United States District Court, D. New Jersey
June 22, 2015
OTSUKA PHARMACEUTICAL CO., LTD., Plaintiff,
TORRENT PHARMACEUTICALS LIMITED, INC., TORRENT PHARMA INC., and HETERO LABS LIMITED, Defendants
[Copyrighted Material Omitted]
For Plaintiff: Melissa A. Chuderewicz, Esq., Christopher P. Soper, Esq., Brian R. Zurich, Esq., PEPPER HAMILTON LLP, Princeton, New Jersey; Paul W. Browning, Esq., James B. Monroe, Esq., Denise Main, Esq., Jeffrey A. Freeman , Esq., FINNEGAN, HENDERSON, FARABOW, GARRETT & DUNNER, LLP, Washington, D.C.
For Defendants: James E. Cecchi, Esq., Michael Cross, Esq., CARELLA, BYRNE, CECCHI, OLSTEIN, BRODY & AGNELLO, PC, Roseland, New Jersey; Claire J. Evans, Esq., James. H. Wallace, Esq., A. Neal Seth, Esq., Lawrence M. Sung, Esq., Matthew J. Dowd, Esq., WILEY REIN LLP, Washington, D.C.
HONORABLE JEROME B. SIMANDLE, Chief United States District Judge.
This patent infringement action, one of twenty-five related actions under the Hatch-Waxman Act, 35 U.S.C. § § 271, 281, generally concerns Plaintiff Otsuka Pharmaceutical Co, Ltd.'s (hereinafter, " Otsuka" ) position that Torrent Pharmaceuticals Limited, Inc.'s, Torrent Pharma Inc.'s, and Hetero Labs Limited's (hereinafter, " Torrent" ) proposed generic aripiprazole product infringes one or more claims of two of the various patents covering Otsuka's Abilify® aripiprazole product, U.S. Patent Nos. 8,017,615 (" the '615 patent" ) and 8,580,796 (" the '796 patent" ).
Otsuka now moves to dismiss Torrent's Fifth and Sixth Counterclaims for " Unlawful Monopolization" and for " Patent Misuse" (hereinafter, the " Counterclaims" ) pursuant to Federal Rule of Civil Procedure 12(b)(6) and, in the alternative, to bifurcate and stay Torrent's Counterclaims pending resolution of the primary patent infringement issues pursuant to Federal Rule of Civil Procedure 42(b). [Docket Item 43.]
Otsuka argues, in particular, that Torrent's antitrust Counterclaim must be dismissed, because Torrent has not alleged, nor will Torrent ever suffer, the " anticompetitive injury" required for antitrust standing, and because Torrent's " cursory conclusions" fail to plausibly overcome Otsuka's Noerr-Pennington immunity. (Otsuka's Reply at 2-5; Otsuka's Br. at 5-11.) Ostuka similarly asserts that Torrent's patent misuse Counterclaim must be dismissed, because its allegation of baseless infringement fails as a matter of law to state a cognizable claim for patent misuse. (See Otsuka's Reply at 5-6; Otsuka's Br. at 11-12.) In the alternative, Otsuka requests that the Court follow the " 'standard practice'" of bifurcating for trial the patent issues raised in this litigation from the antitrust and/or patent misuse issues. (Otsuka's Br. at 13 (citations omitted).)
Torrent, however, submits that its antitrust Counterclaim demonstrates the " real and immediate" risk of injury required for purposes of antitrust standing, because absent " this bad faith litigation," Torrent would have an " unencumbered path to launch its ANDA product." (Torrent's Opp'n at 4-5.) With regard to Otsuka's claim of Noerr-Pennington immunity, Torrent similarly asserts that its antitrust Counterclaim sets forth sufficient factual matter to demonstrate that this litigation constitutes a sham, because Otsuka initiated suit despite Torrent's detailed non-infringement statement and despite the fact that Torrent's abbreviated new drug application (hereinafter, " ANDA" ) is non-infringing on its face. (Id. at 3-7.) Finally, Torrent submits that dismissal of its Counterclaims would, at this early stage of discovery, be inappropriate to the extent undeveloped factual issues remain concerning whether Otsuka's conduct constitutes patent misuse and/or an antitrust violation. (Id. at 8-9.)
The principal issues before the Court are whether the allegations of Torrent's Counterclaims suffice to confer antitrust standing, to overcome Otsuka's Noerr-Pennington immunity, and to state a plausible claim for patent misuse.
