name causes of action for unfair competition (Count I), estoppel (Count II) and violations of the Sherman Act, 15 U.S.C. § 2 (Counts III and IV), and seek declaratory judgment (Count V).

Bristol now moves pursuant to Fed. R. Civ. P. 12(b)(6) to dismiss all counterclaims of Baker Norton, and the estoppel claim (Count II) of Zenith Goldline. Bristol also moves to dismiss Zenith Goldline's counterclaims to the extent that they relate to allegations of conduct immunized by the Noerr-Pennington doctrine (portions of Counts I, II, III, and IV), and to strike such portions of the pleadings pursuant to Fed. R. Civ. P. 12(f).

These motions, decided without oral argument pursuant to Fed. R. Civ. P. 78, are granted.


Paclitaxel is the FDA-designated generic term for an anti-cancer agent derived from the bark of the Pacific Yew tree. Its anti-cancer properties were discovered and developed by researchers at the National Cancer Institute ("NCI"), an institute of the National Institutes of Health ("NIH"), beginning in the 1960's. During this period, the federal government developed techniques to extract paclitaxel from yew tree bark and to create a clinically acceptable formulation for treating humans.

In the early 1980's, the NCI conducted research and clinical trials concerning the use of paclitaxel to treat ovarian cancer. Eventually, the agency sought a commercial partner to bring a paclitaxel-based drug to market, and in 1991 the NCI and Bristol entered into a Cooperative Research and Development Agreement ("CRADA") pursuant to the Federal Technology Transfer Act, 15 U.S.C. § 3710a(b).

In 1991 and 1993, Congress held investigatory hearings to determine the extent of Bristol's power to exclude competition pursuant to the CRADA, and to examine Bristol's pricing arrangements. Bristol made various oral and written statements during these hearings.

Beginning in 1991, purportedly relying on public assurances by Bristol not to block competition in the development of paclitaxel- related drugs, Baker Norton began to conduct clinical trials involving the use of paclitaxel to treat breast cancer. In 1995, Baker Norton learned that the NCI had obtained U.S. Patent No. 5,496,846 ("the `846 patent"), known as the Wilson patent, which described the use of paclitaxel to treat breast cancer. Accordingly, Baker Norton sought a nonexclusive license to this patent in the spring of 1996 and formally applied to the NIH in September 1996. Soon after, NIH informed Baker Norton that no license was available because the agency had determined that the Wilson patent was a subject invention of the CRADA. And because Bristol had exercised its option under the CRADA for an exclusive license to this patent, Baker Norton's application was rejected. Countercl. ¶¶ 45-60.

Baker Norton, seeking to market a paclitaxel-based drug to treat Kaposi's sarcoma, a life-threatening form of cancer that often strikes persons with AIDS, developed and tested Paxene(TM), a paclitaxel-based drug. The counterclaimants allege that through Baker Norton's application to the NIH for a license to the Wilson patent, Bristol improperly learned that Baker Norton was preparing a New Drug Application to obtain "orphan drug" exclusive marketing privileges regarding the treatment of Kaposi's sarcoma. Countercl. ¶¶ 83-84. Orphan drug designation is a form of non-patent marketing exclusivity granted by the FDA pursuant to 21 U.S.C. § 360bb to encourage the development of drugs to treat rare diseases or conditions. The counterclaimants allege that in February 1997, with the assistance of data from NCI researchers, Bristol submitted to the FDA its own application for orphan drug status and a supplemental New Drug Application. Countercl. ¶ 89. These applications were approved, and Bristol was granted a seven-year period of marketing exclusivity. As a result, Baker Norton's New Drug Application, submitted in March 1997, was approved, but Baker Norton was barred from marketing Paxene(TM) to treat patients with Kaposi's sarcoma until 2004. Countercl. ¶¶ 92-93.


I. Standard for a Motion to Dismiss

On a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), the court is required to accept as true all allegations in the counterclaims, and all reasonable inferences that can be drawn therefrom, and to view them in the light most favorable to the non-moving parties. See Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384 (3rd Cir. 1994). The question is whether the claimants can prove any set of facts consistent with their allegations that will entitle them to relief, not whether they will ultimately prevail. Hishon v. King & Spalding, 467 U.S. 69, 73 (1984). While a court will accept well-pleaded allegations as true for the purposes of the motion, it will not accept unsupported conclusions, unwarranted inferences, or sweeping legal conclusions cast in the form of factual allegation. See Miree v. DeKalb County, Ga., 433 U.S. 25, 27 n. 2 (1977). The Court may consider the allegations of the pleadings, as well as documents attached or specifically referenced thereto, and matters of public record. See Pittsburgh v. West Penn Power Co., 147 F.3d 256, 259 (3rd Cir. 1998); see also 5A Wright & Miller, Federal Practice & Procedure § 1357 at 299 (2nd ed. 1990).

