UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY
August 27, 2009
IN RE NEURONTIN ANTITRUST LITIGATION
The opinion of the court was delivered by: Hochberg, District Judge
MDL No. 1479
This matter comes before the Court upon the consolidated Motion to Dismiss the Direct Purchaser Plaintiffs' Claims (Docket # 90) filed by Defendants Warner-Lambert Company LLC and Pfizer Inc. (collectively, "Warner-Lambert"), pursuant to Fed. R. Civ. P. 12(b)(6). The Court has considered the briefs of the parties, and oral argument held on April 22, 2009.
I. Factual Background
This matter arises from actions brought by direct purchasers of the anti-epilepsy drug gabapentin, which has been marketed by Defendants under the tradename Neurontin since 1994.*fn1
Plaintiffs assert that Defendants violated federal antitrust laws by using patents for or related to gabapentin to block generic competition for Neurontin. The Judicial Panel on Multidistrict Litigation transferred several related actions to this Court for coordinated and consolidated pretrial proceedings, pursuant to 28 U.S.C. § 1407.*fn2 Certain facts and allegations underlying this action have been discussed extensively in two Opinions handed down by this Court today in a related matter, In re Gabapentin Patent Litig. (No. 00-2931, MDL No. 1384).*fn3 For purposes of the instant motion, however, the following background is relevant and bears repeating.
A. Warner-Lambert's Gabapentin Patents
Having discovered gabapentin and its usefulness in preventing and limiting epileptic seizures in the 1970s, Warner-Lambert obtained various patents covering the drug and its uses. Warner-Lambert obtained U.S. Patent No. 4,024,175 (the "'175 Patent"), which claimed the chemical molecule gabapentin anhydrous in 1977. The '175 Patent expired in 1994. In 1979, Warner-Lambert obtained U.S. Patent No. 4,087,544 (the "'544 Patent") covering the use of gabapentin to treat epilepsy. The '544 Patent expired in 2000.*fn4
Warner-Lambert developed its Neurontin products on the basis of these patents. Following clinical trials, Warner-Lambert submitted New Drug Applications ("NDAs") to the FDA for the use of gabapentin to treat epilepsy. The FDA approved NDA No. 20-235, for gabapentin capsules, on December 30, 1993 and NDA No. 20-882, for gabapentin tablets, on October 9, 1998. Pursuant to these NDAs, Neurontin was only approved for use as an adjunctive therapy for the treatment of epilepsy.
Warner-Lambert filed several Orange Book listings in connection with the development and sale of Neurontin. In January 1992, Warner-Lambert certified that the '175 and '544 Patents covered the formulation, composition and/or method of use of the drug product that was the subject of NDA No. 20-235. Both patents were then listed in the Orange Book. Plaintiffs contend that Neurontin, as it was approved by the FDA, is protected only by these two patents.
In addition to the '175 and '544 Patents, Warner-Lambert has obtained and listed in the Orange Book several other gabapentin-related patents. In the late 1980s, Warner-Lambert applied for a patent covering a monohydrate form of the gabapentin compound in which each gabapentin molecule is associated with one molecule of water.*fn5 U.S. Patent No. 4,894,476 (the "'476 Patent"), claiming gabapentin monohydrate, issued on January 16, 1990 and expired on May 2, 2008. At about the same time, Warner-Lambert also discovered that gabapentin could be useful in slowing or preventing neurodegeneration. On January 28, 1992, Warner-Lambert obtained U.S. Patent No. 5,084,479 (the "'479 Patent"), claiming the use of gabapentin anhydrous to treat neurodegenerative diseases.*fn6 This patent expires on January 2, 2010.
At about the time Neurontin was approved by the FDA, Warner-Lambert amended its patent notification statement to include the '476 and '479 Patents, certifying that they also covered the formulation, composition and/or method of use of the drug product that was the subject of its NDAs. The '476 and '479 Patents were listed in the Orange Book in May 1994 and January 1996, respectively.
Warner-Lambert filed a final patent application, U.S. Patent Application No. 07/570,500 ("the '500 Application"), in August 1990. This patent covered the manufacturing process developed by the company to create a low-lactam form of gabapentin.*fn7 As described below, the parties dispute the details and objectives of the resulting patent prosecution. The low-lactam gabapentin patent was ultimately issued as U.S. Patent No. 6,054,482 (the "'482 Patent") on April 25, 2000 and it will expire on April 25, 2017.*fn8 Shortly after the '482 Patent issued, Warner-Lambert certified that it also covered the drug product at issue in both NDA No. 20-235 and NDA No. 20-882, resulting in an Orange Book listing for the '482 Patent as well.
B. The Market For Neurontin
Warner-Lambert first began selling Neurontin capsules in early 1994. According to the FDA's required labeling, gabapentin is useful for "adjunctive therapy in the treatment of partial seizures with and without secondary generalization in adults with epilepsy." This was the only use approved by the FDA prior to the launch of Neurontin.*fn9
Once Warner-Lambert began marketing Neurontin however, doctors also began to use Neurontin to treat neurodegenerative conditions such as Parkinson's disease, A.L.S., and neuropathic pain, the uses covered by the '479 Patent but not approved by the FDA.*fn10 Increased awareness of Neurontin's off-label uses led to significant sales of the drug to treat conditions other than epilepsy. By 1998, Neurontin was being prescribed and used almost exclusively for off-label uses. See First Amended Complaint and Demand for Jury Trial of Plaintiffs CVS Pharmacy, Inc., Rite Aid Corporation and Rite Aid HDQTRS. Corp. ¶ 93, In re Neurontin Antitrust Litig., No. 02-5583 (D.N.J. Feb. 14, 2008) ("Direct Purchaser Non-Class Complaint" or "DPNC Complaint").
C. Abbreviated New Drug Applications And The Resulting Patent Infringement Litigation
Beginning in 1998, several generic drug manufacturers filed Abbreviated New Drug Applications ("ANDAs") seeking FDA approval to market generic gabapentin products after the expiration of the '544 patent (and its pediatric extension).*fn11 Purepac Pharmaceutical Co. ("Purepac"), the first generic applicant, filed two ANDAs: No. 75-370 for gabapentin capsules on March 30, 1998 and No. 75-694 for gabapentin tablets on September 3, 1999. When Purepac initially filed ANDAs, it submitted a Paragraph IV Certification concerning the '476 Patent and a section viii statement concerning the '479 Patent. Apotex Corp. ("Apotex") filed ANDA No. 75-360 for gabapentin capsules on April 17, 1998, and included a Paragraph IV Certification for both the '476 and '479 Patents. Similar ANDAs were subsequently filed by Geneva Pharmaceuticals, Inc., Teva Pharmaceuticals USA, Zenith Goldline Pharmaceuticals, and Eon Labs Manufacturing, among others.
Based on these ANDA submissions, Warner-Lambert commenced patent infringement litigation against several generic applicants, alleging infringement of the '476 and '479 Patents.*fn12
In response, Purepac, Apotex and several other generic applicants asserted antitrust or unfair competition counterclaims similar to those pending before this Court in the instant action and in In re Gabapentin Patent Litig. By initiating infringement litigation, Warner-Lambert invoked the automatic 30-month stay provision, thereby requiring the FDA to stay approval of the generic manufacturers' ANDAs. Summary judgment of noninfringement was ultimately granted in favor of the generic applicants. See, e.g., Warner-Lambert Co. v. Purepac Pharm. Co., et al., Nos. 98-2749, 99-5948, 2003 WL 21698310 (D.N.J. May 22, 2003) (the "May 22 Opinion"). Plaintiffs now assert that these initial lawsuits were "objectively baseless and intended solely to illegally extend [Defendants'] monopoly by delaying the entrance of generic manufacturers into the gabapentin anhydrous market." DPNC Complaint ¶ 63.
Once the '482 Patent was issued and listed in the Orange Book, generic applicants amended their ANDAs to include Paragraph IV Certifications concerning that patent. The updated certifications led to another round of litigation, beginning in June 2000, as Warner-Lambert again filed multiple patent infringement actions against several generic manufacturers. These actions, asserting infringement of the '482 Patent, are those now pending before this Court in In re Gabapentin Patent Litig.*fn13
Generic manufacturers began selling their gabapentin products "at risk" before a court ruling on infringement liability had issued. Purepac, for example, launched its gabapentin capsules in October 2004, and its gabapentin tablets in December 2004. Other manufacturers began selling generic gabapentin products in 2004 and 2005 as well.
