United States District Court, D. New Jersey
PETER G. SHERIDAN, District Judge.
This matter comes before the Court on Defendant Sandoz, Inc.'s ("Sandoz" or "Defendant") appeal, pursuant to FED. R. CIV. P. 72(a) and L. CIV. R. 72.1(c), of the January 6, 2014 Order entered by the Hon. Lois H. Goodman, U.S.M.J. granting Plaintiff Merck Sharp & Dohme Corp.'s ("Merck" or "Plaintiff") Motion to Strike Certain Portions of Sandoz's Expert Report and Denying Sandoz's Motion to Amend its Invalidity Contentions (ECF No. 142). The Court decides this matter without oral argument pursuant to FED. R. CIV. P. 78(b). For the reasons set forth herein, Magistrate Judge Goodman's Order of January 6, 2014 is affirmed.
A. Factual Background
In March 2003, Merck obtained FDA approval for EMEND® Oral, a drug used to treat nausea and vomiting in certain chemotherapy patients and whose active ingredient is aprepitant. (Defs.' Br. in Supp. of Appeal ("Def.'s Br.") at 5). In January 2008, Merck obtained FDA approval for an injectable version of the drug called EMEND® I.V., in which the active ingredient is a prodrug of aprepitant called fosaprepitant. ( Id. ).
On January 24, 2012, Sandoz, in accordance with the procedures established in 21 U.S.C. § 355(j), filed an Abbreviated New Drug Application ("ANDA") seeking FDA approval to manufacture, use and sell a generic fosaprepitant I.V. product. ( Id. at 5-6). Sandoz's ANDA contained a Paragraph IV Certification indicating that the proposed generic product would not infringe U.S. Patent No. 5, 691, 336 ("the '336 patent"), the patent covering the fosaprepitant prodrug in EMEND® I.V. ( Id. at 6). Four months later, on April 23, 2012, Sandoz sent a Paragraph IV Notice Letter informing Merck that it had filed an ANDA with the FDA and stating its belief that the '336 patent was invalid for obviousness under 35 U.S.C. § 103. (Pl.'s Mem. in Opp'n to Def.'s Appeal ("Pl.'s Opp'n Mem.") at 4). In its Notice Letter, Sandoz alleged that Merck's '336 patent admitted that a Merck foreign patent application, WO'679, was prior art, and that fosaprepitant was obvious in light of WO'679 and a patent and article by Murdock.
On May 31, 2012, within forty-five days of receiving Sandoz's '336 patent Paragraph IV Notice Letter, Merck commenced this action by filing a two-count Complaint in the United States District Court for the District of New Jersey. In Count One of its Complaint, Merck asserts that "[b]y seeking approval of its ANDA to engage in the commercial manufacture, use, or sale of a drug product claimed in the '336 patent before its expiration including its patent term extension, Sandoz has infringed the '336 patent pursuant to 35 U.S.C. § 271(e)(2)(A)." (Compl. at ¶ 16). In Count Two, Plaintiff asserts that Sandoz's proposed manufacture, use or sale of a generic fosaprepitant I.V. product similarly infringed U.S. Patent No. 5, 716, 942 ("the '942 patent"). The Court conducted an Initial Pretrial Scheduling Conference on October 2, 2012 during which the parties discussed the schedule for the case, including the need to complete proceedings prior to the July 2015 expiration of the FDA-imposed stay of approval. Two days later, on October 4, 2012, the Court issued a Pretrial Scheduling Order.
On October 16, 2012, pursuant to the directive of the Court's October 4, 2012 Pretrial Scheduling Order and in accordance with this Court's Local Patent Rules, Sandoz served Merck with its Preliminary Invalidity Contentions for the '336 patent. According to Sandoz, its Invalidity Contentions "explained that several of Merck's own prior art publications... disclosed aprepitant." (Def.'s Br. at 6). Furthermore, the Invalidity Contentions "explained why making a prodrug version of that drug - e.g., fosaprepitant - was unpatentably obvious." ( Id. ). The Invalidity Contentions identified nine pieces of alleged prior art and stated that they "incorporate[d] by reference" the contentions of Defendant Accord "to the extent those contentions are not inconsistent with the positions taken [by Sandoz]." (Def.'s Preliminary Noninfringement and Invalidity Contentions for the '336 Patent ("Def.'s Invalidity Contentions") at 3). Pursuant to L. Pat. R. 3.3(c), Sandoz also served Merck with a chart identifying four of the alleged prior art documents. (Pl.'s Opp'n Mem. at 6-7).
Prior to Merck serving its Responses to Sandoz's Invalidity Contentions, the parties met and conferred about the scope of those contentions. ( Id. at 7). According to Plaintiff, Merck expressed concerns "that Sandoz had used vague and confusing language and was attempting to improperly incorporate invalidity contentions of co-defendant Accord without specifically disclosing what they were." ( Id. ). Sandoz maintained that its contentions fully complied with the requirements imposed by L. Pat. R. 3.3 because Sandoz had "provided a narrative portion and claim chart that contain[ed] citations and quotes from each reference that Sandoz is relying upon for its obviousness position." (Pl.'s Mot. to Strike at 2, Ex. 5). Sandoz further maintained that"[t]he prior art combinations on which [it] may relay [were] also set forth in that chart and/or narrative, and include[d] every permutation of the art listed for each claim limitation." ( Id. ). In response to Merck's concerns regarding the incorporation by reference of Accord's Invalidity Contentions, Sandoz maintained that "there is nothing improper about Sandoz's incorporation by reference... [as] [Merck] already ha[d] those in writing[.]" ( Id. ). On November 30, 2012, Merck served its L. Pat. R. 3.4A Responses to Sandoz's Invalidity Contentions explaining in detail why Sandoz failed to meet its burden to establish a prima facie case of obviousness. Merck also explained that Sandoz had improperly attempted to incorporate the Invalidity Contentions of Accord without specifically disclosing them as required under L. Pat. R. 3.3.
