United States District Court, D. New Jersey
August 3, 2005.
TEVA PHARMACEUTICALS USA, INC. and TEVA PHARMACEUTICAL INDUSTRIES LTD., Defendants.
The opinion of the court was delivered by: WILLIAM J. MARTINI, District Judge
Teva Pharmaceuticals USA, Inc. and Teva Pharmaceutical
Industries Ltd. ("Teva") appeal from the May 13, 2005 Order of
Magistrate Judge Patty Schwartz denying Teva leave to amend their
answers to include an affirmative defense of unenforceability due
to inequitable conduct.*fn1 Magistrate Judge Schwartz held
that Teva had not shown good cause for amending the Pretrial
Scheduling Order pursuant to Fed.R.Civ.P. 16(b) and,
therefore, denied Teva's motion. Judge Schwartz also rendered
"observations" that Teva's proposed amendment was unduly delayed,
unduly prejudicial to Wyeth, and futile, and thus would likely be
denied under Fed.R.Civ.P. 15(a) as well. But, Judge Schwartz
did so without affirmatively denying Teva's motion to amend under
Rule 15(a). Teva appeals the May 13, 2005 Order, arguing that it
is clearly erroneous and contrary to law pursuant to Fed.R. Civ.
P. 72(a) and L. Civ. R. 72.1(c)(1)(A).
This is a patent infringement action. Wyeth charges Teva with
infringing three of its patents: U.S. Patent Nos. 6,274,171 B1
(the "`171 patent"); 6,419,958 B2 (the "`958 patent"); and
6,403,120 B1 (the "`120 patent"). These patents have
substantially identical specifications and are directed to an
extended release formulation of venlafaxine hydrochloride. Wyeth
listed these patents in its Effexor® XR*fn2 New Drug Application
("NDA") No. 20-699, which is directed to the use of venlafaxine
hydrochloride extended release capsules "for the treatment of
depression including depression with associated anxiety."
(Steiner Decl. Ex. 3 at WYETH 0040-00003).
Teva, seeking to market a generic version of Effexor® XR, filed
an Abbreviated New Drug Application ("ANDA") for an extended
release venlafaxine formulation. As part of the ANDA process,
Teva provided Wyeth with notice that Teva's ANDA contained a
"Paragraph IV" certification pursuant to
21 U.S.C. § 355(j)(2)(a)(vii)(IV).*fn3 Wyeth then brought this action
against Teva charging patent infringement on March 27, 2003.
Seven of the independent claims asserted against Teva claim a
"method for providing a therapeutic blood plasma concentration of
venlafaxine over a twenty four hour period with diminished
incidences of nausea and emesis. . . ." '171 patent, claims 20,
22, 23; '958 patent, claims 1, 3, 4; '120 patent, claim 1.
Support for that claim language is found in the specifications of
The use of the one-a-day venlafaxine hydrochloride
formulations of this invention reduces by adaptation,
the level of nausea and incidence of emesis that
attend the administration of multiple daily dosing.
In clinical trials of venlafaxine hydrochloride ER,
the probability of developing nausea in the course of
the trials was greatly reduced after the first week.
Venlafaxine ER showed a statistically significant
improvement over conventional venlafaxine
hydrochloride tablets in two eight-week and one 12
week clinical studies. '171 patent, col. 2, ll. 46-55 (emphasis
added).*fn4 Teva asserts that Wyeth
misrepresented its invention to the U.S. Patent and
Trademark Office ("PTO") by making the italicized
statement above (hereinafter "the statement") without
any clinical studies in support thereof, and, as a
result, committed inequitable conduct. On February
22, 2005, Teva requested leave to amend its answers
to add that affirmative defense of inequitable
Before addressing the Magistrate Judge's resolution of that
motion, it is necessary to go back in time so that Teva's request
can be viewed in its proper context. On June 30, 2003, the Court
entered a Pretrial Scheduling Order establishing December 31,
2003 as the deadline for amendment of pleadings. The parties
engaged in fact discovery and on October 31, 2003, Wyeth produced
its NDA. The NDA disclosed all clinical studies concerning
Effexor® XR conducted by or for Wyeth. After reviewing the NDA,
"it raised a red flag"*fn5
for Teva that it may have an
inequitable conduct claim. However, Teva did not seek to amend
its answers before the deadline, nor did it request that the
deadline be extended. Teva professes that its inaction was due to
its inability to determine whether the clinical studies supported
the statement without the benefit of taking additional discovery.
(See Teva Reply Br. at 7).