II. Direct Purchaser Antitrust Actions
Plaintiffs in the instant action are direct purchasers of Neurontin.*fn14 Plaintiffs Louisiana Wholesale Drug Company ("Louisiana Wholesale"), Meijer, Inc., and Meijer Distribution, Inc. (collectively, "Meijer," and all collectively "Direct Purchaser Class Plaintiffs") filed an Amended Complaint asserting two counts of monopolization in violation of Section 2 of the Sherman Act.*fn15 The Direct Purchaser Class Plaintiffs bring this action on behalf of themselves and as representatives of a class of "[a]ll persons who directly purchased Neurontin from Defendant at any time during the period of July 16, 2000 until the effects of Defendant's conduct ceased." First Amended and Consolidated Class Action Complaint of Plaintiffs Louisiana Wholesale Drug Company, Inc., Meijer, Inc., and Meijer Distribution, Inc. ¶ 24, In re Neurontin Antitrust Litig., Nos. 02-1830, 02-2731(D.N.J. Feb. 14, 2008) ("Direct Purchaser Class Complaint" or "DPC Complaint"). Excluded from the class are Defendants and their officers, directors, management and employees, predecessors, subsidiaries and affiliates, and all federal government entities.*fn16
Plaintiffs CVS Pharmacy, Inc. (formerly CVS Meridian, Inc., "CVS"), Rite Aid Corporation, and Rite Aid HDQTRS. Corp. (collectively, "Rite Aid" and all collectively "Direct Purchaser Non-Class Plaintiffs") filed an Amended Complaint asserting one count of monopolization and one count of attempted monopolization, also in violation of Section 2 of the Sherman Act.*fn17 Plaintiffs in both actions seek similar relief, primarily a judgment that Warner-Lambert's actions are an unlawful restraint of trade in violation of the Sherman Act, treble damages for such actions, and reasonable costs and attorneys' fees. See DPC Complaint at 53; DPNC Complaint at 41.
Although the claims in each action are styled slightly differently, Plaintiffs have set forth virtually identical allegations concerning Warner-Lambert's anticompetitive conduct. Plaintiffs primarily allege that Warner-Lambert engaged in an "overall scheme" to monopolize the market for gabapentin anhydrous products by forestalling, if not completely preventing, generic competition for Neurontin.*fn18 Warner-Lambert is alleged to have carried out this scheme by:
(1) procuring two additional patents that it improperly listed in the Orange Book; (2) manipulating the patent approval process so that a third patent with claims so limited that they are impossible to accurately measure or distinguish from the prior art so that the patent could be used to delay generic entry; (3) filing and prosecuting multiple sham lawsuits on these patents that no reasonable litigant could have expected to succeed; and (4) engaging in fraudulent off-label promotion to convince doctors to prescribe Neurontin for uses for which it was not approved.
DPNC Complaint ¶ 29. Plaintiffs claim that these actions, taken together, foreclosed generic competition in the gabapentin anhydrous market and enabled Warner-Lambert to charge supracompetitive prices for Neurontin. As a result, consumers of gabapentin anhydrous were compelled to pay, and did pay, artificially inflated prices for the drug.
A. Allegations Of Patent Prosecution Misconduct
Specifically, Plaintiffs allege that Warner-Lambert manipulated the prosecution of the '482 Patent to provide additional protection for the Neurontin franchise and maximize the delay of generic competition through successive 30-month stays of generic approval. The filing of the initial '500 Application in 1990 led to a series of rejections by the patent examiner and continuation applications by Warner-Lambert. Continuation Application No. 08/020,270 (the "'270 Application"), filed in February 1993, was finally approved for issuance as U.S. Patent No. 5,395,852 (the "'852 Patent"). The '852 Patent was scheduled to issue on March 7, 1995.
Shortly before the issuance date, however, Warner-Lambert requested that the approved application be withdrawn in exchange for another continuation application, so that the patent examiner could consider the '476 Patent as well as U.S. Patent No. 4,152,326 (the "'326 Patent"), which is also directed to compounds related to gabapentin, assigned to Warner-Lambert and lists the same inventors. Plaintiffs now contend that Warner-Lambert knew about both patents and should have brought them to the examiner's attention far earlier in the prosecution process. They further allege that these delays were designed to provide Warner-Lambert with "the ability to time the eventual issuance of the patent to its greatest advantage." DPC Complaint ¶ 97; see also DPNC Complaint at 53-54. Warner-Lambert prosecuted its final continuation application over the next five years, allegedly stepping up its efforts only when it appeared that protection for Neurontin under other patents would soon expire.
The '482 Patent, as issued, has claims similar to those approved years earlier under the '270 Application, thereby implying, according to Plaintiffs, that Warner-Lambert could have patented the low-lactam formulation much earlier if the patent itself had been the company's actual objective. But this patent, Plaintiffs allege, was merely a "contingency" patent held in reserve for use in further delaying the launch of generic gabapentin.*fn19 Plaintiffs claim, in sum, that "Defendant intentionally delayed and prolonged the prosecution of its patent application in order to better use the patent ... to delay generic competition by improperly obtaining another automatic 30-month stay of FDA approval of generic ANDAs." DPC Complaint ¶ 99.
B. Allegations Of Improper Orange Book Listings
Plaintiffs further allege that Warner-Lambert submitted false and fraudulent information to the FDA in order to improperly list the '476 and '479 Patents in the Orange Book. They assert that Warner-Lambert listed these patents despite knowing that the patents "(1) did not claim an approved drug or an approved method of using a drug, and (2) could not reasonably be asserted to be infringed upon by the sale of generic gabapentin anhydrous." DPNC Complaint ¶ 36. Warner-Lambert's certification concerning the '476 Patent was allegedly false and fraudulent because Warner-Lambert knew the '476 Patent claimed a different formulation or composition than the drug approved for sale as Neurontin. Id. ¶ 41. Plaintiffs contend that the certification concerning the '479 Patent was similarly false and fraudulent because that patent claimed only the use of gabapentin anhydrous to treat neurodegenerative disorders, not the FDA-approved use of Neurontin to treat epilepsy. Id. ¶ 43. Plaintiffs allege that Warner-Lambert listed these patents in the Orange Book "only so that it could take advantage of the ANDA approval process to delay generic approvals for up to 30 months." Id. ¶ 47.
Plaintiffs also challenge Warner-Lambert's subsequent listing of the '482 Patent. They allege that Warner-Lambert intentionally narrowed the patent claims covering the gabapentin substance, but nevertheless listed the '482 Patent in the Orange Book, certifying that it related to Neurontin and that infringement could be reasonably asserted against generic applicants. According to Plaintiffs, "this was improper ... because it is not possible to distinguish infringing from non-infringing generic products with regard to each claimed specification of the '482 patent and therefore the '482 patent should not have been listed in the Orange Book." DPC Complaint ¶ 101.
C. Allegations Of Sham Patent Litigation
Warner-Lambert's enforcement of the '476, '479, and '482 Patents through infringement litigation is also alleged to be a key component of the company's monopolization scheme. The initial lawsuits asserting the '476 and '479 Patents were, according to Plaintiffs, pursued without either a reasonable basis or reasonable expectation for success, and were initiated "solely to illegally extend [Defendant's] monopoly by delaying the entrance of generic manufacturers into the gabapentin anhydrous market." DPNC Complaint ¶ 63.
The '476 Patent actions were allegedly baseless because the targeted ANDAs sought approval for a generic product using gabapentin anhydrous, not gabapentin monohydrate as claimed by the '476 Patent. Without an approved NDA for a drug containing gabapentin monohydrate, Plaintiffs allege that generic manufacturers were neither required nor permitted to file ANDAs for that substance.*fn20 The '479 Patent lawsuits were allegedly baseless because that patent claimed only a use of gabapentin that had not been approved by the FDA and for which the generic applicants were not seeking approval.*fn21 Plaintiffs thus contend that their generic products could not, therefore, infringe upon the '479 Patent. Without any real expectation of success on the merits of these actions, "Defendant simply used these two patents to secure the 30-month stay of approval of generic ANDAs that is automatically triggered by the filing of an infringement suit regarding an Orange Book-listed patent." DPC Complaint ¶ 7.