For the reasons that follow, Otsuka's motion will be granted in part and denied in part.
A. Factual and Procedural Background
Otsuka, a pharmaceutical company primarily organized and existing under the laws of Japan, holds New Drug Application (hereinafter, " NDA" ) No. 21-436, approved by the Food and Drug Administration (hereinafter, the " FDA" ), for aripiprazole tablets, which Otsuka markets under the trade name Abilify® . (Am. Compl. at ¶ ¶ 1, 17-18, 25-30.)
In connection with Abilify's® listing in the Orange Book, the FDA's book of drug products approved under the Food, Drug, and Cosmetic Act (hereinafter, the " Orange Book" ), 21 U.S.C. § 355(j), Otsuka identifies the '615 patent and the '796 patent, both of which Otsuka owns by virtue of assignment. (Id. at ¶ ¶ 14, 17, 26, 29.) The listing, in particular, discloses Abilify® 's active ingredient as " aripiprazole," the dosage form as a " tablet" or " oral," and the strengths as 2 mg, 5 mg, 10 mg, 15 mg, 20 mg, and 30 mg. (Counterclaim at ¶ 13 (quotation marks omitted).)
In late 2013, Torrent filed ANDA No. 20-1519 with the FDA, seeking approval to market generic 2 mg, 5 mg, 10 mg, 15 mg, 20 mg, and 30 mg aripiprazole tablets in the United States, prior to the expiration of the '615 and the '796 patents. (See Countercl. at ¶ 14.) Torrent's ANDA filing included a " paragraph IV certification" pursuant to 21 U.S.C. § 355(j)(2)(A)(vii)(IV), in which Torrent set forth its assertion that the Abilify® patents would not be infringed by the commercial manufacture, use, or sale of Torrent's generic product. (See id.)
On January 4, 2014, Torrent mailed notice of its ANDA certification to Otsuka, and provided " a detailed statement of the factual and legal bases of Torrent's ANDA certifications for the '615 and '796 patents," i.e., a detailed explanation of the bases for Torrent's position that its generic aripiprazole tablets would " not infringe any valid or enforceable claim of the Orange Book-listed '615 and '796 patents." (Id. at ¶ 15.) In order to substantiate its non-infringement position, Torrent then provided the relevant portions of its ANDA on February 20, 2014. (Id. at ¶ 16.)
Otsuka filed an initial and Amended Complaint in this District, alleging that Torrent's proposed generic product " will, if approved and marketed," infringe at least one claim of the '615 and '796 patents. (Am. Compl. at ¶ ¶ 22-23, 33-34.) On October 22, 2014, Torrent filed an Answer to Otsuka's Amended Complaint and, as a relevant here, asserted Counterclaims for " Unlawful Monopolization in Violation of the Sherman Act: Sham Litigation" and for a " Declaratory Judgment of Unenforceability of the '615 and '796 Patents for Patent Misuse." (Countercl. at ¶ ¶ 34-62.)
Torrent's " Unlawful Monopolization" Counterclaim alleges, in particular, that Otsuka " has the power to control prices and/or exclude competition in, or prevent entry into" the aripiprazole market, and claims that Otsuka has wielded that power
" to monopolize" the market. (Id. at ¶ ¶ 42-45.) Indeed, Torrent alleges that Otsuka " has engaged in an overall predatory scheme to monopolize the [aripiprazole market] through, but not limited to, initiating objectively baseless and sham judicial proceedings designed" to " entrench and enhance [Otsuka's] monopolistic position in the [aripiprazole] market and to stifle and eliminate competition and competitors with no economic, market or competitive benefit." (Id. at ¶ ¶ 45, 47.) Torrent, accordingly, alleges that Otsuka initiated this " sham" and " bad faith" litigation against it not upon a genuine belief that Torrent's ANDA products would infringe the '615 and '796 Patents, but " for an improper purpose, and as a means of directly interfering with and harming Torrent's business and in order to forestall, frustrate and prevent competition by Torrent," in violation of the Sherman and Clayton Acts, 15 U.S.C. § § 2, 15, and 26. (Id. at ¶ ¶ 48-51.) Moreover, as a result of this " exclusionary" and " anticompetitive" conduct, Torrent has purportedly " suffered, and will continue to suffer," significant injury, " including lost profits and business opportunities." (Id. at ¶ ¶ 57-58.)
