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In re Lipitor Antitrust Litigation

United States District Court, D. New Jersey

August 21, 2018

In re LIPITOR ANTITRUST LITIGATION

          MEMORANDUM AND ORDER

          SHERIDAN, U.S.D.J.

         Presently before the Court is Defendants Pfizer Inc., Pfizer Manufacturing Limited, Pfizer Ireland Pharmaceuticals, Warner-Lambert Co., and Warner-Lambert Co. LLC's Motion for Judgment on the Pleadings pursuant Federal Rule of Civil Procedure 12(c), regarding End-Payor Plaintiffs' Second Amended Consolidated Complaint. (ECF No. 755). This case arises from allegations that two drug companies, Pfizer and Ranbaxy, engaged in an anticompetitive scheme that prevented the generic drug of Lipitor from entering the market. Plaintiffs are end-payor purchasers (hereinafter "EPP") who claim to have paid inflated costs for the brand-named drug, Lipitor, due to, among other things, a delayed entry provision included in Pfizer and Ranbaxy's settlement agreement. Unlike the Direct Purchaser Plaintiffs, who assert claims under the Sherman Act, the EPPs base their claims on their respective state's antitrust and consumer protection acts.

         Background

         I. Parties

         Plaintiffs are a collection of organizations including insurance carriers, Taft-Hartley funds, municipalities, and individuals, who have been indirectly affected by Defendants' alleged schemes. For example, jointly administered Taft-Hartley fund and employee welfare benefit plaintiffs include: A.F.L.-A.G.C. Building Trades Welfare Plan, a self-insured health and welfare benefit plan in Alabama (Id. at ¶ 24); New Mexico United Food and Commercial Workers Union's and Employers' Health and Welfare Trust Fund, a Taft-Hartley fund (Id. at ¶ 26); Bakers Local 433 Health Fund of South Dakota; and Minnesota's Twin Cities Bakery Workers Health and Welfare Fund. (Id. at ¶¶ 28-29).

         Health insurance carrier plaintiffs include: Louisiana Health Services Indemnity Company d/b/a Bluecross/Blueshield of Louisiana, a corporation licensed to conduct business in Louisiana that provides health benefits to covered members (Id. at ¶ 27); Fraternal Order of Police, Fort Lauderdale Lodge 31, Insurance Trust Fund, a governmental health insurance plan that provides health and major medical insurance to active and retired Fort Lauderdale police officers and their dependents. (Id. at ¶ 30).

         Municipality plaintiffs include: the Mayor and City Council of Baltimore, Maryland (Id. at ¶ 25), and the City of Providence, Rhode Island, both municipal corporations with self-insured health and welfare benefit plans. (Id. at ¶ 31).

         Finally, the six individual plaintiffs are Edward Czarnecki, a Wisconsin resident; Emilie Heinle, a North Dakota resident; Andrew Livenzey from Massachusetts; Edward Ellenson from Hawaii; Jean Ellyne Dougan, an Arkansas resident; and Nancy Billington of Montana (Id. at ¶¶ 32-37).

         All plaintiffs claim to have purchased or provided partial payment for some of, or the entire price of, Lipitor or its generic version. (Id. at ¶¶ 24-46). Plaintiffs contend that they were all injured as a result of Defendants' anticompetitive schemes, since they paid a premium for the medication. (id).

         Defendants in this case are Pfizer and Ranbaxy. (Id. at ¶¶ 38-46). Pfizer Inc., Pfizer Ireland Pharmaceuticals, and Warner-Lambert Company are collectively referred to as Pfizer. (Id. at ¶¶ 38-42). Pfizer Inc. is the parent company of Pfizer Ireland Pharmaceuticals, an Irish unlimited liability company that is a wholly owned, indirect subsidiary of Pfizer Inc. (Id. at ¶¶ 38-39). Pfizer acquired Warner-Lambert Company in 2000. (Id. at ¶ 40). According to the Complaint, reference to Warner-Lambert also includes, but is not limited to, Warner-Lambert employees Bruce D. Roth, Joan Thierstein, and Jerry F. Janssen. (Id. at ¶ 41). In addition, the Complaint names Defendants Ranbaxy Laboratories Limited, Ranbaxy Inc., and Ranbaxy Pharmaceuticals Inc. collectively as Ranbaxy. (Id. at ¶¶ 43-46). Ranbaxy Laboratories Limited is an Indian corporation that wholly owns Ranbaxy Inc., which has a place of business in New Jersey. (Id. at ¶¶ 43-49).