Plaintiffs similarly allege that the litigation concerning the '482 Patent is baseless and likewise intended to further delay the approval and launch of generic products. Plaintiffs assert that because the claims of the '482 Patent are formulated so narrowly, it is not possible to determine whether generic products would actually infringe that patent.*fn22 According to Plaintiffs, Warner-Lambert was well aware of this fact yet still initiated infringement actions. "A reasonable litigant," however, "would have realized that the inability of technology to quantify and distinguish the level of chloride ions at the low levels specified by the '482 patent would make it objectively impossible to succeed on the litigation based on infringement of the '482 patent." DPC Complaint ¶ 106.*fn23
D. Allegations Of Off-Label Marketing
Finally, Plaintiffs allege that Warner-Lambert, having recognized that potential lifetime sales of Neurontin would be limited, also attempted to unlawfully maintain its monopoly over the gabapentin anhydrous market by fraudulently promoting the drug for off-label uses.*fn24 Rather than facing this challenge in a lawful manner or developing legitimate alternative profit streams, Warner-Lambert allegedly decided to aggressively and illegally promote Neurontin for a variety of off-label uses without seeking additional FDA approval.*fn25 "Defendant's purpose in pursuing the illegal promotion campaign" was, Plaintiffs assert, "to quickly and dramatically grow the market for Neurontin in the years prior to anticipated loss of market exclusivity." DPC Complaint ¶ 67. By publishing misleading articles, withholding studies showing that Neurontin was not effective for certain off-label uses, and encouraging salespeople to use biased "medical liaisons" in sales pitches to physicians, among other tactics, Warner-Lambert allegedly hoped to induce prescription of Neurontin for unapproved uses. This would then inflate Warner-Lambert's market share and profits without having to satisfy the FDA's rigorous requirements for approving additional indications for Neurontin. Plaintiffs claim that Warner-Lambert's off-label marketing campaign directly affected the market for gabapentin anhydrous and must, therefore, be considered as integral to the company's overall monopolization scheme.
III. Legal Standards
A. Motion To Dismiss
On April 1, 2008, Defendants filed a consolidated motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), seeking to dismiss all of the federal antitrust claims asserted by the Direct Purchaser Plaintiffs. To survive a motion to dismiss filed under Rule 12(b)(6), "[f]actual allegations must be enough to raise a right to relief above the speculative level on the assumption that all of the complaint's allegations are true," even if doubtful in fact. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 545 (2007) ("Twombly"). According to the Third Circuit, "stating ... a claim requires a complaint with enough factual matter (taken as true) to suggest the required element. This does not impose a probability requirement at the pleading stage, but instead simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary element." Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (internal quotations omitted) (citing Twombly, 550 U.S. at 555-56).
Although a court does not need to credit a complaint's "bald assertions" or "legal conclusions," it must view all of the allegations in the complaint as well as all reasonable inferences that can be drawn therefrom in the light most favorable to the plaintiff. Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997) (citing Rocks v. City of Philadelphia, 868 F.2d 644, 645 (3d Cir. 1989)); see also In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1429-30 (3d Cir. 1997). The Supreme Court recently held that "once a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint." Twombly, 550 U.S. at 546.*fn26
Antitrust complaints, in particular, are to be liberally construed at this stage of the proceeding. See In re Hypodermic Prods. Antitrust Litig., MDL No. 1730, 2007 WL 1959224, at *5 (D.N.J. June 29, 2007) (citing Commonwealth of Pa. ex rel. Zimmerman v. PepsiCo, Inc., 836 F.2d 173, 179 (3d Cir. 1988)). "[I]n antitrust cases, where 'the proof is largely in the hands of the alleged conspirators,' dismissals prior to giving the plaintiff ample opportunity for discovery should be granted very sparingly." Hosp. Building Co. v. Trustees of Rex Hosp., 425 U.S. 738 (1976) (quoting Poller v. Colombia Broad., 368 U.S. 464, 473 (1962)). "The liberal approach to the consideration of antitrust complaints is important because inherent in such an action is the fact that all details and specific facts relied upon cannot properly be set forth as part of the pleadings." See Lucas Indus. v. Kendiesel, Inc., No. 93-4480, 1995 WL 350050, at *2 (D.N.J. June 9, 1995). Nevertheless, courts have determined that "the heavy costs of modern federal litigation, especially antitrust litigation, and the mounting caseload pressure on the federal courts," militate in favor of requiring some reasonable particularity in pleading violations of the federal antitrust laws. See Sutliff, Inc. v. Donovan, Co., 727 F.2d 648, 654 (7th Cir. 1984); Garshman v. Universal Res. Holding, Inc., 641 F.Supp. 1359, 1367 (D.N.J. 1986).
B. Antitrust Claims
The purpose of the Sherman Act is "to protect the public from the failure of the market."
15 U.S.C.A. § 2 n.5 (quoting Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447 (1993)). The Direct Purchaser Plaintiffs have asserted claims of monopolization and attempted monopolization under Section 2 of the Sherman Act, which provides in pertinent part that "[e]very person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony." 15 U.S.C. § 2. Section 16 of the Clayton Act allows a person "threatened [with] loss or damage by a violation of the antitrust laws" to seek injunctive relief. The Clayton Act includes the Sherman Act as one of the applicable "antitrust laws."
A claim for monopolization has two elements: "(1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident." United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966).*fn27 A monopolization claim does not require proof of the specific intent to monopolize, demanding only proof of "a general intent to do the act, for no monopolist monopolizes unconscious of what he is doing." Times-Picayune Publ'g Co. v. United States, 345 U.S. 594, 626 (1953) (internal quotations and citations omitted). Nevertheless, "the possession of monopoly power will not be found unlawful unless it is accompanied by an element of anticompetitive conduct." Verizon Commc'ns v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 407 (2004). This requirement is particularly important in the patent context, because patents inherently grant certain rights to exclude competition. Actions that are permissible under the patent laws, such as the mere maintenance of the statutory patent monopoly, cannot therefore give rise to antitrust liability.
See, e.g., Hoffman-La Roche Inc. v. Genpharm Inc., 50 F. Supp. 2d 367, 378 (D.N.J. 1999); Sheet Metal Duct, Inc. v. Lindab, Inc., No. 99-6299, 2000 WL 987865, at *2-3 (E.D. Pa. July 18, 2000).*fn28
A claim for attempted monopolization has three elements: (1) predatory or exclusionary conduct; (2) the possession of the specific intent to monopolize; and (3) a dangerous probability of achieving monopoly power or succeeding in the attempt to monopolize. Ideal Dairy Farms, Inc. v. John Labatt, Ltd., 90 F.3d 737, 750 (3d Cir. 1996) (citing Spectrum Sports, 506 U.S. at 454-58). "Whether a party violates § 2 of the Sherman Act by attempting to monopolize is a question of proximity and degree." Id. (citations omitted). To determine whether there is a "dangerous probability of monopolization," courts will consider "the relevant market and the defendant's ability to lessen or destroy competition in that market." Spectrum Sports, 506 U.S. at 456.*fn29
Warner-Lambert seeks dismissal of both the Direct Purchaser Class Complaint and the Direct Purchaser Non-Class Complaint for failure to state a claim. According to Warner-Lambert, Plaintiffs' claims are simply an attempt to reargue that Warner-Lambert's Orange Book listings and gabapentin patent infringement lawsuits were baseless, even though "these issues have been evaluated favorably to [Warner-Lambert] by the courts during 10 years of patent litigation." Memorandum in Support of Defendants' Motion to Dismiss the Direct Purchaser Plaintiffs' Claims at 2, In re Neurontin Antitrust Litig., No. 02-1390 (D.N.J. Apr. 1, 2008) ("Defendants' Opening Brief"). Furthermore, "[P]laintiffs' claims are foreclosed by their failure to satisfy fundamental antitrust requirements concerning competitive impact, antitrust injury, causation and the four-year statute of limitations." Id.
In response, Plaintiffs emphasize the sufficiency of their Amended Complaints. They argue that they have more than adequately pled cognizable violations of Section 2 of the Sherman Act, and that such violations are not immunized by the Noerr-Pennington doctrine. They also challenge Warner-Lambert's attempts to use certain opinions in the related patent infringement lawsuits to validate the company's actions, because those opinions are not binding in this litigation and should not, Plaintiffs argue, even be considered by this Court.
The instant motion challenges the Direct Purchaser Complaints on both substantive and procedural grounds. For the sake of clarity, the Court will first address Warner-Lambert's procedural grounds for dismissal and then turn to Defendants' substantive arguments for dismissal.
A. Statute Of Limitations
Warner-Lambert argues that Plaintiffs' claims based on the delayed prosecution of the '482 Patent and the off-label marketing of Neurontin should be dismissed because they are barred by the relevant statute of limitations. An antitrust cause of action has a 4-year limitations period, plus any additional number of years during which the statute of limitations was tolled, and generally accrues "when a defendant commits an act that injures" the plaintiff. Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 338 (1971).
