The opinion of the court was delivered by: Hon. William J. Martini
I. FACTS AND PROCEDURAL POSTURE
This patent infringement action is brought by Plaintiff Graceway, LLC (Graceway) founded in 2006, and Plaintiff 3M Innovative Products Co. ("3M IPC") against several defendants, all of whom have since been dismissed, except for Defendant Nycomed.
Three distinct patents are involved in this lawsuit. First, the '338 Patent (Patent No. 4,698,338) covers imiquimod, the active pharmacological ingredient in Aldara, a product originally approved by the Food and Drug Administration ("FDA") in 1997. Aldara is Graceway's core product, a mature product which it acquired in 2006 from 3M IPC. The '338 Patent expired on August 25, 2009, with a period of exclusivity which ran to February 25, 2010.
Second, Graceway also holds the '944 Patent (Patent No. 5,238,944) or a license thereunder, a formulation of imiquimod with isostearic acid. This patent was approved on August 24, 1993, and will expire on August 24, 2010, with a period of exclusivity running to February 24, 2011. The '944 Patent covers Aldara.
Third, Plaintiff 3M IPC is the owner of the '672 Patent (Patent No. 7,655,672) filed December 17, 2004, with Graceway (originally) holding an exclusive license (although its exclusivity is now disputed). This patent was issued on February 2, 2010. It protects a formulation of imiquimod and a refined grade of oleic acid, i.e., Super Refined Oleic Acid ("SROA"). Graceway markets no product in the United States covered by the '672 Patent.
On January 10, 2007, Nycomed informed Graceway by letter that it had filed an Abbreviated New Drug Application ("ANDA") to produce a bioequivalent generic version of Aldara. Graceway understood this to mean that Nycomed would manufacture, use, offer for sale, etc., its product after Nycomed received FDA approval for its ANDA and after the '338 Patent on imiquimod had expired on February 25, 2010. On February 25, 2010, the FDA approved Defendant Nycomed's ANDA application seeking to produce a generic of Aldara, albeit one with a different formulation from Aldara. Nycomed's bioequivalent of Aldara, i.e., "Nycomed's Product," has been determined by the FDA to be a bioequivalent of Aldara, with both products functioning as creams for application to dermal or mucosal surfaces for delivery of imiquimod. (Plaintiffs' opening brief stated that approval occurred on February 23, 2010 at 8:59 a.m. -- but the docket item cited says February 25, 2010 at 8:59 a.m.) Once approved, Nycomed immediately began advertising, selling, and distributing its product domestically. It is not disputed that Nycomed's Product does not infringe either the '338 Patent (which is now expired) or the '944 Patent (covering a formulation using isostearic acid). Nycomed's Product, like the formulation described in the '672 Patent, makes use of a formulation of imiquimod and oleic acid (or super-refined oleic acid).
In a Complaint filed on February 23, 2010, Plaintiffs allege that Nycomed's Product infringes the '672 Patent and seek damages and (preliminary and permanent) injunctive relief for the injury Graceway has and will sustain in consequence of lost profits and sales of Aldara. Before the Court is Defendant Nycomed's Rule 11 Motion seeking dismissal of the Plaintiffs' infringement suit because, allegedly, Graceway failed to do a pre-filing investigation to determine if Nycomed's product infringed Graceway's '672 Patent. For the reasons elaborated below, the Court will DENY Nycomed's motion.
II. POSITIONS OF THE PARTIES
As explained, Nycomed alleges that Graceway failed to conduct a pre-filing investigation. In other words, the '672 Patent applies to creams that are "at least about 80% oleic acid by weight as a fatty acid," a specific oleic acid component with specific peroxide and impurity values under certain testing conditions. Nycomed claims that Graceway had no good faith basis to believe that Nycomed's product infringed the '672 Patent because Graceway failed to "investigate, analyze, test, obtain or even request a sample of Nycomed's product prior to before filing suit" on February 23, 2010. Nycomed argues that Graceway did not (and perhaps even now does not) know the source of Nycomed's oleic acid and has not tested Nycomed's product in regard to whether it actually infringes the claims of the '672 Patent. Nycomed further explains that Plaintiff Graceway failed to request a sample of Nycomed's product either after January 10, 2007 (when the ANDA was filed) or after February 2, 2010 (when Graceway's '672 Patent was issued), but nevertheless brought suit on February 23, 2010.
Plaintiffs respond that after filing suit, but before the parties incurred significant litigation costs, Graceway requested information about Nycomed's product, but Nycomed refused to turn over basic information about its formulation on the grounds that it is a trade secret. Graceway argues that the likelihood that Nycomed would have turned over actual samples for testing prior to its filing suit was "zero." Graceway argues that although it did not test Nycomed's actual product, its counsel "performed [an] independent claim construction analysis" before filing the instant litigation. Graceway argued in the Nordsiek Declaration that it had a basis for filing this action. At the time of filing, Graceway understood the properties of oleic acid as such that any oleic acid used had to be refined to at least the extent that it would meet the requirement of the '672 Patent or else it would not be stable in imiquimod cream. In fact, Graceway argues that it engaged in its testing "long" before it filed this suit.*fn1
In Nycomed's reply, it argues that the Nordsiek Declaration is insufficient as a matter of law to meet the pre-suit filing requirement because the Declaration was created five days after suit was filed and the declarant is not an attorney. "Rule 11, we think, must be interpreted to require the law firm to, at a bare minimum, apply the claims of each and every patent that is being brought into the lawsuit to an accused device .." View Eng., Inc. v. Robotic Vision Sys., Inc., 208 F.3d 981, 986 (Fed. Cir. 2000). Finally, Nycomed argues that it would have turned over a sample had it been asked and that Graceway's failure to ask and to engage in reverse engineering based is fatal to Graceway's position.
After the Reply was filed, the parties filed a number of letter responses. Graceway asked to file a proposed sur-reply and an affidavit. The affidavit of Barbara Moore states that the infringement analysis described in Graceway's opposition brief was conducted before suit was filed and it was merely memorialized in the Nordsiek Declaration, not that the Nordsiek Declaration was the actual analysis. The Nordsiek Declaration was "not offered as [direct] evidence of [a pre-filing] investigation, but rather to explain how Graceway knew Nycomed infringed at the time it filed suit." In the proposed sur-reply brief, Graceway argues that "Graceway and its counsel did conduct a rigorous investigation prior to filing suit." But the affidavit offered in support does not specify that counsel conducted an investigation. It only states that an infringement analysis was conducted "before suit was filed." As to Graceway's requesting a sample of Nycomed's product, Graceway argues that Nycomed's position, that Nycomed would have provided a sample if it had it been asked, was self-serving and undermined by the fact that since February 23, 2010 (when suit was filed), Graceway has asked Nycomed for samples, and has been to date refused.*fn2 In a responsive letter, Nycomed argued that the Graceway's letter is unsupported attorney rhetoric, which fails to specify what pre-filing infringement analysis was done by an attorney using actual product or reverse engineered product, and further argues that the Graceway's letter amounts to waiver of attorney-client privilege and work-product protection in regard to pre-filing investigations. Graceway argues that there was no waiver because the contents of ...