         II. Facts

         In the Complaint, EPPs identify several anticompetitive schemes that purportedly give rise to the present lawsuit. Specifically, Plaintiffs allege that Defendants fraudulently obtained a second, duplicative, patent from the United States Patent and Trademark Office (PTO); listed that patent in the book of Approved Drug Products with Therapeutic Equivalence Evaluations (the "Orange Book"); engaged in sham litigation relating to the second patent; filed a sham citizen petition with the FDA; entered into an unlawful reverse payment agreement with Ranbaxy; and manipulated the statutorily created 180 day first-to-file period[1] to sustain Pfizer's and Ranbaxy's exclusivity and collectively prevent other generic companies from entering the market. The Court discusses each allegation in turn.

         1. Walker Process and Fraudulent Orange Book Allegations

         EPPs first present a Walker Process[2] claim against Pfizer, based on Pfizer's enforcement of an invalid patent and fraudulent listing of the patent in the Orange Book. By way of background, Warner-Lambert, which was later acquired by Pfizer in 2000, applied for the Original Lipitor Patent on March 30, 1986 and subsequently received Patent No. 4, 681, 893 ('893 Patent) on July 21, 1987. (Id. at ¶¶ 95, 104). The Original Lipitor Patent was for a racemic mixture, which contains equal amounts of two enantiomers that inhibit the production of cholesterol. (Id. at ¶ 7). Enantiomers are made of mirrored images of stereoisomers, which are two or more compounds with the same atoms but arranged differently. (Id. at ¶¶ 85-86). In a racemic mixture, it is common for one enantiomer to have all or most of the biological activity, while the other is largely inactive. (Id. at ¶ 89).

         According to the Complaint, the compounds in the '893 Patent were not limited to any particular stereochemistry; instead, the structure included four different stereoisomers possibilities: R-trans, S-trans, R-cis, and S-cis isomers. (Id. at ¶ 103). Even though the '893 Patent covered the multiple possibilities, Warner-Lambert focused on developing the R-trans enantiomer of the compound, in calcium salt form, which would eventually be sold as Lipitor. (Id. at ¶¶ 106-07). Warner-Lambert achieved patent extensions and regulatory exclusivities that postponed the patent's expiration from May 30, 2006 to March 24, 2010. (Id. at ¶ 104).

         On July 21, 1989, Warner-Lambert applied for a patent to specifically protect the R-trans enantiomer, which later became the '995 Enantiomer Patent. (Id. at ¶ 126). According to the Complaint, Warner-Lambert had to prove the R-trans enantiomer's activity had a "surprising" or "unexpected" characteristic to procure a subsequent patent; put differently, they had to justify why the proposed patent was not already protected by the by the '893 Patent. (Id. at ¶ 109). Plaintiffs allege Warner-Lambert tasked its senior management with finding "something that could be mischaracterized as surprising." (Id. at ¶¶ 110-14). Warner-Lambert included a table in the '995 Patent application to demonstrate the surprising results that the R-trans enantiomer was one hundred times more active than the S-trans enantiomer and ten times more active than the racemic mixture. (Id. at ¶ 128). However, Plaintiffs claim that one skilled in the art would know "one enantiomer is the 'active' isomer, while the other is 'inactive,' and thus the active enantiomer is about twice as active as the racemic mixture." (Id. at ¶ 121). Further, the Complaint states Warner-Lambert would have known, through testing and experimentation, that the R enantiomer was likely to be the active isomer. (Id. at ¶ 122). Plaintiffs allege that Warner-Lambert failed to calculate the average result from its various tests and, instead, "cherry-picked from among the results [of the tests] in order to generate a table that supported its claim of 'surprising activity.'" (Id. at ¶ 135). As a result, the data Warner-Lambert provided in its application was allegedly both false and misleading, since the R-trans enantiomer is approximately twice as active as the racemic mixture, not ten times. (Id. at ¶ 133).