Warner-Lambert asserts that any antitrust action based on the prosecution of the '482 Patent accrued, at the latest, on July 20, 2000, when Warner-Lambert sued Purepac and Apotex for infringing the '482 Patent and thereby imposed an additional 30-month stay of generic approval. Any claims concerning Warner-Lambert's off-label marketing activities accrued, according to Defendants, in 1995, when Warner-Lambert executives allegedly implemented their plans for off-label promotional efforts. Warner-Lambert argues that these actions all occurred more than four years prior to the date on which the Direct Purchaser Plaintiffs' Complaints were filed, and are, therefore, beyond the applicable statute of limitations.
Plaintiffs respond that their claims survive because they were timely filed and that any new allegations in the Amended Complaints relate back to those pled originally. The first complaint in the consolidated antitrust action was filed on March 26, 2002, and it alleged monopolization in the market for gabapentin anhydrous as well as the baselessness of the infringement actions concerning the '476, '479, and '482 Patents. The Amended Complaints that now control this proceeding were filed on February 14, 2008 pursuant to a schedule set by the Court. While these Complaints include additional factual allegations based on information obtained by Plaintiffs through discovery in the related patent proceedings or information that has come to light in the intervening years, particularly with respect to Warner-Lambert's off-label marketing efforts, such allegations are pled in support of the same monopolization claims asserted originally. These allegations are not now presented as the basis for additional, independent causes of action. These allegations thus relate back, within the meaning of Fed. R. Civ. P. 15(c)(1)(B), to those in the original complaints.*fn30
Furthermore, the Court notes that this proceeding was stayed by an Order of Hon. John Lifland, U.S.D.J., from October 31, 2002 until early 2008, and the intervening years do not impact the statute of limitations period. See DiPippa v. United States, 687 F.2d 14, 20 (3d Cir. 1982) (recommending that the district court stay proceedings pending the resolution of related matters in order to "avoid statute of limitations problems"); Baglione v. Clara Maass Med. Center, Inc., No. 99-4069, 2006 WL 2591119, at *3 (D.N.J. Sept. 8, 2006) (noting that "a stay of proceedings ... would have tolled the statute of limitations and avoided any statute of limitations problems."). Accordingly, this Court finds that the Direct Purchaser Plaintiffs' antitrust claims, as pled in the currently-operative Amended Complaints, are not barred by the applicable statute of limitations.
B. Antitrust Injury
Warner-Lambert also argues that Plaintiffs' antitrust claims based on '476 and '479 Patent infringement lawsuits as well as those based on the off-label marketing of Neurontin should be dismissed because Plaintiffs did not suffer an antitrust injury from these actions. Antitrust plaintiffs must establish standing to pursue their claims. A threshold requirement for antitrust standing is proof of "antitrust injury," which requires that the injury be "causally linked to an illegal presence in the market." Brunswick v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977). To this end, a plaintiff must show both harm of the type the antitrust laws were intended to prevent, and an injury to the plaintiff which flows from that which makes the defendant's actions unlawful. Gulfstream III Assocs., Inc. v. Gulfstream Aerospace Corp., 995 F.2d 425, 429 (3d Cir. 1993). Once an antitrust injury has been established, the plaintiff must further establish that he or she is a proper antitrust plaintiff.*fn31
Warner-Lambert's arguments that Plaintiffs have failed to plead antitrust injury focus on the second element of the Gulfstream standard and are essentially causation arguments. Defendants contend that Plaintiffs' claims should be dismissed because Plaintiffs fail to allege antitrust injury specifically flowing from the '476 and '479 infringement actions or the off-label promotion of Neurontin. Warner-Lambert argues that: (1) Plaintiffs' allegations concerning the patent litigation cannot support antitrust claims because generic competition was impossible regardless of the 30-month stay imposed by the '476 and '479 patent actions;*fn32 and (2) that the inability of generic manufacturers to obtain even tentative FDA approval until after the stays associated with the '476 and '479 Patent suits expired was an independent barrier to generic entry.*fn33
Similarly, Warner-Lambert contends that Plaintiffs cannot show an antitrust injury from any off-label marketing of Neurontin because the alleged injury is not connected to an antitrust violation. "All the alleged off-label marketing could have done," Defendants argue, "was enhance competition between Neurontin(r) and alternative drugs in some undefined, unpleaded relevant market. This does not meet the requirement that injury must flow from that which would make the alleged conduct an antitrust violation." Defendants' Opening Brief at 6.*fn34
Proving antitrust injury depends, at least in part, on establishing a causal link to an antitrust violation. See Brunswick, 429 U.S. at 489. Warner-Lambert's arguments are, in essence, that Plaintiffs cannot prove that such a causal link exists in this case. Such arguments do not, however, require the dismissal of Plaintiffs' claims at this stage of the litigation.
First, the Court notes that "the existence of antitrust injury is not typically resolved through motions to dismiss." Schuylkill Energy Res., Inc. v. Pa. Power & Light Co., 113 F.3d 405, 417 (3d Cir. 1997) (citing Brader v. Allegheny Gen. Hosp., 64 F.3d 869, 876 (3d Cir. 1995)); see also In re Wellbutrin SR/Zyban Antitrust Litig., 281 F. Supp. 2d 751, 757 (E.D. Pa. 2003) (denying motion to dismiss antitrust claims on similar grounds because "Plaintiffs may be able to prove that the allegedly frivolous lawsuits 'materially caused' their alleged injuries.")
("Wellbutrin"); Zenith Radio Corp., 395 U.S. at 114 n.9 (noting that an antitrust plaintiff may establish antitrust injury with "proof of some damage flowing from the unlawful conspiracy; inquiry beyond this minimum point goes only to the amount and not the fact of damage.").
Second, in arguing that none of its alleged anticompetitive activities proximately caused the delayed launch of generic products, Warner-Lambert compartmentalizes or fragments Plaintiffs' allegations concerning an overall monopolization scheme. The Direct Purchaser Plaintiffs need not allege proximate cause or antitrust injury separately for each component of the alleged scheme. The injuries arguably inflicted by Warner-Lambert's allegedly anticompetitive activities should, instead, be viewed as a whole. Biovail Corp. Int'l v. Hoechst AG, 49 F. Supp. 2d 750, 767 (D.N.J. 1999)("Again, this court will not evaluate whether each and every anticompetitive act upon which Biovail's antitrust claims are based directly caused Biovail injury. Instead, it will determine whether Biovail was injured by the anticompetitive conduct as a whole, an analysis the court will refrain from conducting until it is established that an antitrust violation has been pleaded."); see also SmithKline Beecham Corp. v. Apotex Corp., 383 F. Supp. 2d 686, 702 (E.D. Pa. 2004) (same); Teva Pharmaceuticals, 432 F. Supp. 2d at 430-31.
Similarly, Plaintiffs need not allege that Warner-Lambert's anticompetitive actions were the sole cause of its injury. See Zenith Radio Corp., 395 U.S. at 114 n.9 ("It is enough that the illegality is shown to be a material cause of the injury; a plaintiff need not exhaust all possible alternative sources of injury."); Greater Rockford Energy & Tech. Corp. v. Shell Oil Co., 998 F.2d 391, 401 (7th Cir. 1993) ("An antitrust violation need not be the sole cause of the alleged injuries, but the plaintiff must establish, with a fair degree of certainty, that the violation was a material element of, and substantial factor in producing, the injury."). Plaintiffs need not "allege (or dispose of) all alternative theories of causation to survive a motion to dismiss." In re K-Dur Antitrust Litig., 338 F. Supp. 2d 517, 535 (D.N.J. 2004). Rather, they are "simply required to allege facts showing that [they] suffered the type of injury or harm the antitrust laws were intended to prevent, and that [their] injury flows from[Warner-Lambert's] anti-competitive conduct." Id.
Nor are Plaintiffs required at this stage of the proceeding to adduce proofs discrediting all possible intervening causes of the delayed launch of generic products, such as the failure to obtain tentative generic approval from the FDA before the expiration of the 30-month stays at issue. Several courts have held that a finding of antitrust injury cannot be tied to the status of FDA approval of a generic applicant. See Bristol-Myers Squibb Co. v. Ben Venue Labs., 90 F. Supp. 2d 540, 544-46 (D.N.J. 2000) (accepting the counterclaimants' contention that they need not demonstrate FDA approval in order to invoke antitrust standing). In Abbott Laboratories. v. Mylan Pharmaceuticals., Inc., for example, the court observed that basing antitrust injury on "the status of FDA approval relative to the required timing of the suit" would render such injury "wholly contingent on the vagaries of timing of agency action." No. 05-6561, 2007 WL 625496, at *4 n.2 (N.D. Ill. Feb. 23, 2007)(internal quotations and citations omitted) ("Mylan").
