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MEDPOINTE HEALTHCARE INC. v. HI-TECH PHARMACAL CO.

August 4, 2005.

MEDPOINTE HEALTHCARE INC., Plaintiff,
v.
HI-TECH PHARMACAL CO., INC., Defendant. MEDPOINTE HEALTHCARE INC., Plaintiff, v. MORTON GROVE PHARMACEUTICALS, INC., Defendant.



The opinion of the court was delivered by: JOHN HUGHES, Magistrate Judge

MEMORANDUM OPINION

This matter comes before the Court upon Motions by Defendants, Hi-Tech Pharmacal Co., Inc. and Morton Grove Pharmaceuticals, Inc., for leave to file Amended Answers and Counterclaims [Docket entry #64 (Hi-Tech Pharmacal Co., Inc.), Docket entry #34 (Morton Grove Pharmaceuticals, Inc.)], returnable June 6, 2005. Defendants seek to allege the same substantive claims against Plaintiff MedPointe Healthcare Inc. but assert additional facts as bases for those claims. Specifically, as part of these new "facts," Defendants seek to equate an alleged failure to inform the Court of a prior court decision in a separate case with "patent misuse" in this case. Plaintiff MedPointe Healthcare, Inc. has submitted opposition to that part of the motion but does not oppose certain other parts. The Defendants have submitted a joint reply. The Court has reviewed the papers submitted by the parties and conducted oral argument on June 6, 2005. For the reasons stated, Defendants' Motions to file Amended Answers and Counterclaims are granted in part and denied in part.

  I. PROCEDURAL BACKGROUND AND HISTORY

  A. The `206 Patent

  In November 2003, MedPointe Healthcare Inc. ("MedPointe" or "Plaintiff") filed a patent infringement suit against Hi-Tech Pharmacal Co., Inc. ("Hi-Tech") for willful infringement of United States Patent No. 6,417,206 ("the `206 patent"), the patent currently before the court. In December 2003, the Court conducted a three day evidentiary hearing to determine whether a preliminary injunction should be granted against Hi-Tech regarding the `206 patent. Subsequently, in March 2004, the Court entered a preliminary injunction [Docket Entry # 26]. In November 2004, the Federal Circuit Court of Appeals vacated the preliminary injunction, finding that the trial court failed to recognize that Hi-Tech had cast enough doubt on the validity of the `206 patent with its obviousness defense. MedPointe Healthcare Inc. v. Hi-Tech Pharmacal Co., Inc., 115 Fed. Appx. 76 (3d Cir. 2004).

  In April 2004, MedPointe filed a separate action against Morton Grove Pharmaceuticals, Inc. ("Morton Grove") for infringement of the `206 patent. In February 2005, Hi-Tech and Morton Grove's ("Defendants") cases were consolidated for discovery and case management purposes. [Docket entry #59 (Hi-Tech Pharmacal Co., Inc.), Docket entry #26 (Morton Grove Pharmaceuticals, Inc.)].

  B. The `597 Patent

  In September 2001, prior to MedPointe's filing of the `206 patent, MedPointe's predecessor, Carter-Wallace, filed an application with the U.S. Patent Office for U.S. Patent No. 6,287,597 ("the `597 patent"), a separate patent. Subsequent to its acquisition of the `597 patent, MedPointe sued Morton Grove for alleged infringement of the `597 patent and moved for a preliminary injunction. In February 2002, the Court denied MedPointe's motion, finding that Morton Grove met its burden of raising a substantial question of invalidity on grounds of obviousness. See MedPointe v. Morton Grove, No. 01-5190 (D.N.J. 2002). Following the February 2002 hearing, the Court issued a March 2003 sealed written opinion. The opinion was subsequently unsealed in June 2004. Hi-Tech was not a party in this separate action.

  The prior ruling on the `597 patent concerns a different product from that addressed by the `206 patent. Specifically, the `597 patent addresses a "two-component antihistamine/decongestant formulations, [while] the `206 patent", the patent here, "addresses three-component antitussive/antihistamine/decongestant formulations." Pl.['s] Br. at 4. Not only are they different products, with different compositions and different inventors, but also, the judges, attorneys, and presentations of evidence and argument, are different as well. Finally, it is uncontested that there are two separate patents and two separate court proceedings.