         The PTO originally rejected the '995 Patent application, since the invention was already covered and anticipated by the claims in the previously procured '893 Patent. (Id. at ¶ 153). Under patent law, a patent application can be rejected "if the differences between the subject matters sought to be patented and the prior art [are] such that the subject matter as a whole would have been obvious at the time of the invention was made to a person having ordinary skill in the art to which said subject matter pertains." (Id. at ¶ 154). In response to the PTO's rejection, Warner-Lambert then requested to amend its application to provide a declaration by Dr. Bruce Roth, who participated in developing Lipitor, in support of the newfound information regarding the R-trans enantiomer's activity. (Id. at ¶¶ 159-60). In his declaration, Roth asserted that the available data "shows the activity of [the R-trans enantiomer] is surprising and unexpected because if the [S-trans enantiomer] is accepted as inactive, the activity of [the R-trans enantiomer] would be expected to be only twice that of the racemic mixture" and not the ten times that occurred. (Id. at ¶¶ 165-66). Warner-Lambert argued the surprising nature of this information overcomes the obvious inclusion under the '893 Patent and, thus, warrants the issuance of the '995 Patent. (Id. at ¶ 161). Plaintiffs contend the data presented to the PTO, including the Roth Declaration were knowingly false and misleading and used to fraudulently convince the PTO to procure the new patent. (Id. at ¶¶ 133, 165, 170-74). Persuaded by the data submitted, the PTO eventually issued the '995 Enantiomer Patent on December 28, 1993. (Id. at ¶ 182).

         As a result of its two approved patents, Warner-Lambert submitted a new drug application to the FDA for Lipitor, which was approved on December 17, 1996. (Id. at ¶ 201). Warner-Lambert then listed both the '893 Original Lipitor Patent and the '995 Enantiomer Patent in the Orange Book, which expired on May 30, 2006 and December 28, 2010, respectively. (Id. at ¶¶ 203-04). Thereafter, it applied for an extension of the '893 Original Lipitor Patent to account for the difference in time between the issuance of the patent covering the active ingredient in the new drug and the FDA's approval of that drug. (Id. at ¶¶ 206-08). As a result, the PTO postponed '893 Patent's expiration until March 24, 2010. (Id. at ¶ 213).

         2. Sham Litigation and Citizen Petition Allegations

         Plaintiffs next contend Defendants engaged in sham litigation against Ranbaxy. On August 19, 2002, Ranbaxy filed an Abbreviated New Drug Application (ANDA) to sell a generic version of Lipitor. (Id. at ¶¶ 221-22). While Ranbaxy verified their generic version would not violate any of the Lipitor patents, Pfizer, who had acquired Warner-Lambert by this time, filed a patent infringement lawsuit against Ranbaxy on February 21, 2003 for allegedly infringing on the '893 and '995 Patents. (Id. at ¶¶ 223-24). In the pre-trial proceedings, Pfizer attempted to amend its complaint to include process patent infringement claims; however, their motion was denied since these patents could not be listed in the Orange Book and, therefore, were not a basis for the suit.[3](Id. at ¶¶ 226-27). On appeal from the District of Delaware, the Federal Circuit ruled in Pfizer's favor, finding that Ranbaxy's product infringed on the '893 Patent. However, it also dismissed Pfizer's '995 Patent infringement claim since it had an improper dependent claim structure. (Id. at ¶ 232). As a result, Ranbaxy had to wait until the expiration of the '893 Patent in March 2010, before selling its generic version. (Id. at ¶¶ 232, 234).

         Plaintiffs contend since the '995 Patent was fraudulently obtained, the patent infringement litigation against Ranbaxy was a baseless sham, that was intended to interfere with the introduction of Ranbaxy's generic drug into the market. (Id. at ¶ 230).