Torrent's patent misuse Counterclaim largely reiterates the allegations of its antitrust Counterclaim, and specifically alleges that Otsuka filed this action without " any good faith factual basis" to support its infringement positions against Torrent, and " for the purpose of delay[ing] Torrent's entry" into the aripiprazole market by " burden[ing] Torrent with litigation costs and making baseless accusations of infringement." (Id. at ¶ ¶ 60-62.)
The pending motion followed.
III. STANDARD OF REVIEW
Under Federal Rule of Civil Procedure 12(b)(6), the court must generally accept as true the factual allegations of the defendant's counterclaims, and construe all " reasonable inferences" in the light most favorable to the defendant. Revell v. Port Auth. Of N.Y., N.J., 598 F.3d 128, 134 (3d Cir. 2010); see also Fleisher v. Standard Ins. Co., 679 F.3d 116, 120 (3d Cir. 2012) (same). However, " [a] pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action" fails to suffice. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Rather, the factual allegations must be facially sufficient to demonstrate a " plausible" right to relief, by pleading factual content sufficient for the Court " to draw the reasonable inference that the [plaintiff] is liable for the misconduct alleged."
Iqbal, 556 U.S. at 678 (quoting Bell A. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)); see also Umland v. Planco Fin. Servs., 542 F.3d 59, 64 (3d Cir. 2008).
In evaluating whether a counterclaim meets this pleading standard, the Court strips away conclusory statements and reviews instead the " well-pled factual allegations, assume[s] their veracity, and then determine[s] whether" the allegations demonstrate a plausible " entitlement to relief."
Iqbal, 556 U.S. at 678 (internal quotation marks omitted).
As stated above, Otsuka moves to dismiss Torrent's antitrust Counterclaim for
lack of standing and on immunity grounds, and moves to dismiss Torrent's patent misuse Counterclaim for failure to state a plausible claim for relief. The Court will address each issue in turn.
A. Torrent has Alleged Sufficient Facts to Demonstrate Antitrust Standing
Article III constitutional standing, a principle moored in the notion " that the judiciary's power only extends to cases or controversies," constitutes a threshold requirement in all actions in federal court. Ethypharm S.A. France v. Abbott Labs., 707 F.3d 223, 232 (3d Cir. 2013) (citing U.S. Const. art. III, § 2; Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992)). The principles of constitutional standing are, however, " 'augmented'" by prudential considerations aimed at preserving the effective enforcement of the antitrust laws. Id. (quoting City of Pittsburgh v. W. Penn Power Co., 147 F.3d 256, 264 (3d Cir. 1998)). Indeed, the Supreme Court has specifically recognized that " Congress did not intend to allow every person tangentially affected by an antitrust violation to maintain an action to recover threefold damages for the injury to his business or property." Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 535, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983) (citation omitted).
As a result, a party suing under federal antitrust laws, as here, must meet the prudential requirement of " 'antitrust standing.'"  Ethypharm S.A. France, 707 F.3d at 232 (citation omitted). In Associated Gen. Contractors of Cal., Inc., the Supreme Court articulated the considerations relevant to whether a complainant possesses antitrust standing, which the Court of Appeals for the Third Circuit subsequently organized into the following multifactor test:
(1) the causal connection between the antitrust violation and the harm to the plaintiff and the intent by the defendant to cause that harm, with neither factor alone conferring standing; (2) whether the plaintiff's alleged injury is of the type for which the antitrust laws were intended to provide redress; (3) the directness of the injury, which addresses the concerns that liberal application of standing principles might produce speculative claims; (4) the existence of more direct victims of the alleged antitrust violations; and (5) the potential for duplicative recovery or complex apportionment of damages.
Ethypharm S.A. France, 707 F.3d at 232-33 (citing In re Lower Lake Erie Iron Or. Antitrust Litig., 998 F.2d 1144, 1165-66 (3d Cir. 1993)) (hereinafter, the " AGC factors" ). Of these factors, the second, antitrust injury, constitutes the " 'necessary but insufficient condition of antitrust standing.'" Id. (citation omitted). Thus, in the absence of a plausible allegation of antitrust injury, the only factor challenged by Otsuka in this instance, the Court need not address the remaining AGC factors.
