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In re Effexor Antitrust Litigation

United States District Court, D. New Jersey

November 15, 2018

In re EFFEXOR ANTITRUST LITIGATION

          MEMORANDUM AND ORDER

          PETER G. SHERIDAN, U.S.D.J.

         Presently before the Court is Defendants Wyeth Inc., Wyeth Manufacturing Limited, Wyeth Ireland Pharmaceutical Products (collectively, "Wyeth"), Teva Pharmaceuticals USA, Inc. and Teva Pharmaceuticals Industries Limited's (collectively, "Teva") Motion for Judgment on the Pleadings pursuant Federal Rule of Civil Procedure 12(c), regarding End-Payer Plaintiffs' Third Amended Consolidated Complaint. (ECF No. 165).[1] This case arises from allegations that two drug companies, Wyeth and Teva, engaged in an anticompetitive scheme that prevented the generic drug of Effexor XR from entering the market. Plaintiffs are end-payor purchasers (hereinafter "EPP") who claim to have paid inflated costs for the brand-named drug, Effexor XR, due to, among other things, a delayed entry provision included in Wyeth and Teva'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 and IBEW-NECA 505 Health & Welfare Plan, both of which are self-insured health and welfare benefit plans in Alabama and Florida, and Alabama, respectively (Id. at ¶¶ 20-21); Painters District Council No. 30 Health and Welfare Fund, a self-insured health and welfare benefit plan located in Illinois (Id. at ¶ 24); New Mexico United Food and Commercial Workers Union's and Employers' Health and Welfare Trust Fund and Plumbers and Pipefitters Local 572 Health and Welfare Fund, Taft-Hartley funds from New Mexico and Tennessee, respectively (Id. at ¶¶ 23, 25); Sergeants Benevolent Association Health and Welfare Fund, a New York health and welfare fund (Id. at ¶ 27). 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 ¶ 22). Municipality plaintiffs include the City of Providence, Rhode Island, a municipal corporation that operates a self-insured health and welfare benefit plan. (Id. at ¶ 26). Finally, there is one named individual Plaintiff, Patricia Sutter, who is a Maine citizen. (Id. at ¶ 28). All Plaintiffs purchased, paid, and/or provided reimbursement for Effexor XR or its generic equivalent. (Id. at ¶¶ 20-28). 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 Wyeth and Teva. (Id. at ¶¶ 29-38). Wyeth Inc., Wyeth Pharmaceuticals, Inc., Wyeth-Whitehall, and Wyeth Pharmaceuticals Company are referred to collectively as Wyeth. (Id. at ¶ 33). Wyeth is a wholly owned subsidiary of Pfizer with its principal place of business in New Jersey. (Id. at ¶ 29). Wyeth wholly owns Wyeth Pharmaceuticals, Inc., which is located in Pennsylvania. (Id. at ¶ 30). Wyeth-Whitehall Pharmaceuticals and Wyeth Pharmaceuticals Company are Puerto Rican corporations that are subsidiaries of Wyeth. (Id. at ¶¶ 31-32). The Complaint also identifies "Wyeth applicants," who are inventors and prosecuting attorneys that were responsible for purportedly fraudulently obtaining patents. (Id. at ¶ 34). Teva Pharmaceutical Industries Limited and Teva Pharmaceuticals USA, Inc. are referred to collectively as Teva. (Id. at ¶ 37). Teva Limited is an Israeli corporation that develops, manufactures, markets, and distributes pharmaceutical goods. (Id. at ¶ 36). Teva USA is a wholly owned subsidiary of Teva Limited that is located in Pennsylvania, which focuses its efforts primarily on the generic pharmaceuticals business. (Id.).

         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 three separate, but related patents, from the United States Patent and Trademark Office (PTO); listed these patents in the book of Approved Drug Products with Therapeutic Equivalence Evaluations (the "Orange Book"); engaged in sham litigation relating to these patents; entered into an unlawful reverse payment agreement with Teva; and manipulated the 180 day first-to-file period[2] to sustain Wyeth's and Teva's exclusivity and collectively prevent other generic companies from entering the market. The Court discusses each allegation in turn.

         1. Walker Process and Fraudulent Procurement

         EPPs first present a Walker Process[[3]] claim against Wyeth, based on Wyeth's fraudulent procurement and enforcement of three separate patents. By way of background, in 1985, Wyeth - then operating as American Home Products - acquired a patent for the compound venlafaxine hydrochloride (venlafaxine), commonly referred to as the Husbands patent. (Id. at ¶ 70). Five years later, December 1993, Wyeth received FDA approval of its New Drug Application for Effexor, an antidepressant drug whose active pharmaceutical ingredient is venlafaxine. (Id. at ¶ 71). This initial patent was for an "instant release" formulation; that is, the tablet "dissolves rapidly, resulting in a rapid increase in blood plasma levels of venlafaxine shortly after administration." (Id.). According to the Complaint, the Husbands patent protected any type of venlafaxine-based product that Wyeth created from generic competition before June 13, 2008.[4](Id. at ¶ 72). As such, Wyeth had market exclusivity for venlafaxine products for 14 ½ years. (Id. at ¶73).