         Plaintiffs also allege that Pfizer filed a baseless citizen petition with the FDA, in further attempt to delay the entry of generic versions of Lipitor. (Id. at ¶ 235). According to the Complaint, Ranbaxy's ANDA could have received FDA approval in August 2005, thereby creating generic competition. (Id. at ¶¶ 236-38). However, a month beforehand, July 2005, Pfizer sent a letter to the FDA, in an attempt to further delay the entry to generic versions of Lipitor. (Id. at ¶ 239). Four months later, November 7, 2005, Pfizer re-filed this letter, as a citizen petition, alleging that the generic brand's use of "amorphous atorvastatin calcium" could be "susceptible to higher levels of impurities" than Pfizer's crystalline version; as such, Pfizer averred that Ranbaxy's application needed to be carefully scrutinized and reviewed with considerable skepticism. (Id. at ¶¶ 241-42). However, Plaintiffs claim Pfizer had also used amorphous versions in their testing and development of Lipitor and, therefore, knew that it could be, and had been, safely made. (Id. at ¶¶ 242-46). As such these purported safety concerns were unfounded. (Id.). Further, Pfizer knew from its earlier litigation with Ranbaxy that Ranbaxy's generic drug was amorphous, rather than crystalline. (Id.). According to Plaintiffs, the FDA's previous decisions expressly indicated that special or additional scrutiny would not be applied when reviewing an AND A, when a different form was used; instead, the stability of a drug, not its substance, would be the key focus in measuring the drug's quality. (Id. at ¶ 251). As such, given Pfizer's knowledge that amorphous versions posed no safety risks, as well as the FDA's approach to treating AND A claims, Plaintiffs claim the petition was a baseless attempt to delay generic competition. (Id. at ¶¶ 261-66).

         3. Reverse Settlement Allegations

         Finally, Plaintiffs challenge the validity of a reverse settlement agreement made between Pfizer and Ranbaxy, after Pfizer attempted to obtain reissuance of the '995 Patent. (Id. at ¶ 323). To correct the invalidation of the '995 Patent, Pfizer applied for its reissuance in 2007 and conceded that the data included in its original application, concerning the R-trans enantiomer's effectiveness, contained significant errors. (Id. at ¶¶ 274-76). Therefore, it would no longer rely on this information in its reissuance proceedings. (Id. at ¶ 283). Without this information, Ranbaxy filed a protest with the PTO, contending that the content of the '995 Patent was "anticipated, obvious, [and] constituted double-patenting." (Id. at ¶¶ 279, 284). As a result, the PTO issued a non-final rejection of Pfizer's reissuance application, since it "had before it no scientific basis to conclude the enantiomer claims were anything other than obvious over the '893 Patent." (Id. at ¶ 285, 293). Given Pfizer's failure to receive approval for the '995 Patent, there was a strong possibility that generic brand drugs would enter the market upon expiration of the '893 Patent in March 2010. (Id. at ¶¶ 287-88, 294).

         While Pfizer struggled to obtain a reissuance of the '995 Patent in 2008, it was later discovered that Ranbaxy may have infringed on another patented drug, Accupril, and, therefore, Pfizer had a potential patent infringement claim worth millions of dollars in damages. (Id. at ¶¶ 311-12). According to the Complaint, upon learning of this information "Pfizer needed a stage to disguise a reverse payment to Ranbaxy in order to buy Ranbaxy's agreement to delay launching of its generic version of Lipitor. If there were a pending court case against Ranbaxy involving Lipitor, Pfizer could settle with Ranbaxy through a reverse payment and (unlawfully) extend its Lipitor market exclusivity"; however, when Pfizer learned of Ranbaxy's potential Accupril infringement, there was no active litigation pending. (Id. at ¶ 313).

