The opinion of the court was delivered by: Ackerman, Senior District Judge
AMENDED OPINION AND ORDER*fn1
This matter comes before the Court on appeals (Doc. Nos. 157 and 201) filed by Defendants Teva Pharmaceuticals USA, Inc., Teva Pharmaceutical Industries, Ltd., and Gate Pharmaceuticals (hereinafter collectively "Defendants" or "Teva") from two orders of Magistrate Judge Esther Salas, as well as the motion for summary judgment (Doc. No. 214) filed by Plaintiffs Eisai Co., Ltd. and Eisai, Inc. (hereinafter collectively "Plaintiffs" or "Eisai"). The Complaints in these consolidated cases assert patent infringement against Teva with regard to Teva's applications for approval to market its own generic version of Eisai's product Aricept(r), a prescription drug medication covered by U.S. Patent No. 4,895,841 ("the '841 patent").
In a February 13, 2008 Order, Magistrate Judge Salas granted Eisai's motion to strike portions of Teva's Amended Answers. Eisai Co. v. Teva Pharms. USA, Inc., 557 F. Supp. 2d 490 (D.N.J. 2008) (hereinafter "February Order"). Teva filed the instant appeal (Doc. No. 157) from this February Order. The February Order relied on the Magistrate Judge's December 6, 2007 Order that granted in part and denied in part Teva's motion to amend its Answer. Eisai Co. v. Teva Pharms. USA, Inc., 247 F.R.D. 445 (D.N.J. 2007) (hereinafter "December Order"). Importantly, Teva did not file an appeal from the December Order.
Teva also appeals (Doc. No. 201) from two portions of a subsequent bench Order issued by Magistrate Judge Salas on May 29, 2008 ("May Bench Order") that denied some of Teva's discovery requests. These discovery requests concern the matters that Magistrate Judge Salas ordered to be stricken from Teva's Amended Answers, as well as related issues.
For the following reasons, this Court will reverse the February Order, vacate the appealed portions of the May Bench Order, and refer this matter to the Magistrate Judge for further proceedings consistent with this Opinion. This Court will stay consideration of Eisai's motion for summary judgment pending completion of any additional discovery allowed by Magistrate Judge Salas in accordance with this Opinion.
I. Litigation History and Teva's Motion to Amend its Answer
In the late 1980s, Eisai developed a new drug called donepezil hydrochloride that it would eventually market as Aricept(r), which is the drug claimed in Eisai's '841 patent. The '841 patent was issued on January 23, 1990, and arose from the prosecution of U.S. Patent Application No. 07/207,339 ("the '339 application"). The '841 patent expires in November 2010.
In October 2004, Teva filed an Abbreviated New Drug Application ("ANDA") with the Food and Drug Administration (FDA), seeking approval to market its own generic version of Aricept(r). Teva's ANDA contained a Paragraph III certification with regard to the '841 patent, indicating that it would not distribute its generic version prior to the patent's expiration in November 2010. See 21 U.S.C. § 355(j)(2)(A)(vii)(III).*fn2 One year after filing this ANDA, in October 2005, Teva amended its ANDA to include a Paragraph IV certification claiming that the '841 patent is invalid for obviousness. Shortly thereafter, Eisai filed this patent infringement suit (No. 05-5727) against Teva pursuant to 35 U.S.C. § 271(e)(2), based on Teva's Paragraph IV certification.
Eisai's second Complaint in this matter arose in a similar fashion. In November 2005, Defendant Gate Pharmaceuticals ("Gate"), an unincorporated division of Teva, filed an ANDA for a generic version of Aricept(r) with no Paragraph IV certification attacking the '841 patent. Nearly two years later, Gate amended its ANDA to include a Paragraph IV certification with the same claim that the '841 patent is invalid for obviousness. Eisai then filed a second Complaint against Defendants for patent infringement (No. 07-5489).
In Teva's initial Answer to Eisai's first Complaint, filed in early 2006, it asserted the affirmative defense of patent invalidity for obviousness. The parties extensively litigated the obviousness defense and engaged in substantial discovery relating to that defense.*fn3 More than a year later, in May 2007, Teva filed a motion to amend its Answer to add the affirmative defense of inequitable conduct. This defense amounts to an argument that the '841 patent is unenforceable because Eisai failed to disclose known material information to the Patent and Trademark Office ("PTO") during the prosecution of its patent with an intent to deceive the PTO.