The Direct Purchaser Plaintiffs have alleged that Warner-Lambert manipulated the regulatory advantages afforded by its gabapentin patents in order to prevent the entry of generic competitors into the Neurontin market and thereby unlawfully maintain a monopoly over that market. Neurontin purchasers were, as a result, forced to pay higher prices. According to Plaintiffs, Warner-Lambert "overcharged Plaintiffs and other direct purchasers of Neurontin hundreds of millions of dollars by depriving them of the benefits of competition from cheaper generic versions of Neurontin." DPC Complaint ¶ 16. Plaintiffs further allege that Warner-Lambert's off-label promotion of Neurontin built up the market in which the company then proceeded to charge such prices, and that such activities should be considered when evaluating the injuries inflicted by Warner-Lambert's monopolization scheme as a whole. Moreover, Plaintiffs claim that absent Warner-Lambert's overarching scheme, generic manufacturers would have launched their products and purchasers would have had access to lower-priced drugs years earlier then they ultimately did.*fn35
Courts have regularly held that such conduct creates the anticompetitive effect that the antitrust laws were designed to prevent, and therefore constitutes antitrust injury. See, e.g., Mylan, 2007 WL 625496, at *4-5 (holding that Defendant Mylan established antitrust injury and standing by alleging that Plaintiff Abbott Labs used "the regulatory advantage afforded via a fraudulently-procured patent to prevent Mylan's entrance into the relevant market" and that Mylan had been ready to enter the market "but for Abbott's actions in fraudulently procuring the patents."); Teva Pharmaceuticals, 432 F. Supp. 2d at 431 (finding antitrust injury on the basis of allegations that Teva was excluded from a market while patent litigation remained unresolved because "[s]uch exclusion from the market is 'precisely the type of injury that the antitrust laws were intended to prevent,' because it reflects an injury to competition.") (internal citations omitted);*fn36 see also In re K-Dur Antitrust Litig., 338 F. Supp. 2d at 534 ("Specifically, Plaintiffs have alleged that these agreements caused them to pay higher prices for K-Dur, the type of injury the antitrust laws are intended to prevent. Plaintiffs are not required to plead more."); In re Warfarin Sodium Antitrust Litig., 214 F.3d 395, 401 (3d Cir. 2000) (observing that where a brand manufacturer "attempt[ed] to prevent and/or delay [FDA] approval" of competing generics, "[i]t is difficult to imagine a more formidable demonstration of antitrust injury.").
Accordingly, this Court finds that the Direct Purchaser Plaintiffs have sufficiently alleged that they have suffered an antitrust injury in the form of overcharges on their purchases of gabapentin anhydrous and that such injuries flowed from Warner-Lambert's allegedly unlawful conduct. When evaluated as a whole, the Court need not determine whether each element of Warner-Lambert's alleged monopolization scheme imposed its own antitrust injury. Warner-Lambert's motion to dismiss Plaintiffs' claims based on '476 and '479 Patent infringement lawsuits and the off-label marketing of Neurontin for failure to allege antitrust injury is, therefore, denied.
C. "Overall Scheme" Claim
The Direct Purchaser Plaintiffs allege that Warner-Lambert "willfully and unlawfully maintained its monopoly power by engaging in an overarching scheme to exclude competition that discouraged rather than encouraged competition on the merits." DPC Complaint ¶ 133. This scheme was allegedly designed for the anticompetitive purpose of forestalling generic competition and allegedly carried out with the anticompetitive effect of maintaining supracompetitive prices for gabapentin anhydrous products. Although Plaintiffs claim that Warner-Lambert implemented its scheme by improperly listing patents in the Orange Book, manipulating the prosecution of the '482 Patent, prosecuting multiple sham patent infringement lawsuits, and fraudulently and unlawfully marketing Neurontin for off-label uses, they are not, for the most part, asserting independent antitrust violations on the basis of these predicate actions. Rather, Plaintiffs repeatedly challenge Warner-Lambert's overall pattern of alleged abuse of its gabapentin patents and the patent regulatory process itself, emphasizing that this Court "may, and should, properly consider the entirety of Defendant's illegal and exclusionary conduct when assessing the anticompetitive impact of Defendant's scheme on competition in the market for gabapentin anhydrous." Revised Joint Memorandum of Direct Purchaser Plaintiffs in Opposition to Defendants' Motion to Dismiss Their Complaint at 25, In re Neurontin Antitrust Litig., No. 02-1390 (D.N.J. May 16, 2008) ("Plaintiffs' Opposition Brief").
Warner-Lambert moves to dismiss Plaintiffs' overarching scheme claim because none of the specific conduct alleged by Plaintiffs is independently actionable under federal antitrust laws. Plaintiffs cannot, according to Warner-Lambert, rely on "everything together" to "independently create a basis for suit when ... each thing separately fails to state a claim." Defendants' Opening Brief at 6. Furthermore, courts that have previously allowed antitrust plaintiffs to pursue "overall scheme" claims have only done so because the alleged scheme included exclusionary conduct that was itself unlawful.*fn37 Warner-Lambert argues that none of its underlying conduct violates antitrust laws, and therefore a scheme claim must fail because "[a]ggregating lawful conduct does not state a claim." Defendants' Reply Brief at 5.
In support of this argument, Defendants rely heavily on Intergraph Corp. v. Intel Corp. in which a manufacturer of graphics workstations asserted several theories of antitrust liability against the manufacturer of the microprocessors used in such workstations. On appeal, Intergraph argued "that the various theories of antitrust liability discussed by the district court should not be viewed separately but should be taken together, lest the slate be 'wiped clean' after each aspect fails to violate the Sherman Act." Intergraph Corp. v. Intel Corp., 195 F.3d 1346, 1366 (Fed. Cir. 1999). The court rejected this argument, holding that the "proper analytical approach" is to analyze various theories "individually" even if "many of the issues ... are interrelated and independent." Id. at 1367. Warner-Lambert argues that this case holds that if none of the alleged conduct could support an antitrust claim on its own, either because it was not harmful to competition or was permitted by the patent laws, then the conduct cannot amount to an antitrust violation if "taken together." See also City of Groton v. Conn. Light & Power Co., 662 F.2d 921, 928-29 (2d Cir. 1981) ("Each legal theory must be examined for its sufficiency and applicability, on the entirety of the relevant facts."); Ne. Tel. Co. v. AT&T Co., 651 F.2d 76, 95 n.28 (2d Cir. 1981) (where anticompetitive conduct claims are individually shown "in numerous critical respects [to be] utterly lacking" they "collectively cannot have any synergistic effect" rescuing their validity).
Warner-Lambert also cites Pacific Bell Telelphone Co. v. Linkline Communications, Inc., ("Linkline"), a case recently decided by the United States Supreme Court. In Linkline, the Court evaluated a price-squeeze claim brought by Internet Service Providers ("ISPs") who sold digital subscriber line ("DSL") access to internet to retail customers. Plaintiffs argued that the telephone companies that owned the infrastructure and facilities required to provide DSL service monopolized and attempted to monopolize the regional DSL market by charging high wholesale prices to the ISPs for DSL transport and low retail prices to consumers for DSL Internet service, thereby squeezing the profits earned by the ISPs. The Court rejected this claim, finding that the ISPs stated neither a duty-to-deal claim at the wholesale level nor a predatory pricing claim at the retail level. Linkline, 129 S.Ct. 1109, 1120 (Feb. 25, 2009). Specifically, the Court held that:
In this case, plaintiffs have not stated a duty-to-deal claim under Trinko and have not stated a predatory pricing claim under Brooke Group. They have nonetheless tried to join a wholesale claim that cannot succeed with a retail claim that cannot succeed, and alchemize them into a new form of antitrust liability never before recognized by this Court. We decline the invitation to recognize such claims. Two wrong claims do not make one that is right.
Id. at 1123. Warner-Lambert argues that this decision compels dismissal of Plaintiffs' overall scheme claims "by expressly holding that different types of conduct, each of which is itself lawful under the antitrust laws, cannot be 'alchemize[d] ... into a new form of antitrust liability.'" Supplemental Memorandum Regarding Pertinent New Authority in Support of Defendants' Motions to Dismiss the Complaints at 2, In re Neurontin Antitrust Litig., No. 02-1390 (D.N.J. Mar. 23, 2009) ("Defendants' Supplemental Brief") (citing Linkline, 129 S.Ct. at 1123).