         Irrespective of its reasoning, it is undisputed that Pfizer filed a complaint against Ranbaxy in March 2008 for infringing on Process Patents of the '740 and '511 Patents. (Id. at ¶¶ 314-315). However, as mentioned above, a court had already ruled that these patents were not exclusionary and, therefore, provided no basis for relief. (Id. at ¶¶ 308, 316). This being said, less than three months after the suit was filed, the parties entered into a reverse settlement agreement, whereby Ranbaxy would refrain from manufacturing or selling generic Lipitor until November 30, 2011. (Id. at ¶¶ 315, 323-26). According to the Complaint, Pfizer and Ranbaxy disguised this agreement as a way to settle the process patent litigation when, in actuality, it was a "pretext for its true anticompetitive goals and accomplishments." (Id. at ¶¶ 323-24). Under the terms of the agreement, Ranbaxy paid Pfizer $1 million and Pfizer dismissed its multi-million dollar patent infringement claims based on Ranbaxy's generic version of Accupril. (Id. at ¶ 327). In addition, Ranbaxy was permitted the right to market its generic version of Lipitor in some foreign markets. (Id.). Further, Ranbaxy did not waive its market exclusivity right to be the first to file an ANDA for Lipitor; thereby preventing other generic competition from entering the market until after November 30, 2011. (Id. at ¶¶ 363-65). In return, Ranbaxy also ceased challenging Pfizer's reissuance of the '995 Patent. (Id. at ¶ 366). As a result, the PTO eventually granted reissuance of the '995 Patent, relying in part on Lipitor's commercial success to prove the patent could not have been obvious and, therefore, was not covered by the '893 Original Lipitor Patent. (Id. at ¶ 414).

         Plaintiffs contend the accumulation of Pfizer's conduct demonstrates an anticompetitive scheme to prevent generic brands from interfering with Lipitor's market share and, as a result, Pfizer's profitability. (Id. at ¶ 446). Had Pfizer not fraudulently procured the '995 Patent, Plaintiffs claim there would have been no basis for its reissuance. (Id.). In addition, Ranbaxy only stopped protesting the '995 patent after it entered a reverse settlement agreement with Pfizer. (Id.). If not for these circumstances, the EPPs contend that generic versions of Lipitor would have been able to enter into the market much earlier. (Id. at ¶ 447).

         Plaintiffs bring this case on behalf of themselves and all End-Payor class members to recover damages, calculated by the increased price they had to pay due to Pfizer's conduct in delaying the market entry of generic Lipitor. (Id. at ¶ 486). The class contains individuals or entities who purchased or paid for Lipitor and/or its generic version for consumption by themselves, their families, or members, employees, insureds, participants, or beneficiaries in Arizona, California, Florida, Hawaii, Illinois, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Mexico, New York, North Carolina, North Dakota, Oregon, Rhode Island, South Dakota, Tennessee, Utah, West Virginia, Wisconsin, and the District of Columbia. (Id. at ¶ 487). The Class sues for overage damages occurred from March 24, 2010 until the effects of Defendants' conduct cease. (Id.).

         The Complaint outlines four different claims for relief in the class action. The first is for monopolization under state law against Pfizer. (Id. at ¶ 497). The conduct giving rise to this claim is the fraudulent obtainment of the '995 Patent, its listing in the Orange Book, its sham litigation and citizen petition, the reissuance of the patent, and the unlawful reverse settlement agreement with Ranbaxy. (Id. at ¶ 500). The same factual allegations and theories asserted in Count I are again alleged in Count II against all Defendants. (Id. at ¶ 511). In Count III, Plaintiffs allege conspiracy to restrain of trade against all Defendants. (Id. at ¶¶ 527, 530). Finally, Plaintiffs allege a claim unfair or deceptive trade practices against all Defendants. (Id. at ¶ 546). Plaintiffs contend that as a result of Pfizer's anticompetitive acts or practices, Plaintiffs and the Class were deprived of the opportunity to obtain a less expensive, generic equivalent to Lipitor. (Id. at ¶ 547). As such, Plaintiffs seek compensation from Defendants in the form of damages.

         Legal Standard

         Federal Rule of Civil Procedure 12(c) permits a party to dismiss a suit "[a]fter the pleadings are closed ... but early enough not to delay trial." Fed.R.Civ.P. 12(c). "A Rule 12(c) motion for judgment on the pleadings is treated like a motion to dismiss under Rule 12(b)(6)." Syncsort Inc. v. Sequential Software, Inc., 50 F.Supp.2d 318, 324 (D.N.J. 1999). Under either rule, the Court must accept all well-pleaded factual allegations in the complaint as true and draw all reasonable inferences in favor of the nonmoving party. Id. For a complaint to survive dismissal, it "must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face."' Wireless Media Innovations, LLC v. Maker Terminals, LLC, 100 F.Supp.3d 405, 407 (D.N.J. 2015) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)). As such, "[a] complaint should not be dismissed unless it appears beyond doubt that 'the facts alleged in the complaint, even if true, fail to support the claim.'" Syncsort Inc., 50 F.Supp.2d at 325.