Therefore, the Court notes that, in order to plead an antitrust injury, the party
must allege facts showing (1) that it suffered an injury of the type the antitrust laws seek to prevent, e.g., anticompetitive behavior, and (2) that the injury resulted from the adversary's unlawful or anti-competitive acts. See In re Niaspan Antitrust Litig., 42 F.Supp.3d 735, 753 (E.D. Pa. 2014) (quoting In re K-Dur Antitrust Litig., 338 F.Supp.2d 517, 534 (D.N.J. 2004)). The federal antitrust laws, however, foster " 'the protection of competition not competitors.'" Race Tires Am., Inc. v. Hoosier Racing Tire Corp., 614 F.3d 57, 76-77 (3d Cir. 2010); see also Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 488, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977) (citation omitted) (noting that Congress enacted the antitrust laws " for 'the protection of competition, not competitors'" ). As a result, the pleaded facts must show " that 'the challenged action has had an actual adverse effect on competition as a whole in the relevant market,'" rather than just an adverse effect on the particular competitor. Irish v. Ferguson, 970 F.Supp.2d 317, 365 (M.D. Pa. 2013) (citations omitted); see also Eichorn v. AT& T Corp., 248 F.3d 131, 140 (3d Cir. 2001) (noting that an antitrust injury does not lie unless the allegedly anticompetitive conduct " has a wider impact on the [overall] competitive market" ). Moreover the alleged injuries must, as with all types of standing, be both 'real and immediate,' not 'conjectural' or 'hypothetical.'" City of L.A. v. Lyons, 461 U.S. 95, 102, 103 S.Ct. 1660, 75 L.Ed.2d 675 (1983);
see also Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297, 321 (3d Cir. 2007) (" The prospective harm to competition must not ... be speculative." )
In seeking to dismiss Torrent's federal antitrust claim, Otsuka asserts that Torrent cannot be heard to claim that the pendency of this litigation has caused Torrent to suffer any antitrust or anticompetitive injury, because Torrent " voluntarily chose not to surmount the legal and regulatory" hurdles to its market entry until after the April 2015 expiration of the primary compound patent for Abilify, U.S. Patent No. 5,006,528 (hereinafter, the " '528 Patent" ), and because Torrent's allegations of delayed market entry lack the immediacy required for purposes of antitrust standing. (Otsuka's Br. at 5-7; Otsuka's Reply at 2-4.) The Court, however, finds Otsuka's position without merit.
Critically, the hallmark for evaluating the plausibility of an allegation of antitrust injury is, as stated above, that the actions alleged to be anticompetitive when viewed " as a whole" bear consequence for the overall market, rather than only for an individual competitor. TransWeb, LLC v. 3M Innovative Props. Co., No. 10-4413, 2011 WL 2181189, at *18 (D.N.J. June 1, 2011)
Distilled to its essence, Torrent's Counterclaim alleges that Otsuka has initiated meritless infringement actions in order to " stifle and eliminate competition and competitors," to exclude or prevent competitors' entry into the aripiprazole market, and to maintain its exclusive monopoly over the aripiprazole market. (Countercl. at ¶ ¶ 34-58.) The Counterclaim
further alleges that, as result of Otsuka's purportedly " exclusionary, anticompetitive and unlawful activities," Otsuka has been able to maintain its aripiprazole monopoly to the detriment of competition and consumers and has, in particular, hampered Torrent's ability to enter and compete, resulting in " lost profits and business opportunities." (Id. at ¶ ¶ 54, 57-58.)
In these respects, Torrent's Counterclaim plausibly alleges the elements of an antitrust injury, namely, an injury of the type protected by the antitrust laws, and that the injury derived, at least in part, from anti-competitive acts. Indeed, the pursuit of litigation that forestalls entry into the generic market, as alleged here, constitutes " anti-competitive behavior" of the type the antitrust laws seek to prevent. AstraZeneca AB v. Glenmark Generics Ltd., No. 14-665, 2014 WL 5366050, at *1 (D. Del. Oct. 9, 2014); see also Angelico v. Lehigh Valley Hosp., Inc., 184 F.3d 268, 275 n.1 (3d Cir. 1999) (noting that, " protecting a competitor's ability to compete" clearly rests within " the interest of competition" ). Moreover, Torrent has specifically alleged that Otsuka's pursuit of " objectively baseless and sham judicial proceedings" has adversely affected competition in the overall aripiprazole market by encumbering the path of generic entry and effectively extending Otsuka's long-held monopoly. See Rochester Drug Co-op., Inc. v. Braintree Labs., 712 F.Supp.2d 308, 316 (D. Del. 2010) (finding similar allegations sufficient). Therefore, the Court rejects Otsuka's position that Torrent has failed to plead a cognizable antitrust injury.