Warner-Lambert's arguments are not, however, supported by the bulk of prevailing case law on this issue. When determining antitrust liability based on a collection of factual allegations, "courts must look to the monopolist's conduct taken as a whole rather than considering each aspect in isolation." LePage's Inc. v. 3M, 324 F.3d 141, 162 (3d Cir. 2003) (citing Continental Ore, 370 U.S. at 699 ("In cases such as this, plaintiffs should be given the full benefit of their proof without tightly compartmentalizing the various factual components and wiping the slate clean after scrutiny of each. ... The character and effect of a conspiracy are not to be judged by dismembering it and viewing its separate parts, but only by looking at it as a whole."); see also City of Anaheim v. S. Cal. Edison Co., 955 F.2d 1373, 1376 (9th Cir. 1992) ("[I]t would not be proper to focus on specific individual acts of an accused monopolist while refusing to consider their overall combined effect. ... We are dealing with what has been called the 'synergistic effect' of the mixture of the elements."). The distinction is between analyzing individual acts or categories of anticompetitive conduct as contrasted with individual theories of liability derived from those acts. Here, Plaintiffs' legal theory itself advances a monopolization scheme claim. If an antitrust plaintiff can allege that a series of actions, when viewed together, were taken in furtherance and as an integral part of a plan to violate the antitrust laws, that series of actions may trigger antitrust liability as an overall scheme.
Courts have routinely upheld the validity of "overall monopolization scheme" claims in the patent context, even in the absence of allegations that any one of the scheme's predicate actions was independently violative of antitrust laws. As the court noted in Teva Pharmaceuticals, for example,"[p]laintiffs are entitled to claim that individual acts are antitrust violations, as well as claiming that those acts as a group have an anticompetitive effect even if the acts taken separately do not." 432 F. Supp. 2d at 428.*fn38
Indeed, this Court has previously allowed direct purchaser plaintiffs to pursue overall monopolization claims in a very similar context. In Remeron, the direct purchaser plaintiffs alleged that Organon undertook an overarching scheme to delay generic competition, and that the actions taken to further that scheme must be considered in their entirety. Remeron, 335 F. Supp. 2d at 528. Organon moved to dismiss the overall scheme claim, arguing that "because none of its actions individually was illegal, taken together they cannot constitute an 'overall scheme' to hinder competition," and citing to the same passages in Intergraph now relied upon by Warner-Lambert. Id.
This Court rejected those arguments. As noted in Remeron, "[t]he Intergraph court ... held that a group of factual allegations may be viewed in their totality, even while pieces of legal theory may not be added up and taken as a whole." Id. (emphasis in original). The Direct Purchaser Plaintiffs here are asserting one theory of liability - that Warner-Lambert has violated Section 2 of the Sherman Act by engaging in an overall scheme to monopolize the market for gabapentin anhydrous. This theory is supported by a group of factual allegations, concerning several categories of allegedly anticompetitive conduct. In evaluating the sufficiency of Plaintiffs' pleadings in support of this theory of antitrust liability, "the relevant inquiry is the anticompetitive effect of the defendant's exclusionary practices considered together," and this Court "must look to the monopolist's conduct taken as a whole rather than considering each aspect in isolation." Id. (internal citations omitted).
The Court is not persuaded by Warner-Lambert's reliance on Linkline as a basis to set aside established law in "scheme" cases. The Linkline Court did not address the same issues facing this court, nor did that decision examine the precedents upon which Plaintiffs now rely. Linkline deals only with the viability of a prize squeeze claim in a particular factual situation and in a particular legal context.*fn39 The Court's rejection of a scheme claim in Linkline was mandated by the specifically applicable holdings in Trinko and Brooke Group. The Linkline Court did not discuss the sufficiency of other monopolization scheme claims, nor does anything in the Linkline decision indicate an intention on the part of the Court to overrule long-established principles concerning the viability of claims alleging an overall scheme to unlawfully maintain a patent monopoly by excluding generic competition.*fn40
Reviewing the allegations of anticompetitive conduct in their totality, it is clear that the Direct Purchaser Plaintiffs have adequately pled that Warner-Lambert engaged in a comprehensive multifaceted scheme to monopolize the market for gabapentin anhydrous; that the scheme was designed to obtain more market exclusivity for Neurontin than the patent laws allow; and that, as a result, Plaintiffs and other Neurontin purchasers were forced to pay higher prices for the drug. The Court need not determine whether the underlying elements of Plaintiffs' alleged scheme are violations of the antitrust laws in their own right. As the Supreme Court stated in the context of evaluating a Section 2 claim:
It is not the form of the combination or the particular means used but the result to be achieved that the statute condemns. It is not of importance whether the means used to accomplish the unlawful objective are in themselves lawful or unlawful. Acts done to give effect to the conspiracy may be in themselves wholly innocent acts. Yet, if they are part of the sum of the acts which are relied upon to effectuate the conspiracy which the statute forbids, they come within its prohibition.
American Tobacco Co. v. United States, 328 U.S. 781, 809 (1946). Accordingly, the Court finds that the Direct Purchaser Plaintiffs have adequately stated a claim for monopolization and attempted monopolization on the basis of allegations that Warner-Lambert has engaged in an overall scheme to monopolize the market for gabapentin anhydrous.
D. Noerr-Pennington Immunity And The Proper Scope Of The "Overall Scheme" Claim
Warner-Lambert also argues that certain of the anticompetitive acts alleged by Plaintiffs are immune from antitrust liability under the Noerr-Pennington doctrine. Such arguments require further consideration as conduct protected by Noerr-Pennington immunity cannot be properly included within the scope of the monopolization scheme alleged. United Mine Workers v. Pennington, 381 U.S. 657, 670 (1965) (holding that conduct that is protected from antitrust liability "is not illegal, either standing alone or as part of a broader scheme itself violative of the Sherman Act.") ("Pennington"). Warner-Lambert asserts that its conduct in prosecuting the '482 Patent and its efforts to enforce the '476, '479, and '482 Patents against generic manufacturers through infringement actions are immune from antitrust liability such that all allegations based upon these activities must be dismissed.*fn41
a. The Noerr-Pennington Doctrine And Its Exceptions
The Noerr-Pennington doctrine protects activities by parties to influence government policy or legislation from antitrust claims. See Noerr,365 U.S. 127; Pennington, 381 U.S. 657. The doctrine nominally began as a judicially-created limitation on the scope of the Sherman Act with respect to activities by parties to petition the government to take a certain course of action beneficial to them and harmful to their competitors. It has since been extended to protect those who petition for other forms of governmental action. See, e.g., Cal. Motor Transp. Co. v. Trucking Unlimited, 404 U.S. 508 (1972) (administrative and judicial proceedings); City of Columbia v. Omni Outdoor Adver., Inc., 499 U.S. 365 (1991) (municipal ordinances) ("Omni"). The doctrine has also been expanded to include litigation to protect rights such as patents. See Professional Real Estate Investors v. Columbia Pictures Indus., Inc., 508 U.S. 49, 60 (1993) ("PRE").
The Noerr-Pennington doctrine is not, however, without limit. The Noerr Court acknowledged that activity "ostensibly directed toward influencing governmental action" would not be immune from antitrust liability if it constituted "a mere sham to cover what is actually nothing more than an attempt to interfere directly with the business relationships of a competitor." Noerr, 365 U.S. at 144. Courts have held that activities in which the government entity merely plays a ministerial role, rather than making an independent determination, should not be afforded Noerr-Pennington immunity. See Buspirone, 185 F. Supp. 2d at 369-73; Organon, 293 F. Supp. 2d at 458-59. Litigation will not be protected when a court determines that it is "sham" litigation, i.e., instituted for the sole purpose of precluding competition. PRE, 508 U.S. at 60-61 (quoting Noerr, 365 U.S. at 144). And the "[f]raudulent procurement of a patent or the enforcement of a patent obtained by fraud may provide the basis for Sherman Act Section 2 liability if the other elements of a Sherman Act claim are present." Remeron, 335 F. Supp. 2d at 528 (citing Walker Process Equip., Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172, 177 (1965)).*fn42
b. Patent Prosecution Misconduct
Plaintiffs allege that "[t]he '482 Patent was the end result of a long-running plan to delay the issuance of a patent claiming a low lactam formulation of gabapentin anhydrous until such time as that patent could be used to obtain a 30-month stay that would exclude generic competition beyond the stays already available through the '476 and '479 Patents." DPC Complaint ¶ 9. Rather than aggressively prosecuting the patent, "Defendant took great pains to prolong the continued prosecution of the 'low lactam' patent application, so that the patent issued at a time when the 30-month stay in connection with patent litigation could be used to further delay generic competition." Id. ¶ 11. Plaintiffs claim that Warner-Lambert purposefully withdrew the approved application for this patent shortly before it was scheduled to issue because issuing the patent in 1995 "would not have provided any additional protection than was already possible through Defendant's misuse of the '476 and '479 patents." DPNC Complaint ¶ 54. Plaintiffs further argue that Warner-Lambert's strategic manipulation of the patent approval process was an integral part of Warner-Lambert's overarching monopolization scheme, "permitting Defendant to artificially prolong the period during which it could bring patent infringement litigation and thereby take advantage of the Hatch-Waxman 30-month stay." Plaintiffs' Opposition Brief at 64.