         Analysis

         Defendants presently challenge EPPs' Complaint on four separate bases. First, Defendants contend that EPPs' Complaint should be dismissed in its entirety based on federal preemption principles. Second, Defendants argue that certain states require pre-filing notices that Plaintiffs failed to comply with and proscribe class actions under their respective consumer protection statutes. Third, Defendants aver that EPPs' state antitrust claims fail because they lack standing and fail to plead a concerted act. Finally, Defendants challenge EPPs' consumer protection claims for failing to comply with various state consumer protection law requirements. The Court addresses each challenge in turn.

         I. Federal Law Preemption

         Defendants first seek dismissal of all of Plaintiffs' state law claims, since their state law claims are preempted by federal law. Plaintiffs respond, contending that because their claims are based on antitrust and consumer fraud theories, preemption is inapplicable.

         "Federal patent law preempts state law claims to the extent that state law 'stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress' in enacting the patent laws." Wawryzynski v. H.J. Heinz Co., 574 F.App'x 99, 102 (3d Cir. 2014) (quoting Aronson v. Quick Point Pencil Co., 440 U.S. 257, 262 (1979)). Notably, "district courts shall have original jurisdiction of any civil action arising under any Act of Congress relating to patents, plant variety protection, copyrights and trademarks. No. State court shall have jurisdiction over any claim for relief arising under any Act of Congress relating to patents, plant variety protection, or copyrights." 28 U.S.C. § 1338(a). "Under § 1338(a), then, jurisdiction extends 'only to those cases in which a well-pleaded complaint establishes either that federal patent law creates the cause of action or that the plaintiffs right to relief necessarily depends on resolution of a substantial question of federal patent law, in that patent law is a necessary element of one of the well-pleaded claims.'" In re Lipitor Antitrust Litig, 855 F.3d 126, 143 (3d Cir. 2017) (quoting Christianson v. Colt Industr. Operating Corp., 486 U.S. 800, 809 (1986)). As such, the Court is tasked with determining whether the plaintiffs claims "arise under" patent law. Id. at 144. "[I]f on the face of a well-pleaded complaint there are reasons completely unrelated to the provisions and purposes of the patent laws why the plaintiff may or may not be entitled to the relief it seeks," then the claims do not "arise under" patent law. Id. (internal quotation marks and citations omitted).

         Defendants present three theories supporting their position that Plaintiffs' state law claims are preempted. First, because Plaintiffs' claims are based on the purportedly fraudulent procurement and enforcement of the '995 patent, they must demonstrate that the patent is invalid or unenforceable, which is preempted under federal patent law. Second, to the extent that Plaintiffs' antitrust claims are based on the reverse settlement agreement, they are preempted since they must demonstrate the validity of the generic patents, which necessarily implicates patent law. Finally, Defendants contend that Plaintiffs' "sham" citizen petition claim is preempted, since it must demonstrate the validity of the generic patents, which, again, implicates patent law.

         I. Fraudulent Patent Procurement and Enforcement

         Turning first to Defendants' federal patent preemption argument, Defendants argue that Plaintiffs' state law claims require them to plead and prove that the patent is invalid or unenforceable under federal patent law. According to Defendants, the allegations in Plaintiffs' complaint that trigger federal patent law include: (1) the fraudulent procurement of the '995 patent (2) the fraudulent patent listing of the '995 Patent in the FDA's Orange Book; and (3) the "sham" litigation against Ranbaxy, seeking to enforce the '995 Patent, in addition to its two process patents. Defendants, citing little or no supporting case law, contend that these allegations require first knowing whether the patent at issue is invalid or unenforceable. If the patent was valid, then the obtainment and enforcement of same would be lawful. As such, Defendants argue that because federal patent law is necessary to support these theories, they are preempted by federal law.