In its Proposed Amended Answer submitted in conjunction with the motion to amend, Teva alleged that Eisai failed to disclose four sets of its own co-pending patent applications to the PTO examiner of the '339 application. The majority of the inequitable conduct allegations in Teva's Proposed Amended Answer concerned Eisai's alleged failure to disclose a family of patent applications known as "the '459 application." Eisai initially filed the '459 application in December 1986. While this application was pending, Eisai filed the '339 application in June 1988. The applications were assigned to different PTO examiners. The '459 application resulted in the issuance of U.S. Patent No. 4,849,431 ("the '431 patent") in July 1989. The '339 application resulted in the issuance of the patent-in-suit, the '841 patent, in January 1990. Teva chiefly alleged in its Proposed Amended Answer that Eisai, in prosecuting the '339 application that led to the patent-in-suit, failed to disclose the co-pending '459 application, the '431 patent that issued from that application, and the existence of a 1984 article in the Journal of Medicinal Chemistry authored by Richard A. Kenley. Teva alleged that these materials, to which the Court will refer collectively as the "'459 application," were material to consideration of the '339 application and were withheld with the intent to deceive the PTO.
In addition to the inequitable conduct allegations regarding the '459 application, Teva's Proposed Amended Answer also alleged similar inequitable conduct in Eisai's failure to disclose to the PTO examiner for the '339 application three other sets of its co-pending patent applications, all under consideration by different PTO examiners: the '035 application, the '662 application, and the '971 application (collectively the "other co-pending applications"). Eisai opposed Teva's motion to amend its Answer.*fn4
In the December Order, Magistrate Judge Salas granted Teva's motion to amend only with respect to inequitable conduct based on failure to disclose the '459 application. In the analysis relevant to the instant appeal, Magistrate Judge Salas first ruled that Teva's Proposed Amended Answer presented four separate allegations of inequitable conduct: non-disclosure of the '459 application and the three other co-pending applications. Teva claimed that it asserted only one basis of inequitable conduct: failure to disclose the '459 application. According to Teva, the failure to disclose the other co-pending applications only constituted evidence of Eisai's intent to deceive the PTO in failing to disclose the '459 application, with the other non-disclosures demonstrating a "pattern of failures to disclose." December Order, 247 F.R.D. at 451. Due to Teva's inconsistent depiction of its allegations in the Proposed Amended Answer and its briefs, Magistrate Judge Salas viewed Teva's effort to "blend all four co-pending applications into one allegation of inequitable conduct" as an "artful attempt" to avoid the heightened pleading standard of Federal Rule of Civil Procedure 9(b) with regard to the other non-disclosures.*fn5 Id. Thus, Magistrate Judge Salas examined each asserted instance of inequitable conduct separately, requiring Teva to plead fraud for each with the requisite particularity under Rule 9(b) to withstand a motion to dismiss.
Before turning to the specific allegations, Magistrate Judge Salas also limited the temporal scope of any claimed basis of inequitable conduct. Eisai's initial '339 application to the PTO was rejected by the PTO examiner, apparently for reasons not directly related to the co-pending applications allegedly withheld by Eisai during the prosecution of that initial application. (See Patunas Decl., Ex. B ("Proposed Amended Answer") at ¶ 43 (alleging that initial '339 application was rejected as being "anticipated and/or obvious... over U.S. Patent 3,746,759").) Eisai subsequently amended its '339 application to include a narrower set of claims than the initial application. This narrowed application was eventually approved by the PTO and issued as the '841 patent-in-suit. Magistrate Judge Salas deemed any inequitable conduct with regard to the initial '339 application irrelevant to the enforceability of the '841 patent-as-issued. Therefore, the Magistrate Judge held that only inequitable conduct allegations arising from non-disclosures during the prosecution of the amended '339 application would be allowed, and that leave to amend with allegations arising from conduct during the prosecution of the initial '339 application would be denied.