By October 4, 2004, Wyeth had substantially completed its
document production. Teva then deposed each of the four
inventors. Each inventor allegedly "confessed ignorance
concerning support for the statement in the patent[s]." (Teva
Reply Br. at 4). Teva then noticed a 30(b)(6) deposition. Wyeth
produced two 30(b)(6) witnesses in February 2005, and it was at those depositions where Teva allegedly confirmed for the first
time which studies Wyeth contends support the statement:
600B-208-US ("the 208 study"), 600B-209-US ("the 209 study"), and
600B-367-EU ("the 367 study"). Further, according to Teva, it was
only after taking those 30(b)(6) depositions that it was able to
confirm its suspicions that Wyeth had no support for the
statement. And thus, Teva filed its motion for leave to amend in
On May 9, 2005, at the hearing on Teva's motion, Magistrate
Judge Schwartz denied Teva's request, holding that Teva failed to
demonstrate good cause to modify the scheduling order under Rule
16. Judge Schwartz reviewed Teva's request under Rule 16 because
of the June 30, 2003 Pretrial Scheduling Order, which established
the December 31, 2003 deadline for amendment of pleadings. The
Magistrate Judge was not persuaded by Teva's protestations that
it could not reasonably have sought to amend its answers before
the deadline. Rather, Judge Schwartz found that Teva had
sufficient information the NDA and its disclosure of all
clinical studies in October 2003 to assert an inequitable
conduct defense based on lack of clinical study support. Judge
Schwartz further found Teva's argument that it needed additional
discovery to "confirm" the factual underpinnings of its
inequitable conduct allegations to be unpersuasive: "Given that
the NDA reflected all the studies that related to the XR
formulation, there was really no need to wait until the end of
fact discovery to investigate the claims it now seeks to lodge."
(5/9/05 Tr. at 90).
Teva then appealed that decision. That appeal is now before
this Court. Discussion
A district court may reverse a Magistrate Judge's order if it
finds the ruling clearly erroneous or contrary to law. See
28 U.S.C. § 636(b)(1)(A); Fed.R.Civ.P. 72(a); L. Civ. R.
72.1(c)(1)(A). The district court is bound by the clearly
erroneous rule as to findings of fact, while the phrase "contrary
to law" indicates plenary review as to matters of law. Haines v.
Liggett Group Inc., 975 F.2d 81, 91 (3d Cir. 1992). According to
the Supreme Court, "a finding is `clearly erroneous' when
although there is evidence to support it, the reviewing court on
the entire evidence is left with the definite and firm conviction
that a mistake has been committed." United States v. United
States Gypsum Co., 333 U.S. 364, 395 (1948).
Rule 16(b) of the Federal Rules of Civil Procedure governs
amendment of pleadings once a scheduling order has been entered.
See Eastern Minerals & Chem. Co. v. Mahan, 225 F.3d 330, 340
(3d Cir. 2000).*fn6 Rule 16 provides that a scheduling order
"shall not be modified except upon a showing of good cause and by
leave of the district judge or, when authorized by local rule, by
a magistrate judge." Fed.R.Civ.P. 16(b). Good cause depends on
the diligence of the moving party. Globespanvirata, Inc. v.
Texas Instruments Inc., 2005 WL 1638136, *3 (D.N.J. Jul. 12,
2005). The moving party must show that despite its diligence, it
could not reasonably have met the scheduling order deadline. S&W
Enters., LLC v. Southtrust Bank of Ala., NA, 315 F.3d 533, 535
(5th Cir. 2003). Further, the absence of prejudice to the
nonmovant is not a consideration under the good cause standard.
Globespanvirata, Inc., 2005 WL 1638136 at *3. Here, it is uncontested that a Pretrial Scheduling Order was
issued on June 30, 2003 and that the Order established December
31, 2003 as the deadline for amendment of the pleadings.
Consequently, Teva's motion for leave to amend its answers was
properly considered under the Rule 16(b) "good cause" standard.