         However, Defendants' arguments are in direct contravention with the Third Circuit's recent holding in Lipitor, 855 F.3d at 126.[4] In Lipitor, the Third Circuit explicitly held that the present matter does not "arise under" federal patent law. The Third Circuit held that although a resolution of a substantial question of federal patent law is necessary for a fraudulent patent claim, that alone is not sufficient to establish that the Federal Circuit has jurisdiction. Id. at 143. The court explained that unless every theory of the claim requires resolution of a substantial question of federal law, it does not "arise under" federal patent law and, therefore, the Third Circuit has jurisdiction. Id. The court interpreted "arises under" to mean that every theory of the claim requires the resolution of a substantial question of federal law, if it does not, federal patent law will not preempt. Id. Here, even if the allegations in the Complaint present substantial questions of patent law, because the antitrust allegations and sham citizen petition do not, this case does not arise under federal patent law for purposes of federal patent preemption. Id. (quoting Christianson, 486 U.S. at 812).

         Moreover, federal patent law does not preempt a state law claim in which a patent law issue is implicated if "the state law cause of action [i.] includes additional elements not found in the federal patent law cause of action and [ii.] is not an impermissible attempt to offer patent-like protection to subject matter addressed by federal law." Dow Chem. Co. v. Exxon Corp., 139 F.3d 1470, 1473 (Fed. Cir. 1998). In Dow, the defendant was issued a patent that disclosed certain wire and cable devices manufactured using a particular insulating polymer. Id. at 1471. At about the same time, the plaintiff introduced its own line of polymer products and filed a complaint contending that its polymer did not infringe on the defendants' patent since the defendants' patent was invalid and unenforceable. Id. at 1471-72. In addition, the plaintiff asserted a state-law unfair competition claim, alleging that that the defendant obtained its patent through inequitable conduct before the PTO. Id.

         Finding patent preemption inapplicable, the Federal Circuit explained that there are three objectives for patent law: (1) to provide an incentive to invent; (2) to promote the full disclosure of inventions; and (3) to ensure "that which is in the public domain cannot be removed therefrom by action of the states." Id. at 1474 (quoting Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 480-81 (1974)). With these objectives in mind, the Dow court held that when the state law cause of action includes additional elements not found in the federal patent law and state law is not an obstacle to the objectives of federal patent law, it is not preempted even if patent law is implicated. Id. at 1473. As such, the Federal Circuit held that because the state law unfair competition claim included additional elements not found in federal patent law and did not otherwise conflict with the objectives of federal patent law, its claims were not preempted. Id. at 1478-79.

         Here, as in Dow, the EPPs state antitrust and consumer protection claims require proof of elements not found in a patent cause of action. As discussed earlier, the purpose for patent protection is to provide an incentive to invent, to promote the full disclosure of inventions and to ensure "that which is in the public domain cannot be removed therefrom by action of the states." Antitrust and consumer protection law protect consumers from being overcharged for products, which is a wholly different goal than patent law.

         This is also consistent with the Court's decision in In re Thalomid and Revlimid Antitrust Litig., No. 14-6997, 2015 U.S. Dist. LEXIS 177541 (D.N.J. Oct. 29, 2015), where the court held that even if a state court must adjudicate a question of federal patent law, it is not preempted if it includes additional elements not part of a federal cause of action. Id. at *61-63. In Thalomid, the plaintiffs, who were indirect purchasers, alleged that the defendants created an antitrust scheme by obtaining patents through fraud on the PTO and bringing sham lawsuits to delay generic brands from entering the market. Id. at *4-5. As is the case here, the defendants argued that the plaintiffs' antitrust claims should be preempted by federal patent law since they alleged that they obtained the patents through unjust conduct with the PTO. Id. at *61-62. Relying on Dow, the court held that even if a question of federal patent law must be adjudicated, the state law claim is not preempted, as long as it contains additional elements not part of a federal patent cause of action. Id. Finding the allegations were also premised on bad faith in the marketplace (an element not required in patent law) the Court reasoned that federal patent preemption was not warranted.

         Here, similar to Thalomid, the EPPs allege that the patents were obtained through fraud on the PTO, Pfizer improperly listed the '995 patent in the Orange Book, the generic drug was delayed entry because of sham litigation, a baseless Citizens Petition was filed, and a reverse payment settlement agreement was negotiated to prolong a monopoly. As such, ...


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