Based on these initial rulings, Magistrate Judge Salas proceeded to consider Teva's allegations with regard to each of the four co-pending applications. Although the court disallowed Teva's allegations regarding non-disclosure of the '459 application that specifically addressed the initial '339 application, it granted leave to amend with regard to the '459 application allegations that implicated conduct involving the '841 patent-as-issued, i.e., conduct regarding the amended '339 application. The Magistrate Judge emphasized that with regard to these allowable '459 application allegations, Teva pled with particularity the undisclosed prior art, knowledge of the prior art by an Eisai official, and why the undisclosed items were material. Id. at 451-52. With regard to the three other families of co-pending applications, Magistrate Judge Salas found Teva's allegations lacking in particularity. Teva's allegations regarding the other three sets of co-pending applications failed to include "discussion of specific claims or specific pieces of prior art" or "linkage to the '841 patent as issued." Id. at 452. Teva also failed to include any averment of intent to deceive with regard to the other three applications. By contrast, Teva alleged with regard to the '459 application that this "material information was withheld with an intent to deceive the PTO." (Proposed Amended Answer at ¶ 15.) Magistrate Judge Salas found this statement of intent sufficient to grant leave to Teva to amend its Answer to include its temporally relevant '459 application allegations.
III. Teva's Corrected Amended Answers and the February Order
Teva did not appeal the December Opinion to this Court. Rather, on December 17, 2007, it filed Corrected Amended Answers in an attempt to comply with the December Order.*fn6 These Corrected Amended Answers added the inequitable conduct defense solely with regard to the '459 application, consistent with the scope permitted by the December Order. The '459 application allegations included the same general averment that Eisai withheld material information "with an intent to deceive the PTO." (Patunas Decl., Ex. C ("Corrected Amended Answer") at ¶ 39.)*fn7
However, Teva also included references to the other co-pending applications on which Magistrate Judge Salas had denied leave to amend. This time, Teva clarified its purpose for invoking these other co-pending applications: that collectively, they constituted a "pattern of non-disclosure" that "further supports the conclusion that the failure by Applicants to disclose the co-pending '459 application and Kenley was done intentionally to deceive the Examiner of the '339 application." (Corrected Amended Answer at ¶ 41.) In other words, Teva converted what it claimed was implicit in its Proposed Amended Answer into an explicit allegation: that the non-disclosure of the other co-pending applications constituted only evidence of intent to deceive with regard to the '459 application, rather than separate bases of inequitable conduct. Teva included additional allegations in its Corrected Amended Answers regarding Eisai's "pattern of filing and prosecuting a series of overlapping patent applications" and a "pattern of conduct." (Id. at ¶¶ 31, 32, 40.) The Corrected Amended Answers did not contain any specific allegation that the other co-pending applications were "material." Teva merely alleged that the other co-pending applications had "claims overlapping those of the '459 and '339 applications," that they were all assigned to different PTO examiners, and that Eisai did not disclose any of them to any of the other examiners handling any of the other applications. (Id. at ¶ 41.) Complaining that these allegations regarding the other co-pending applications and a "pattern of conduct" exceeded the scope of allegations permitted by the December Order, Eisai moved to strike these allegations (Paragraph 31 and portions of Paragraphs 32, 40, and 41) pursuant to Federal Rule of Civil Procedure 12(f).
In the February Order, Magistrate Judge Salas granted Eisai's motion. First, the court specifically applied the particularity requirement of Rule 9(b) to both elements of inequitable conduct, materiality and intent. February Order, 557 F. Supp. 2d at 493 ("Under Fed. R. Civ. P. 9(b), each element must be plead with particularity.") (emphasis added). Next, Magistrate Judge Salas construed Teva's argument in opposition to Eisai's motion to strike in the same way that she interpreted Teva's argument on its prior motion to amend. The court acknowledged that Teva pled the non-disclosure of the other co-pending applications only as evidence of facts and circumstances from which intent to deceive could be inferred with regard to the '459 application. In the Magistrate Judge's words, "Teva wants to use the other applications as atmospherics to help it prove intent to deceive." Id. However, the court construed Teva's argument as also advancing the notion that the other co-pending applications were material. Id. ("Teva's brief begins with a claim that the co-pending applications only speak to intent but ends with an argument as to their materiality."). After this discussion of Teva's purportedly conflicting arguments, Magistrate Judge Salas essentially reasoned that allegations of non-disclosure of co-pending applications are allowable to show intent to deceive only if the non-disclosure was material and if that materiality is pled with particularity:
[T]he fact of the matter is that co-pending applications are only relevant insofar as they are material. Without alleging materiality, Teva has no basis upon which to assert that the co-pending applications should have been disclosed to the patent examiner. It follows that those co-pending applications do not evidence an intent to deceive and cannot be used in that manner. As Eisai argues, "[o]ne cannot intend to deceive by not disclosing information not alleged to be material." This Court ...