Nor does the Court find that these alleged injuries constitute conjectural possibilities, rather than the real and immediate injury required for purposes of antitrust standing.
See Broadcom Corp., 501 F.3d at 321. Indeed, even if Torrent " voluntarily" declined to mount any legal challenge to Otsuka's aripiprazole monopoly until after the expiration of the '528 Patent in April 2015, the exclusivity associated with the '528 Patent has since passed, and
therefore interposes no present barrier to Torrent's entry into the aripiprazole market as Otsuka's active competitor. Nor does the status of Torrent's FDA approval render the alleged injury any less imminent, because the FDA's own records reflect that Torrent obtained final FDA approval for its ANDA product on April 28, 2015. See Press Release, FDA, FDA approves first generic Abilify to treat mental illnesses (Apr. 28, 2015), available at, http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm444 862.htm. As a result, the pendency of this litigation constitutes the only encumbrance to Torrent's free ability to enter the aripiprazole market, rendering the alleged injuries both real and immediate.
Moreover, even if Torrent's Counterclaim relies, at least in part, upon some ultimate facts, such as that Otsuka's actions evince a " specific intent to restrain competition," (id. at ¶ 45), Torrent need not " 'plead detailed evidentiary matter in order to survive a motion to dismiss.'"  In re Niaspan Antitrust Litig., 42 F.Supp.3d at 756 (citations omitted). Rather, the inquiry for purposes of the pending motion to dismiss turns upon the plausibility of the allegations, not upon whether Torrent has " alleged sufficient facts to 'compel' the inference" that Otsuka committed the alleged violations. Id. Here, Torrent's allegations, accepted as true, support an inference that Torrent has suffered an antitrust law injury flowing from Otsuka's allegedly anticompetitive conduct. (See generally Countercl.) These allegations therefore suffice at the pleading stage to state a plausible claim for relief, particularly given the fact that the existence of antitrust injury " involves complex questions of fact," often ill-suited for resolution upon a " motion 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) (collecting cases)); see also In re Niaspan Antitrust Litig., 42 F.Supp.3d at 757 n.19 (collecting cases that have declined to resolve the existence of antitrust injury through motions to dismiss).
For all of these reasons, the Court rejects Otsuka's argument that Torrent's antitrust Counterclaim should be dismissed for lack of antitrust standing, and turns to Otsuka's position that Noerr-Pennington immunity bars the Counterclaim.
B. Torrent Alleges Sufficient Facts to Plausibly Overcome Otsuka's Noerr-Pennington Immunity
Under the Noerr-Pennington doctrine, a patent owner's initiation of patent
infringement litigation receives presumptive immunity from attack under the antitrust laws. See generally Eastern R.R. Presidents Conference v. Noerr Motor Freight, 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961); United Mine Workers of Am. v. Pennington, 381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965); see also Rochester Drug Co-op., Inc., 712 F.Supp.2d at 316 (considering Noerr-Pennington immunity in the patent infringement context). Parties who file " sham litigation" are, however, excepted from the benefit of immunity under Noerr-Pennington. Prof'l Real Estate Investors v. Columbia Pictures Indus., Inc., 508 U.S. 49, 60-61, 113 S.Ct. 1920, 123 L.Ed.2d 611 (1993). An allegation of sham litigation consists of two elements: first, " the lawsuit must be objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits." Id. (internal quotations and citations omitted). Second, " the baseless lawsuit [must] conceal an attempt to interfere directly with the business relationships of a competitor," rather than reflect a legitimate effort to obtain judicial review. Id.
In seeking the dismissal of Torrent's antitrust Counterclaim, Otsuka argues that Torrent pleads little more than " bare labels and legal conclusions," by claiming that Otsuka initiated " objectively baseless and sham judicial proceedings," " baselessly and improperly wielded the '615 and '796 Patents," and that the pending litigation qualifies as " both objective and subjectively baseless." (Otsuka's Br at 8-10 (citation omitted).) Those allegations, standing alone, do indeed constitute conclusory allegations of the type routinely found insufficient to overcome Noerr-Pennington immunity under the federal pleading standards. Nevertheless, Torrent's Counterclaim includes more detailed factual matter.