II. The Noerr-Pennington Doctrine

Bristol moves to dismiss certain allegations of the counterclaims for state law unfair competition (Count I), monopolization in violation of Section 2 of the Sherman Act, 15 U.S.C. § 2 (Count III), and attempted monopolization (Count IV). As the counterclaim defendant, Bristol maintains that because any injury to Baker Norton was the result of Bristol's valid efforts to obtain government action, such efforts are immunized from federal antitrust and state law liability by the Noerr- Pennington doctrine.

According to Bristol, Zenith Goldline does not have standing to assert counterclaim allegations that Bristol carried out a "scheme" to monopolize profits from paclitaxel-based drugs: The relevant counterclaims assert in part that Bristol interfered with Baker Norton's ability to obtain a license to the Wilson patent and secure immediate FDA approval to market paclitaxel. Admittedly, these allegations do not concern Zenith Goldline. However, the counterclaimants also allege that Bristol obtained patents by fraud and inequitable conduct, illegally obtained exclusive patent licenses and is currently asserting invalid patents to the detriment of Zenith Goldline. The court cannot readily disentangle the respective counterclaims of Baker Norton and Zenith Goldline. Because Bristol has made no other arguments concerning the standing issue, the court treats these counterclaims as they were asserted, that is, by both counterclaimants.

The Supreme Court in Eastern R.R. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961), ruled that federal antitrust liability did not arise from a publicity campaign by railroad companies directed toward obtaining legislation favorable to railroads and destructive of the business interests of competitor trucking companies. The Court held that such a result was necessary to protect the First Amendment right to petition the government. It reasoned that such actions are "not business activity, but political activity," and found that while violations of the Sherman Act typically involve "express or implied agreement or understanding that the participants will give up their trade freedom, or help one another to take away the trade freedom of others through the use of such devices as price-fixing agreements, boycotts, market-division agreements, and other similar arrangements," "where a restraint upon trade or monopolization is the result of valid government action, as opposed to private action, no violation of the Act can be made out." Id. at 136.

The Noerr Court countenanced only one exception to immunity: "There may be situations in which a publicity campaign, ostensibly directed toward influencing government action, is a mere sham to cover what is actually nothing more than an attempt to interfere directly with the business relationships of a competitor and the application of the Sherman Act would be justified." Id. at 144.

The principles of Noerr and its companion, United Mine Workers of America v. Pennington, 381 U.S. 657 (1965), have since been extended to provide immunity to private efforts to influence courts, federal and state agencies. California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 510 (1972).

The counterclaimants protest that this doctrine does not immunize an entire course of wrongful acts simply because Bristol requested government approval and licenses as part of its allegedly tortious scheme. They rely on Allied Tube & Conduit Corp. v. Indian Head, Inc. that the scope of antitrust protection depends on the "source, context, and nature of the anticompetitive restraint at issue." 486 U.S. 492, 499 (1988) (holding that anticompetitive actions of private standard- setting body could not be considered either valid governmental action or "incidental" to a valid effort to influence government action, and thus were subject to antitrust scrutiny). "An anticompetitive, private tortious scheme is not transformed into protected `political' activity simply because a defendant submits an application to a government agency for approval or authorization." Opp. Br. at 14; see Ticor Title Ins. Co. v. F.T.C., 998 F.2d 1129 (3rd Cir. 1993) (refusing to permit immunity where title insurance companies agreed collectively to set uniform rates, though rates were subject to approval by state-chartered rating bureaus; holding that "a state's rubber stamp is not enough" to immunize private actions); Litton Systems v. American Tel. and Tel. Co., 700 F.2d 785, 804-809 (2nd Cir. 1983) (rejecting Noerr-Pennington doctrine as inapposite where telecommunications carrier had filed its rates in a tariff with a federal agency because "[t]he fact that the FCC might ultimately set aside a tariff filing does not transform AT&T's independent decisions as to how it will conduct its business into a `request' for governmental action or an `expression' of political opinion.")

A. Sherman Act Counterclaims

Baker Norton and Zenith Goldline plead two counterclaims for violations of the Sherman Act. They allege that Bristol improperly obtained exclusive licenses to government-owned patents and secured orphan drug exclusivity privileges: (1) to block competition to market paclitaxel to breast cancer patients, Bristol contracted with NCI for an exclusive license to the Wilson patent (the `846 patent), by employing a "blatantly incorrect" interpretation of Bristol's CRADA; and (2) once it learned that Baker Norton was preparing to request FDA approval of Paxene(TM) to treat Kaposi's sarcoma, Bristol secured FDA approval of its own supplemental NDA and request for orphan drug exclusivity, which barred Baker Norton's ability to market paclitaxel for that indication until 2004.

The counterclaimants also allege that Bristol secured patents through inequitable conduct and fraud on the Patent and Trademark Office, attempted to enforce invalid patents, and brought litigation to exclude Baker Norton and Zenith Goldline from the paclitaxel ...

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