         However, Effexor's instant release formulation had several significant drawbacks. First, the spike of venlafaxine into the patient's blood plasma levels could cause nausea and vomiting. (Id. at ¶ 75). Second, because the drug was rapidly absorbed into the body, patients were required to take the medication several times a day. (Id.). In response, Wyeth sought to develop an extended release formulation of Effexor to address these drawbacks. (Id.). According to the Complaint, "[b]y the early 1990s, methods for achieving sustained or extended release of the active ingredient in pharmaceuticals were well known in the drug industry." (Id. at ¶ 77). To create an extended release form of venlafaxine, Wyeth took two approaches: (1) they worked in-house and (2) entered into a business venture agreement with ALZA Corporation, a pharmaceutical formulation company that specialized in extended release technology. (Id. at ¶ 79).

         Wyeth's in-house development team used a coated spheroid approach to create its extended release version of Effexor, which had been previously utilized in another patented drug, Inderal LA. (Id. at ¶ 80). The coated spheroid approach used in Inderal LA was previously patented in the late 1970s and received Patent No. 7, 138, 475 ('475 Patent). (Id. at ¶ 82). As a result, Plaintiffs contend that Wyeth's approach to extending the release of Effexor was already considered a prior art, despite their subsequent effort to seek additional patent protections of the same. (Id. at ¶ 82).

         Meanwhile, ALZA used its osmotic-controlled release oral delivery system (hereinafter, "OROS") to create an extended release version of Effexor. (Id. at ¶¶ 86-88). As such, by 1993, Wyeth had two formulations of extended release venlafaxine and ultimately chose to focus on developing its own encapsulated spheroid version of Effexor. (Id. at ¶¶ 89-90). According to the Complaint, clinical studies "failed to establish any statistically significant improvement of the extended release over the instant release with respect to side effects such as nausea." (Id. at ¶ 90). As such, Plaintiffs aver that "Wyeth could not truthfully claim there was any valid scientific basis for claiming that the extended release version reduced side effects when compared to the instant release." (Id.).

         In any event, in June 1993, Wyeth made its first attempt to receive additional patent protections for venlafaxine. (Id. at ¶ 91). The 1993 application sought a method-of-use patent for using venlafaxine for various medical conditions, including obesity, anxiety, and post-traumatic stress disorder, just to name a few. (Id.). However, this application did not specify any particular venlafaxine formulation and was later abandoned. (Id. at ¶¶ 91-92). Less than two years later, January 1995, Wyeth sought another method-of-use patent for using venlafaxine to treat hypothalamic menopause in non-depressed women. (Id. at ¶ 94). Again, they did not identify a particular formulation for approval, but did mention a sustained release composition. (Id. at ¶¶ 94-95). The following year, April 1996, Wyeth received FDA approval of this composition and Patent No. 5, 506, 270 ('270 Patent). (Id.).

         As previously mentioned, ALZA had also developed an extended release formulation for venlafaxine, using its OROS technology; as such, in May 1993, ALZA also sought to secure patent protection for its formulation, which received FDA approval in August 2002 as Patent No. 6, 440, 457. (Id. at ¶ 96). In addition, the World Intellectual Property Organization published a patent application ('589 PCT application) that was assigned to ALZA in 1994, which claims priority to ALZA's patent application. (Id. at ¶ 97). The '589 patent specifies the extended release osmotic formulation that ALZA developed and explained that an extended release formulation in general reduces negative side effects because these side effects result from spikes in blood plasma levels that occur when taking medication multiple times a day. (Id. at ¶¶ 98, 101).

         According to the Complaint, beginning in 1996, Wyeth made several attempts to receive additional patent protections for Effexor XR. (Id. at ¶ 103). By this time, Wyeth had already obtained a method-of-use patent for using venlafaxine to treat hypothalamic menopause in non-depressed women and ALZA's '589 patent had been published. (Id.). This being said, according to the Complaint, "Wyeth submitted six sequential applications that led to three patents, the '171, '958, and '120 patents, each of which contained ostensibly independent method-of-use claims." (Id. at ¶ 104). Plaintiffs aver that Wyeth defrauded the PTO in obtaining these patents and, as a result, prevented generic extended release venlafaxine formulations from entering the market until June 2008. (Id.).