Warner-Lambert counters that its prosecution of the '482 Patent is immune from antitrust liability under the Noerr-Pennington doctrine because its "prosecution at the PTO to obtain the patent constituted classic petitioning of the government that is immune under Noerr." Defendants' Opening Brief at 25. Defendants claim that other than sham litigation, only the commission of fraud within the meaning of Walker Process Equipment, Inc. v. Food Machinery and Chemical Corp. "is sufficient to strip a patentee of its immunity from the 'antitrust laws.'" Id. at 26. Accordingly, Warner-Lambert urges that any claims based on allegations of misconduct during the prosecution of the '482 Patent must be dismissed.
Under the Walker Process doctrine, the "[f]raudulent procurement of a patent or the enforcement of a patent obtained by fraud," although an act or result of government petitioning, may provide the basis for antitrust liability. Remeron, 335 F. Supp. 2d at 528. To establish a Walker Process claim of fraud, an antitrust plaintiff must show: "(1) [a] false representation or deliberate omission of a fact material to patentability (2) made with the intent to deceive the patent examiner (3) on which the examiner justifiably relied in granting the patent, and (4) but for which misrepresentation or deliberate omission the patent would not have been granted." Id. (quoting C.R. Bard, 157 F.3d at 1364).
Warner-Lambert argues that, "[s]imply put, the delay plaintiffs allege was not fraudulent, and the antitrust laws do not 'reach ... monopolies carried on under a nonfraudulently procured patent." Defendants' Opening Brief at 26 (citing Nobelpharma AB v. Implant Innovations, Inc., 141 F.3d 1059, 1069 (Fed. Cir. 1998) ("Nobelpharma")). Defendants emphasize that courts have frequently drawn a distinction between "patents procured by 'deliberate fraud' and those rendered invalid or unenforceable for other reasons." Nobelpharma, 141 F.3d at 1069 (internal citations omitted). Only the former, they argue, are subject to antitrust liability. Plaintiffs' ability to pursue antitrust claims would, therefore, not reach "monopolies practiced under patents that for one reason or another may turn out to be voidable under one or more of the numerous technicalities attending the issuance of a patent." Id. Although Plaintiffs here may have alleged inequitable conduct before the Patent Office, their allegations of delay do not establish Walker Process fraud and thus must be dismissed.
However, Plaintiffs here have not pled a classic Walker Process claim, and they do not claim that the intentionally delayed prosecution of the '482 Patent renders the patent itself invalid. Rather, Plaintiffs challenge Warner-Lambert's strategic manipulation of the patent approval process with the alleged goal of restraining competition. They allege that Warner-Lambert fraudulently delayed the issuance of the patent by deliberately making a "mistake" in its disclosure statements which then achieved delay when Warner-Lambert sought to "correct" its filings. The Noerr-Pennington doctrine does not, Plaintiffs argue, "provide a safe harbor" for such conduct. Plaintiffs' Opposition Brief at 64.*fn43
The Court agrees. Rather than implicating the Walker Process exception to NoerrPennington immunity, their allegations can be viewed as the equivalent of a more generalized "sham" or "sham petitioning" exception. The Noerr Court did not immunize activities which are "ostensibly directed toward influencing governmental action" but which are, in fact, shown to be "a mere sham to cover what is actually nothing more than an attempt to interfere directly with the business relationships of a competitor." Noerr, 365 U.S. at 144. Sham petitioning "encompasses situations in which persons use the governmental process - as opposed to the outcome of that process - as an anticompetitive weapon. A classic example is the filing of frivolous objections to the license application of a competitor, with no expectation of achieving denial of the license but simply in order to impose expense and delay." Omni, 499 U.S. at 380 (citing Cal. Motor Transp., 404 U.S. 508) (emphasis in original). Under this exception to Noerr-Pennington immunity, proof of "a pattern of baseless, repetitive claims" may lead "the factfinder to conclude that the administrative and judicial processes have been abused. ... actions of that kind cannot acquire immunity by seeking refuge under the umbrella of 'political expression.'" Cal. Motor Transp., 404 U.S. at 513.
While not expressly claiming this "sham petitioning" exception, Plaintiffs' Complaints contain factual allegations which, if proven, are sufficient to warrant an exception to NoerrPennington immunity under this theory. Plaintiffs have clearly alleged that Warner-Lambert manipulated the prosecution of the '482 Patent, not to promptly obtain government action in its favor, but rather to delay its issuance and thereby forestall generic competition for Neurontin by obtaining 30-month stays barring generic products from the market. Specifically, Plaintiffs have pled that Warner-Lambert, acting with the specific intent to monopolize or maintain its monopoly in the gabapentin anhydrous market, withheld prior art, filed unnecessary continuation applications, and abandoned an approved patent application in an attempt to obtain successive, rather than concurrent, 30-month stays. They have further alleged that the delays resulting from this sham petitioning kept prices for the drug higher than they would have been in a competitive marketplace. These actions were, moreover, allegedly an integral part of Warner-Lambert's overall monopolization scheme. If such allegations are proven, Warner-Lambert's patent prosecution gamesmanship could reasonably be considered "nothing more than an attempt to interfere directly with the business" of Warner-Lambert's generic competitors. The Court does not declare such conduct immune as a matter of law at this stage of the litigation.
Courts have already held that abuse of the patent prosecution process and inequitable conduct before the Patent Office similar to what is alleged here may form the basis for a viable antitrust claim. In DiscoVision Associates v. Disc Manufacturing, Inc., the court denied a motion to dismiss Disc Manufacturing's monopolization claim based on, among other things, allegations that DiscoVision "committed fraud and misrepresentations in prosecuting its patents" and "committed these acts and filed continuation applications with the specific intent to monopolize or maintain its monopoly" in the relevant markets. DiscoVision Assoc., 1997 WL 309499, at *8. Disc Manufacturing had also alleged that DiscoVision had "employ[ed] improper delaying tactics in the PTO," and had "purposefully withheld material prior art during the prosecution of applications that led to" some of the patents at issue in the lawsuit. Id. at *3. The court concluded that "[t]hese allegations, if true, are sufficient to support the inference that DiscoVision's continuation applications had an anticompetitive effect beyond the grant of the patent ... [and] may form a basis for antitrust liability." Id. at *8. Plaintiffs here have made comparable allegations concerning Warner-Lambert's actions in prosecuting the '482 Patent.
Similarly, in denying a motion to dismiss antitrust claims based on the "late listing" of patents in the Orange Book, this Court held that:
Within the maze of Hatch-Waxman, if a patent-holder's actions unlawfully maintain otherwise lawful monopoly power or use a lawful patent to manipulate the ANDA process, such actions could lead to anticompetitive effects in the relevant market. ... At this stage in the instant action, it cannot be said to a legal certainty that no relief could be granted under Section 2.
Remeron, 335 F. Supp. 2d at 532.
The same principles apply to the conduct alleged in this proceeding. The Hatch-Waxman regulatory scheme presents unique opportunities for gamesmanship by offering a "nonrefundable" 30-month stay. It remains to be seen whether the evidence will bear out the claims that Warner-Lambert manipulated the process and timing of patent prosecutions in order to expand the otherwise lawful monopoly granted to it by a patent or a series of patents. Fraudulently delaying the issuance of a patent could lead to anticompetitive effects in the relevant market if such delays were intended to obtain control over or exclude competitors from that market via Hatch-Waxman's 30-month stay provisions. As Plaintiffs argue, granting immunity to such conduct would run counter to the public policies underlying the NoerrPennington doctrine. Abuse of the Patent Office's administrative and regulatory process itself is not entitled to immunity.