On January 5, 2013, Sandoz retained Dr. David H. Sherman to serve as an expert in this matter. On April 5, 2013, pursuant to the provisions of a Protective Order issued by Magistrate Judge Goodman, Sandoz identified Dr. Sherman as its expert and requested that he be permitted to receive and review confidential information produced by Merck as part of this litigation. On May 9, 2013, Merck moved to disqualify Dr. Sherman as an expert based on an alleged conflict of interest and "the manner in which he was retained by Sandoz and ultimately disclosed to Merck." (Pl.'s Ltr. of May 9, 2013 at 1). On May 21, 2013, Magistrate Judge Goodman denied Plaintiff's motion. Fact discovery subsequently closed on June 28, 2013.
On August 7, 2013, Sandoz served the expert report of Dr. Sherman (the "Sherman Report"), which included sixteen prior art references that were not previously disclosed in Defendant's October 16, 2012 Invalidity Contentions. According to Defendant, "Dr. Sherman's report included, among others, fifteen references that were either incorporated therein by reference or more recently discovered by Dr. Sherman when drafting his report." (Def.'s Br. at 7). Defendant states that "[f]our of those references were taken directly from the asserted patent, and Merck even cited to them... during patent prosecution." ( Id. ) (emphasis in original). The remaining eleven references at issue were allegedly discovered by Dr. Sherman "in July, shortly before his August report, as part of the undertaking experts are expected to perform in patent litigation." ( Id. ). Dr. Sherman used all fifteen references to respond to arguments raised in Merck's Responses to Sandoz's Invalidity Contentions. ( Id. ).
After Merck notified Sandoz of its objection to the inclusion of these additional prior art references absent a motion to amend, the parties met and conferred. The meet and confer process ultimately failed and Sandoz declined to seek leave to amend at that time. As a result, on September 13, 2013, Merck moved to strike those portions of Dr. Sherman's report which referenced the previously undisclosed prior art. On October 10, 2013, Magistrate Judge Goodman heard oral argument on the motion to strike. At the conclusion of argument, the Court permitted Defendant to seek leave to amend its Invalidity Contentions. ( See Oct. 10, 2013 Hearing Tr. at 42:24-43:23).
On October 17, 2013, pursuant to the Court's instructions, Sandoz filed a motion to amend its Invalidity Contentions to include the fifteen prior art references. In support of its motion, Sandoz argued that "[a]ll three elements required to amend contentions - good cause, timeliness and lack of undue prejudice - exist[ed.]" (Def.'s Mot. to Am. at 1). In regards to the first requirement, Defendant contended that good cause existed to add all fifteen references because: (1) "eleven of the references were only discovered by Sandoz's expert... a few weeks before they were disclosed to Merck in... [the] expert report[, ]" and (2) "Sandoz disclosed its reliance on the remaining four references when it told Merck on the day invalidity contentions were served that it intended to rely on prior art cited in the text of the '336 Patent in suit." ( Id. at 1-2). In regards to the timeliness requirement, Defendant argued that "[a]ll of the references were either incorporated into Sandoz's original contentions... or disclosed as part of Dr. Sherman's expert report within weeks after they were located." ( Id. at 2). According to Sandoz, although it "did not file a motion to amend at the precise time it learned of the references (and instead timely disclosed them in an expert report), Merck was well aware of how Sandoz intended to rely on the references[.]" ( Id. ). In regards to the third requirement, Sandoz argued that Merck had failed to articulate any undue prejudice that would result from the proposed amendments. According to Sandoz, the proposed amendments did not require any new discovery or alteration of the case schedule and were fully consistent with Sandoz's initially served contentions. Moreover, in Sandoz's view, "there ha[d] been ample time - two months - for Merck to make any adjustment necessary in any rebuttal expert reports it intend[ed] to serve." ( Id. ). Sandoz further explained that "Merck's motion to strike portions of Dr. Sherman's report still require[d] proof of prejudice, which[, it contended, ] Merck ha[d] not established." ( Id. at 7). As such, Sandoz posited that even if "Sandoz's motion [to amend] [was] denied, that d[id] not mean that the corresponding portions of Dr. Sherman's report should automatically be stricken." ( Id. ).
Merck filed its Opposition to Defendant's motion on October 24, 2013. In its opposition, Merck argued that Sandoz's motion to amend should be denied for several reasons. Merck first argued that Sandoz had no reason to delay raising the four uncharted pieces of art allegedly mentioned in the '336 patent as a basis for its obviousness defense because "Sandoz ha[d] been aware of the '336 patent since at least January 2009, when it asserted that Merck's patent claiming aprepitant was invalid in view of the '336 patent." (Pl.'s Opp'n to Def.'s Mot. to Amend ("Pl.'s Opp'n to Mot. to Amend") at 9). According to Merck, Sandoz's assertion of ...