Indeed, in addition to the allegations cited by Otsuka, Torrent specifically alleges that it provided a " detailed statement of the factual and legal bases" for its position on the non-infringement of Torrent's ANDA, and that it subsequently provided the confirming " portions" of Torrent's ANDA. (Countercl. at ¶ ¶ 15-16.) Torrent therefore alleges that the infringement claims asserted by Otsuka in this litigation lack an objectively reasonable basis, because " [n]o reasonable litigant could expect to secure favorable relief against Torrent upon the merits under the '615 and '796 patents." (Id. at ¶ ¶ 45, 47, 49-50.) Moreover, because Otsuka " initiated litigation" despite Torrent's allegedly dispositive evidence of noninfringement, Torrent submits that Otsuka filed this action " in bad faith, for an improper purpose, and as a means of directly interfering with," forestalling, frustrating, and preventing competition by Torrent, and not in order to " obtain an adjudication of a valid claim." (Id. at ¶ ¶ 46, 49.)
These allegations, accepted as true for purposes of this Rule 12(b)(6) motion, plausibly allege facts sufficient to overcome Otsuka's presumptive antitrust immunity under the Noerr-Pennington doctrine.
See, e.g., Abraxis Bioscience, Inc. v. Navinta LLC,
No. 07-1251, 2008 WL 2967034, at *7 (D.N.J. July 31, 2008) (finding the defendant's limited allegations sufficient to overcome Noerr-Pennington immunity in connection with a motion to dismiss); Knoll Pharm. Co. Inc. v. Teva Pharm. USA, Inc., No. 01-1646, 2001 WL 1001117, at * 4 (N.D.Ill. Aug. 24, 2001) (finding the objectively baseless prong met where the defendant in an infringement action alleged that, before the plaintiff filed suit, the defendant sent a detailed letter providing the bases for the defendant's position on invalidity); In re Cardizem CD Antitrust Litig., 105 F.Supp.2d 618, 643-44 (E.D. Mich. 2000) (denying motion to dismiss antitrust claim on Noerr-Pennington grounds where the claimant alleged that the plaintiff prosecuted the infringement action solely as a basis for litigation to delay and exclude the claimant from the market).
Moreover, even assuming the allegations proved insufficient, the inquiry into whether Otsuka maintains in this action " objectively and subjectively baseless" infringement claims turns upon issues of reasonableness and intent--issues which are premature to consider upon the present record. Indeed, resolution of these inherently factual issues requires consideration of whether Otsuka undertook a reasonable investigation in advance of pursuing its infringement claims, whether Otsuka undertook this action for an improper and anticompetitive purpose, and whether a reasonable litigant could have realistically expected success on the merits at the time of filing. All of these determinations require inquiry into issues of fact, which cannot be resolved in the context of a motion to dismiss, and prior to discovery. See S3 Graphics Co., Ltd. v. ATI Techs. ULC, No. 11-1298, 2014 WL 573358, at *3 (finding resolution of Noerr-Pennington immunity " not proper before discovery" ); Shionogi Pharma, Inc. v. Mylan, Inc., No. 10-1077, 2011 WL 3860680, at *6 (D. Del. Aug. 31, 2011) (declining to resolve the application of Noerr-Pennington immunity upon a motion to dismiss); Hoffman-La Roche Inc. v Genpharm Inc., 50 F.Supp.2d 367, 380 (D.N.J. 1999) (" Reasonableness is a question of fact, and the Court cannot make such factual determinations on a factual controversy roiled by a motion to dismiss." )
For all of these reasons, the Court rejects Otsuka's argument that Torrent's Counterclaim should be dismissed on Noerr-Pennington immunity. If, however, Torrent fails to meet its burden of proof as to " sham" litigation" upon litigation of the patent infringement claims and upon discovery as to Torrent's Counterclaims, Otsuka may renew its claim of Noerr-Pennington immunity. Moreover, even if Torrent ultimately overcomes Noerr-Pennington immunity, in order to
succeed on its Counterclaim, Torrent must still establish a substantive antitrust violation. See Organon Inc. v. Mylan Pharms., Inc., 293 F.Supp.2d 453, 461 (D.N.J. 2003) (citation omitted).