  C. Defendants' Motions to Amend Answers and Counterclaims

  Hi-Tech and Morton Grove seek to amend their Answers and Counterclaims to assert, inter alia, both the allegations of patent misuse and the defense of "unclean hands" which had been previously asserted, but not on the same factual grounds. See Hi-Tech's Am. Answer and Countercl. and Morton Grove's Am. Answer and Countercl. The Defendants base the new claim and defense, found in paragraphs 77-80 of Hi-Tech's Amended Answer and Counterclaim and paragraphs 91-95 of Morton Grove's Amended Answer and Counterclaim, on MedPointe's alleged purposeful non-disclosure of the preliminary injunction hearing for the `597 patent. Defs.['] Joint Reply Br. at 10-11. Specifically, paragraphs 77-80 of Hi-Tech's Amended Answer and Counterclaim state:
77. During the preliminary injunction proceedings in this action, MedPointe did not disclose Judge Lifland's oral ruling rendered in connection with preliminary injunction proceedings on the `597 patent. As explained previously, that oral ruling was material to the patentability of the claims of the `206 patent.
78. MedPointe also failed to disclose during the preliminary injunction proceedings in this case the subsequent written opinion of Judge Lifland issued on March 27, 2003, which confirmed Judge Lifland's earlier conclusions regarding the obviousness of the claims of the `597 patent. In that written opinion, Judge Lifland concluded that one skilled in the art would recognize that pyrilamine and chlorpheniramine are obvious variants of one another, and that it would have been obvious to select pyrilamine as a replacement for chlorpheniramine. Given that one of Hi-Tech's arguments in opposing a preliminary injunction was that it would have been obvious to substitute pyrilamine tannate for chlorpheniramine tannate, and phenylephrine tannate in the prior art Tussi-12 product (which contained carbetapentane tannate, chlorpheniramine tannate, and phenylephrine tannate), to render the claims of the `206 patent obvious, Judge Lifland's conclusions regarding the obviousness of selecting pyrilamine as a replacement for chlorpheniramine were highly pertinent to a consideration of the issues. On information and belief, MedPointe's attorneys knew of that written opinion during the preliminary injunction proceedings in this action. The opinion, which represented the views of another judge within the same district, should have been disclosed to the Court during the preliminary injunction proceedings.
79. Judge Lifland's conclusion in the written opinion that it would have been obvious to replace the non-tannate salt forms of the Allergine reference with tannate forms was also highly material to the preliminary injunction proceedings in this case. During those proceedings, Hi-Tech argued that it would have been obvious to modify the Candettes reference to replace the non-tannate salt forms with the tannate salt forms. Judge Lifland's conclusion in connection with the prior preliminary injunction proceedings that replacing non-tannate forms of active bases with the respective tannate forms would have been obvious demonstrated that it was obvious to modify Candettes to render the claims of the `206 patent obvious. On information and belief, MedPointe's attorneys were aware of this portion of Judge Lifland's written opinion. Accordingly, MedPointe should have disclosed this portion of the opinion during the preliminary injunction proceedings in this case.
80. MedPointe's failure to disclose both the oral and the written opinion to this Court constitutes unclean hands.
Hi-Tech's Am. Answer and Countercl. ¶¶ 77-80 (citations omitted) (Morton Grove adopts these same paragraphs, which are designated as ¶¶ 91-95 in Morton Grove's Am. Answer and Countercl.). Both Defendants argue that the Lifland Court's conclusion regarding the obviousness of the `597 patent is highly pertinent to an "obviousness defense" consideration in its `206 patent litigation and that the non-disclosure caused a substantial impediment to market entry. Defs.['] Joint Reply Br. at 12. Defendants seek to add other facts which are not controversial.

  D. MedPointe's Opposition

  The Defendants' asserted claim of patent misuse and "unclean hands," found in paragraphs 77-80 in Section E of Hi-Tech's proposed Amended Answer and Counterclaim and paragraphs 91-95 in Section VI of Morton Grove's proposed Amended Answer and Counterclaim, are the only amendments opposed by Plaintiff. Pl.['s] Br at 1. The rest of Hi-Tech's Amended Pleadings, containing Sections A-D and the rest of Section E, are unopposed by Plaintiff and they include: "A. MedPointe Failed to Disclose Material Information To The U.S. Patent and Trademark Office From a Prior Preliminary Injunction Motion/Hearing Which It Lost";

 
"B. MedPointe Failed To Disclose The Substance Of The Prosecution Of The `618 Application To The Examiner Of The `206 Patent";
"C. MedPointe Has Engaged In A Pattern Of Inequitable Conduct";
"D. The `206 Patent Does Not List The ...

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