In sum, the Direct Purchaser Plaintiffs have adequately alleged facts which, if proven, will show that Warner-Lambert's prosecution of the '482 Patent was conducted in a manner that was "ostensibly directed toward influencing governmental action," but was really meant "to interfere directly with the business relationships of a competitor." Noerr, 365 U.S. at 144. The conduct alleged may form the basis for antitrust liability outside of the Walker Process framework if Plaintiffs can establish the remaining requirements under Section 2. Plaintiffs' allegations that Warner-Lambert unlawfully manipulated the patent approval process for the '482 Patent will not, therefore, be dismissed as immune and can properly be considered within the scope of Warner-Lambert's alleged overall scheme to monopolize the gabapentin anhydrous market.*fn44
c. Sham Infringement Actions
Plaintiffs allege that Warner-Lambert "responded to the attempts of generic manufacturers to obtain approval of generic equivalents with an aggressive policy of filing infringement cases to enforce the '476, '479 and '482 patents." DPNC Complaint ¶ 63. These lawsuits were not, Plaintiffs claim, legitimate efforts to protect Warner-Lambert's patent rights. Rather, "[e]ach of these patent infringement lawsuits was objectively baseless and intended solely to illegally extend [Warner-Lambert's] monopoly by delaying the entrance of generic manufacturers into the gabapentin anhydrous market." Id. Warner-Lambert asserts that any antitrust claims based on its patent infringement actions fail, because the underlying lawsuits are entitled to immunity from antitrust liability under Noerr-Pennington.
Warner-Lambert correctly argues that litigation to enforce its rights under its gabapentin patents is presumptively immune from antitrust scrutiny under the Noerr-Pennington doctrine. However, Warner-Lambert is not entitled to such immunity if Plaintiffs can establish that the '476, '479, and '482 infringement actions were "sham litigation." The Supreme Court has established the following test for sham litigation:
First, the lawsuit must be objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits. If an objective litigant could conclude that the suit is reasonably calculated to elicit a favorable outcome, the suit is immunized under Noerr, and an antitrust claim premised on the sham exception must fail. Only if challenged litigation is objectively meritless may a court examine the litigant's subjective motivation. Under this second part of our definition of sham, the court should focus on whether the baseless lawsuit conceals "an attempt to interfere directly with the business relationships of a competitor."
PRE, 508 U.S. at 60-61 (quoting Noerr, 365 U.S. at 144). The outcome of this analysis is determined, in large part, by a court's finding that the antitrust defendant had probable cause to initiate the litigation being challenged as sham.*fn45
Warner-Lambert argues that this issue is ripe for decision by this Court as a matter of law at this relatively early stage of the antitrust litigation, emphasizing that PRE holds that where "there is no dispute over the predicate facts of the underlying legal proceeding, a court may decide probable cause as a matter of law." Id. at 63. Warner-Lambert sets forth a series of earlier rulings that it argues clearly establish that its infringement claims were not objectively unreasonable, thereby also establishing the existence of probable cause and precluding a determination that such claims were objectively baseless.*fn46
Plaintiffs, however, contend that they have adequately alleged that the lawsuits concerning each of the three patents at issue were objectively baseless and that no reasonable litigant could have expected success. Specifically, Plaintiffs assert that Defendants knew or recklessly disregarded the fact that the '476 Patent did not cover the drug that generic manufacturers sought to manufacture and market, yet still initiated infringement actions. With respect to the '479 Patent actions, Plaintiffs claim that Warner-Lambert brought suit against the generic manufacturers without evidence of knowledge and intent to induce infringement, while knowing that none of the generic applicants sought approval to market generic gabapentin to treat neurodegenerative diseases. Finally, Plaintiffs argue that they have sufficiently alleged that "no reasonable litigant would believe that the ['482 Patent's claims] could ultimately be upheld as valid, definite, and/or infringed," "[b]ecause of the inability to measure chloride ions from a mineral acid at the low levels specified by the '482 Patent, or to distinguish the level of chloride ions from a mineral acid in the claim from the prior art." Plaintiffs' Opposition Brief at 56.
Plaintiffs also argue that none of the court opinions identified by Warner-Lambert compel dismissal of their claims. Although "the Court may take judicial notice of the opinions filed in the underlying actions ... the scope of that notice is subject to important limitations. The Court may take judicial notice only of the 'existence of the opinion, which is not subject to reasonable dispute over its authenticity.'" Wellbutrin, 2006 WL 616292, at *6 (quoting S. Cross Overseas Agencies, Inc. v. Wah Kwong Shipping Group Ltd., 181 F.3d 410, 426 (3d Cir. 1999)). The Court is not, however, permitted to "make factual findings in this case based on the facts recited in the opinions of other courts." Id.
Surviving summary judgment does not, alone, establish that a lawsuit is not sham for the purposes of an antitrust claim. Judge Lifland, for example, was presented with this exact argument in one of Warner-Lambert's early suits against Purepac. Rather than relying on a previous summary judgment opinion, he determined that a "summary judgment denial, in and of itself, cannot deem litigation objectively reasonable without specific examination of the basis for denial of summary judgment." December 22 Opinion, 2000 WL 34213890, at *5. He further concluded that the denial of summary judgment in one proceeding "does not necessarily relate to the asserted basis for antitrust relief" in another, suggesting that courts must consider whether claims of sham litigation and overall antitrust violations are premised on a broader range of facts and issues. Id.*fn47
Furthermore, when the predicate facts of an allegedly sham lawsuit are disputed, sham litigation claims should not be decided by the court as a matter of law. In re Relafen Antitrust Litig., 346 F. Supp. 2d 349, 361 (D. Mass. 2004) (finding that "'the facts tending to establish the existence or want of existence of probable cause' were disputed, rendering the question inappropriate for decision as matter of law," despite summary judgment decisions in the underlying patent proceedings) (quoting Nelson v. Miller, 227 Kan. 271, 277 (1980)). At this stage of the litigation, the Court's probable cause analysis is based exclusively on the allegations in Plaintiffs' Complaints. Jarrow Formulas, Inc. v. Int'l Nutrition Co., 175 F. Supp. 2d 296, 310-11 (D. Conn. 2001) ("Here, all that is required is that the complaint allege facts, which, if proven, show that the defendant is not entitled to Noerr-Pennington immunity under the sham litigation exception."); Skinder-Strauss Assocs. v. Mass. Continuing Legal Educ., Inc., 870 F. Supp. 8, 10 (D. Mass. 1994) ("Because [the defendant's] counterclaims allege that the lawsuit filed by [the plaintiff] is objectively baseless and conceals an attempt to interfere directly with the business relationships of a competitor, the counterclaims adequately state a claim and should not be dismissed under Fed. R. Civ. P. 12(b)(6).").*fn48
Courts have rejected claims of Noerr-Pennington immunity made through motions to dismiss in situations similar to that now before this Court. In Hoffman-LaRoche, Inc. v. Genpharm, Inc., for example, the court determined that:
The resolution of the question whether plaintiffs' suit is objectively baseless as to Genpharm involves the determination of whether plaintiffs undertook a reasonable investigation before filing suit, whether plaintiffs knew or should have known that Genpharm had not infringed the Syntex process patents, and whether a reasonable litigant could have realistically expected success on the merits at the time the suit was filed. Reasonableness is a question of fact, and the Court cannot make such factual determinations on a factual controversy roiled by a motion to dismiss.
50 F. Supp. 2d 367, 380 (D.N.J. 1999).
Plaintiffs have raised similar factual questions about whether Warner-Lambert examined or tested the proposed generic products before initiating litigation, and whether and when Warner-Lambert knew that certain generic products were manufactured outside of the United States and thus not subject to patent infringement liability. This Court cannot now look to the basis for lines included in other courts' rulings on matters such as sanctions and attorneys' fees to ascertain what analysis was done on the above-enumerated factors; what each court knew or did not know about the full panoply of the litigation; nor what claims were asserted in those cases about the objective reasonableness, or lack thereof, of the infringement actions brought by Warner-Lambert. As a result, the Court cannot make a determination about the existence or want of probable cause for Warner-Lambert's infringement actions upon the pending motions to dismiss but will rather reserve judgment on such issues until motions for summary judgment are made.
Plaintiffs' allegations that Warner-Lambert pursued litigation against generic applicants as an attempt to unlawfully maintain control of the market for gabapentin anhydrous will not, therefore, be dismissed and can properly be considered within the scope of Warner-Lambert's alleged overall scheme to monopolize the gabapentin anhydrous market.*fn49
For the reasons set forth in this Opinion, the Court denies Defendants' Motion to Dismiss the Direct Purchaser Plaintiffs' Claims. An appropriate Order will issue.
Hon. Faith S. Hochberg, U.S.D.J.