The Court next addresses whether Torrent states a plausible Counterclaim for patent misuse
C. Torrent Fails to Allege a Plausible Claim of Patent Misuse
Several decades-worth of Supreme Court jurisprudence makes clear that the defense of patent misuse must be based upon allegations that the patentee " extend[ed] the term of his [patent] monopoly beyond that granted by law." Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 136, 89 S.Ct. 1562, 23 L.Ed.2d 129 (1969); see also Blonder-Tongue Lab. v. University of Illinois Found., 402 U.S. 313, 343-44, 91 S.Ct. 1434, 28 L.Ed.2d 788 (1971) (generally describing the public's " paramount interest" in restraining patent monopolies to " their legitimate scope" ); Transparent-Wrap Mach. Corp. v. Stokes & Smith Co., 329 U.S. 637, 643-44, 67 S.Ct. 610, 91 L.Ed. 563, 1948 Dec. Comm'r Pat. 662 (1947) (" a patentee [is limited] to the monopoly found within the four corners of the grant" and may not use that monopoly power " to acquire a monopoly not embraced in the patent" ).
In applying the Supreme Court's long line of patent misuse decisions, the Court of Appeals for the Federal Circuit has further stated that a claim of patent misuse requires an allegation that the patent owner " 'impermissibly broaden[ed] the physical or temporal scope' of the patent grant with an anticompetitive effect."  Princo Corp. v. Int'l Trade Comm'n, 616 F.3d 1318, 1328 (Fed. Cir. 2010) (quoting Windsurfing Int'l, Inc. v. AMF, Inc., 782 F.2d 995, 1001 (Fed. Cir. 1986). District courts throughout this Circuit have, in turn, uniformly enforced the requirement that a plausible claim for patent misuse include an allegation of a patentee's attempt to impermissibly broaden the physical or temporal scope of the disputed patent. See, e.g., Micron Tech., Inc. v. Rambus Inc., 917 F.Supp.2d 300, 320 n.19 (D. Del. 2013); Altana Pharma AG v. Teva Pharms. USA, Inc., No. 04-2355, 2012 WL 2068611 (D.N.J. June 7, 2012); Cordance Corp. v. Amazon.com, Inc., 727 F.Supp.2d 310, 333-34 (D. Del. July 23, 2010); In re Gabapentin Patent Litig., 648 F.Supp.2d 641, 652 (D.N.J. 2009).
Here, the Court need not belabor Torrent's Sixth Counterclaim for patent misuse, which alleges, in its entirety, that:
59. Torrent restates and realleges each of the foregoing paragraphs as if fully set forth herein.
60. [Otsuka] does not have any good faith factual basis to allege that the products described in the Torrent ANDA infringe any claim of the '615 and '796 patents, and nevertheless filed and are continuing to maintain this lawsuit.
61. [Otsuka] filed this action without regard for the merits of its infringement claims and instead did so for the purpose
of delay Torrent's entry in into the marketplace for aripiprazole tablets by, inter alia, burdening Torrent with litigation costs and making baseless accusations of infringement.
62. The claims of the '615 and '796 patents are unenforceable as a result of Plaintiff's patent misuse, including [Otsuka's] bad faith assertion of the '615 and '796 patents against Torrent.
(Countercl. at ¶ ¶ 59-62.) As is evident from even a cursory review of Torrent's pleading, Torrent's Counterclaim hinges upon Otsuka's allegedly bad faith conduct in pursuing its " baseless" patent infringement action against Torrent. Torrent, however, has failed to plead any allegation that Otsuka has impermissibly broadened the physical or temporal scope of the '615 and '796 patents with an anticompetitive effect. Indeed, Torrent's responsive pleading, in its entirety, contains no allegation concerning any improper expansion of the physical or temporal breadth of the disputed patents. Torrent's Counterclaim therefore lacks an essential allegation, and fails to state a plausible claim for relief as a matter of law. Torrent's patent misuse Counterclaim will, accordingly, be dismissed. Nevertheless, because it remains conceivable that Torrent could plausibly allege this additional requirement, this dismissal will be without prejudice and the Court will grant Torrent leave to file a motion to amend to attempt to assert a counterclaim for patent misuse within fourteen (14) days. Any proposed amended counterclaim must be consistent with this Opinion's directives and findings.
The Court last addresses Otsuka's request to bifurcate and stay.
D. Torrent's Antitrust Counterclaim Will be Bifurcated and Stayed
To the extent Torrent's Counterclaims survive Otsuka's motion to dismiss, as the antitrust Counterclaim has, the parties uniformly assert that the Court should bifurcate and stay the Counterclaim pending resolution of the patent infringement issues. (See Otsuka's Br. at 13; Torrent's Opp'n at 1 (noting Torrent's " accordance with Otsuka's request" to bifurcate and stay); Otsuka's Reply at 6.)