         In March 1996, Wyeth applied for a provisional utility patent[5] ('006 application) for extended release venlafaxine. The '006 application described the proposed patent as "an extended release (ER), encapsulated formulation containing venlafaxine hydrochloride." (Id. at ¶ 120). According to Plaintiffs, the phrase "encapsulated extended release formulation" had two very distinct interpretations. One interpretation could indicate that '006 application concerned the coated spheroid formulation that Wyeth had previously developed, which would limit the patent protection to only this specific formulation design - thereby enabling competing companies to enter the market utilizing a different design that would not violate Wyeth's patent. (Id. at ¶ 123). (Id.). Alternatively, the phrase could be understood to encompass every formulation of venlafaxine; however, such an overly broad interpretation would render the patent invalid and unenforceable, since it was already disclosed in the '270 Patent and the '589 application submitted by ALZA. (Id. at ¶ 124).

         The following year, March 1997, Wyeth filed a non-provisional application (the '137 application) that was almost identical to the '006 application. (Id. at ¶ 108). In its application, Wyeth did not disclose the existence of the '270 Patent or the '589 PCT Application. (Id.). However, the PTO Examiner discovered both and informed Wyeth that its claims about nausea and the spikes in blood plasma were not patentable as independent claims. (Id. at ¶ 136). Moreover, the Examiner noted that the '137 application could only be enforceable if Wyeth narrowed the description of the invention to the specific formulation that it created. (Id.). Eventually, Wyeth abandoned the '137 application and, in November 1997, filed a continuation-in-part application (the '328 application), which included additional information not mentioned in the '006 and '137 applications. (Id. at ¶¶ 109-10). Plaintiffs contend the '328 application was identical to the' 137 application; however, despite having an obligation to disclose the claims that were previously rejected, Wyeth failed to do so in hopes that another PTO Examiner would overlook the ambiguous language. (Id. at ¶¶ 143, 147). This being said, Wyeth eventually abandoned this application as well. (Id. at ¶ 152).

         Shortly after abandoning the '328 application, Wyeth filed another continuation-in-part application (the '629 application), which claimed priority over all three previous applications. (Id. at ¶ 111). The '629 application eventually led to the issuance of Patent No. 6, 274, 171 (the '171 Patent) in August 2001. (Id. at ¶ 112). The '171 Patent was comprised of 25 claims, which included the extended release encapsulated spheroid version of venlafaxine. (Id. at ¶ 112). It also claimed to reduce the drug's concentration in patient's blood plasma and incidents of nausea and vomiting. (Id.). Again, Plaintiffs contend Defendants did not disclose the rejection of the similar claims in the '137 application examined by the PTO Examiner. (Id. at ¶ 157). By failing to disclose the PTO's prior rejection and explain the meaning of the '270 Patent, Plaintiffs aver that Wyeth committed fraud on the PTO in obtaining the '171 Patent. (Id. at ¶¶ 157-58).

         Two months before the' 171 Patent was issued, Wyeth filed a divisional application in June 2001 (the '412 application), which sought another method-of-use patent based on reducing incidents of nausea and vomiting, the drug's concentrations in the patient's blood plasma, and daily drug use. (Id. at ¶ 165). According to Plaintiffs, "[t]he specifications and claims of the '412 application were identical to those in the '629 application." (Id. ¶ 161). However, unlike the other applications, the '412 referred to the formulation as "an extended release formulation" rather than "an encapsulated extended release formulation" as in the previous applications. (Id. at ¶¶ 161-62). Defendants again did not disclose that the '270 Patent "identified the existence of an extended release formulation of venlafaxine hydrochloride that rendered their method-of-use claims unpatentable." (Id. at ¶ 162). By failing to provide this information to the PTO Examiner, the '412 application eventually resulted in the issuance of the Patent No. 6, 419, 958 (the '958 Patent) in July 2002. (Id. at ¶ 164). However, as noted above, the '270 Patent previously procured included a once a day venlafaxine formulation that spread its dosage over time, so Wyeth filed a provisional application, including claims for nausea and vomiting, to avoid being precluded by the '270 Patent. (Id. at ¶ 117-18).

         Finally, in September 2001, Wyeth filed the '965 application, another continuation in part application, that contained similar claims as the '412 application. (Id. at ¶ 166-67). By not disclosing the rejection of the prior applications, the '965 application resulted in the issuance of Patent No. 6, 403, 120 in June 2002 (the '120 Patent). (Id. at ¶ 170).

         According to the Complaint, "Wyeth's repeated pattern of nondisclosure and withholding highly material information in serial patent applications for virtually identical claims" evinces its intent to deceive the PTO. (Id. at ¶ 184). As such, "[b]ut for this fraud on the PTO," Plaintiffs aver that the '171, '120, and '958 Patents would never have been issued. (Id. at ¶ 185).