Teva argues that Judge Schwartz's finding that it was not
diligent is clearly erroneous. Teva asserts that it could not
have reasonably amended its answers before the December 31, 2003
amendment cutoff. According to Teva, it could not determine from
Wyeth's NDA which three studies supported the statement. Teva
offers two reasons why the NDA by itself was insufficient. (See
Teva Reply Br. at 7). First, the NDA is directed to only one
indication for Effexor® XR, the treatment of depression. However,
other clinical studies, concerning other indications, could have
provided support for the statement. Second, the NDA identifies
studies other than the 208, 209 and 367 studies which Wyeth may
have relied upon when making that statement. Put differently,
Teva essentially argues that because the NDA contained more than
3 studies, and Wyeth may have relied on any group of three to
make the statement, Teva had insufficient information before the
amendment deadline to properly plead an inequitable conduct
defense. As a result, Teva asserts that it needed to take
additional discovery to determine Wyeth's alleged bases for the
Teva's arguments are factually incorrect and, ultimately,
unconvincing. In her thorough analysis stated on the record on
May 9, 2005, Judge Schwartz found Teva had not been diligent
before the amendment deadline:
The Court has not been presented with any information
as to why there was any confusion about whether the
three studies in the NDA were different than those in
the patent application. . . . Thus, it appears to this Court that there was sufficient
information long before February 2005 . . . upon
which Teva could have sought leave or at least could
have come before this Court and sought an extension
at that time. In short, it appears that, at least
from October 2003, Teva had possession of the
information upon which it now relies for its proposed
(5/9/05 Tr. at 89, 91). Teva's arguments fail to demonstrate
First, the three studies Wyeth relied on in making the
statement are easily recognizable. The patent refers to two
eight-week and one-twelve week studies. The NDA discloses three
completed studies: the 208, 209 and 367 studies. The 208 and 209
studies were eight weeks in length, while the 367 study was
twelve weeks in length. Teva argues that it could not have known
that these were the three relevant studies because there are two
other eight-week and one other twelve-week studies. (Teva Reply
Br. at 2 (citing Steiner Decl. Ex. 3 at WYETH 0040-00079-81)).
However, and Teva should have known this, at the time those
studies were reported in the NDA, "[n]o interim data [were]
available." (Steiner Decl. Ex. A at WYETH 0040-17122, 19080,
17206). Thus, Teva has presented no reasonable explanation why
those three studies caused it any confusion when trying to
ascertain which studies support the statement.
Teva also argues that it could not have known which studies
were relied upon because the NDA includes "[o]ther studies of
unidentified length" which were ongoing. (Teva Reply Br. at 3
(citing Steiner Decl. Ex. 3 at WYETH 004-000077-78)). Those other
studies, Teva posits, could have been eight or twelve weeks in
duration and, therefore, they potentially could have been support
for the statement. However, an examination of the pages cited by
Teva reveals that the duration of those studies was "6-12 mos".
(Id.). Not surprisingly, Teva fails to explain why it confused
those two studies with the 208, 209 and 367 studies. In short, none of the five additional studies that allegedly
caused Teva confusion could have been relied upon by Wyeth to
show a statistically significant improvement. Further, Teva does
not identify any other study that could have been confused with
the 208, 209 and 367 studies. Therefore, Teva's assertion that it
could not reasonably determine which three studies supported the
statement is belied by the NDA.
Second, and more importantly, Teva's inequitable conduct theory
by itself eliminated any potential confusion Teva may have had
regarding Wyeth's support for the statement. Teva's inequitable
conduct theory is predicated on the assertion that the statement
"[v]enlafaxine ER showed a statistically significant
improvement . . . in [three] studies" required "that three
studies each showed a statistically significant improvement."
(Teva's Reply Br. at 7, emphasis added). According to Teva, in
order to show a statistically significant improvement, a clinical
study would need to compare the extended release product with the
immediate release product. (See Id. at 8). But only one study
disclosed in the NDA the 208 study made such a comparison.
And Teva claims that that study did not show a significant
improvement; rather, it "showed the same incidence of nausea
for both formulations (45%)." (Teva Reply Br. at 8, emphasis in
original). Further, Teva acknowledges that "[n]othing on the face
of the [studies] themselves indicate that they provide support
for any conclusion about `statistical significance.'" (Id.).
Consequently, because under Teva's theory of inequitable conduct
none of the clinical studies disclosed in the NDA support the
statement, and that should have been evident after Teva reviewed the NDA, Teva provides no reason why it could not have
asserted its inequitable conduct defense before the amendment
Teva responds that because allegations of inequitable conduct
are serious, and because inequitable conduct must be plead with
particularity under Fed.R.Civ.P. 9, Teva acted appropriately
by conducting additional discovery to confirm the factual
underpinnings of its defense.*fn8 Although the Court agrees
with Teva that no party should blithely assert a charge of
inequitable conduct, nor should a party attempt to plead
inequitable conduct if it is unable to do so with
particularity,*fn9 the Court is not convinced that the
Magistrate Judge erred when determining that Teva did not act
diligently under the circumstances in this case. Certainly, in
some cases it may be appropriate to conduct additional discovery
to ascertain or develop an inequitable conduct defense before requesting leave to amend.
However, this was not such a case. In short, Teva has failed to
demonstrate that Judge Schwartz's decision was clearly erroneous
or contrary to law.*fn10
For the reasons stated above, Magistrate Judge Schwartz's Order
dated May 13, 2005 is affirmed.