Federal Rule of Civil Procedure 42(b) provides, in relevant part, that the Court may " order a separate trial of one or more separate issues, claims, crossclaims, counterclaims, or third-party claims," in order to encourage " convenience, to avoid prejudice, or to expedite and economize." Fed.R.Civ.P. 42(b). In determining whether to bifurcate under Rule 42(b), courts possess broad discretion. See Barr Lab., Inc. v. Abbott Lab., 978 F.2d 98, 115 (3d Cir. 1992) (citing Idzojtic v. Pa. R.R. Co., 456 F.2d 1228, 1230 (3d Cir. 1972)). Nevertheless, in order to properly exercise that discretion, courts must carefully balance " considerations of convenience, avoidance of prejudice, and efficiency," and must preserve the litigant's constitutional right to a jury. See Celgene Corp. v. Barr Labs., Inc., No. 07-286, 2008 WL 2447354, *1 (D.N.J. June 13, 2008); Fed.R.Civ.P. 42(b) (" When ordering a separate trial, the court must preserve any federal right to a jury trial." ).
Considering the various factors presented in this action, and the parties' agreement, the Court finds the bifurcation and stay of Torrent's antitrust Counterclaim warranted. Critically, resolution of the patent infringement issues may render Torrent's antitrust Counterclaim moot, thereby serving the interests of judicial economy. Bifurcation of antitrust Counterclaim and patent infringement claims further enhances " the parties' right to jury trial by making the issues the jury must consider less complex." Warner Lambert Co. v. Purepac Pharm. Co., Nos. 98-2749,
99-5948, 00-2053, 2000 WL 34213890, *11 (D.N.J. Dec. 22, 2000) (internal quotation marks omitted). In that respect, the Court will follow the practice of separating for trial patent issues and antitrust issues. In re Innotron Diagnostics, 800 F.2d 1077, 1084 (Fed. Cir. 1986) (affirming the severance of patent and antitrust claims as in the interests of judicial economy); see also Eurand Inc. v. Mylan Pharms., Inc., No. 08-889, 2009 WL 3172197, at *2 (D. Del. Oct. 1, 2009) (granting motion to sever and stay antitrust and patent misuse counterclaims and affirmative defenses from the patent infringement action);
See Abraxis Bioscience, Inc., 2008 WL 2967034, at *8 (denying a motion to dismiss, but granting an alternative request to bifurcate and stay antitrust counterclaims).
For all of these reasons, the Court will bifurcate Torrent's antitrust Counterclaim, and will stay discovery with respect to this Counterclaim pending resolution of the patent infringement issues.
For the reasons stated above, Otsuka's motion will be denied with respect to Torrent's antitrust Counterclaim, and granted with respect to Torrent's patent misuse Counterclaim, with leave to amend. Torrent's antitrust Counterclaim will, however, be bifurcated and stayed pending resolution of the patent infringement issues. An accompanying Order will be entered.
This matter comes before the Court by way of Plaintiff Otsuka Pharmaceutical Co., Ltd.'s (hereinafter, " Otsuka" ) motion to dismiss Defendants Torrent Pharmaceuticals Limited, Inc.'s and Torrent Pharma Inc.'s (collectively, " Torrent" ) Counterclaims for unlawful monopolization in violation of the Sherman Act, 15 U.S.C. § 2, and the Clayton Act, 15 U.S.C. § § 15 and 26, and for patent misuse [see Docket Item 43]; and the Court having considered the parties' submissions; and for the reasons explained in the Opinion of today's date; and for good cause shown;
IT IS this 22nd day of June, 2015, hereby
ORDERED that Otsuka's motion to dismiss [Docket Item 43] shall be, and hereby is, DENIED to the extent it requests the dismissal of Torrent's Fifth Counterclaim for antitrust violations, GRANTED to the extent it seeks the dismissal of Torrent's Sixth Counterclaim for patent misuse, and GRANTED to the extent it requests that the Fifth Counterclaim for antitrust violations be bifurcated and stayed; and it is further
ORDERED that Torrent's Fifth Counterclaim for antitrust violations shall be, and hereby is, BIFURCATED and STAYED, pending further Order of the Court; and it is further
ORDERED that Torrent's Sixth Counterclaim for patent misuse shall be, and hereby is, DISMISSED WITHOUT PREJUDICE, with leave to file a motion to amend to attempt to assert a counterclaim for patent misuse within fourteen (14) days of entry of this Order, consistent with the accompanying Opinion.