         2. Wrongful Orange Book Listing and Sham Litigation

         After procuring the' 171, '120, and '958 Patents, Wyeth then listed all three in the Orange Book; all three patents expired on March 20, 2017. (Id. at ¶¶ 14, 112, 114116). Thereafter, Plaintiffs claim that Wyeth engaged in sham litigation against seventeen generic manufacturers. (Id. at ¶ 262). Plaintiffs claim that at least seventeen generic manufacturers sent Wyeth certifications informing it that they intended to manufacture generic versions of Effexor XR, which would not infringe Wyeth's patents. (Id. at ¶ 265). In response, Wyeth sued each generic for infringing on the '171, '120, and '958 Patents. (Id. at ¶ 266). According to the Complaint, Wyeth was aware that its method-of-use patents were invalid or unenforceable; yet, nevertheless chose to seek its enforceability against generic manufacturers. (Id. at ¶ 267). The purposes of these "sham patent suits was to prevent, delay, and/or minimize the success of the entry of generic competitors, which would have sold generic equivalents of Effexor XR in the United States at prices significantly below Wyeth's prices . . . and therefore would have taken most of Wyeth's market share." (Id. at ¶ 270). As such, by blocking the market entry of generic Effexor XR, Wyeth prevented the average market price of its brand name drug from declining dramatically. (Id.).

         3. Reverse Settlement Allegations

         Finally, Plaintiffs challenge the validity of a reverse settlement agreement made between Wyeth and Teva, after Wyeth initially sued Teva for patent infringement of its three patents. (Id. at ¶¶ 272-304). On March 24, 2003, Wyeth sued Teva for infringing on its '171, '120, and '958 patent in the District of New Jersey. (Id. at ¶ 275). One of the key issues before the court was whether the term "extended release formulation" was to be construed broadly or limited to the spheroid formulation developed by Wyeth, which - as discussed above - would enable generic manufactures to design a different formulation that would not infringe on Wyeth's patents. (Id. at ¶ 276). At the Markman hearing, the court ultimately interpreted the phrase to mean the latter, explaining that "one of ordinary skill in the art would construe [extended release formulation] to include specific ingredients." (Id.). According to the Complaint, such a finding was fatal to Wyeth's case; as such, Wyeth sought to settle the matter with Teva and, as a result, avoid other generic companies challenging Wyeth's patent. (Id.).

         On November 2, 2005, the two signed a joint settlement and release agreement. (Id. at ¶ 279). As part of the settlement, the parties agreed that the district court's prior Markman ruling would be vacated, thereby requiring other generic companies to relitigate the "extended release formulation" issue that the court had previously found in Teva's favor. (Id. at ¶ 280). As it pertained to instant release Effexor, Wyeth allowed Teva to sell its generic version prior to the expiration of the patent in June 2008; in addition, Wyeth agreed not to compete with Teva by releasing its own authorized generic during that same period. (Id. at ¶ 281). As a result, Teva had at least a year and a half market exclusivity of generic instant release Effexor. (Id. at ¶ 283). The agreement also included a delayed entry provision, wherein Teva agreed to delay market entry for its generic extended release Effexor until as late as July 2010. (Id. at ¶ 284). In return, "Wyeth promised Teva that Wyeth would not market an authorized generic version of extended release venlafaxine during at least Teva's six-month 'exclusivity' and possibly longer." (Id.). According to the Complaint, by effectively blocking any other competing generic manufactures from entering the market, "the Wyeth-Teva agreement worked a huge, and devastating, impact on competition in the market for extended release venlafaxine." (Id. at ¶ 286). 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 Wyeth's conduct in delaying the market entry of generic Effexor XR. (Id. at ¶ 411). The class contains individuals or entities who purchased or paid for Effexor XR and/or its generic version for consumption by themselves, their families, or members, employees, insureds, participants, or beneficiaries in Arizona, California, Florida, Illinois, Kansas, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Montana, Nevada, New Hampshire, New Mexico, New York, North Carolina, Oregon, Rhode Island, South Dakota, Tennessee, Utah, West Virginia, Wisconsin, and the District of Columbia. The Class sues for overage damages occurred from June 14, 2008 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 Wyeth. (Id. at ¶ 421). The conduct giving rise to this claim is the fraudulent obtainment of the '171, '958, and '120 Patents, its listing in the Orange Book, its sham litigation, and the unlawful reverse settlement agreement with Teva. (Id. at ¶ 424). The same factual allegations and theories asserted in Count I are again alleged in Count II against all Defendants. (Id. at ¶ 439). In Count III, Plaintiffs allege conspiracy to restrain of trade against all Defendants. (Id. at ¶¶ 448). Finally, Plaintiffs allege a claim unfair or deceptive trade practices against all Defendants. (Id. at ¶ 456). Plaintiffs contend that as a result of Wyeth's anticompetitive acts or practices, Plaintiffs and the Class were deprived of the opportunity to obtain a less expensive, generic equivalent to Effexor XR. 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 five separate bases. First, Defendants contend that EPPs' Complaint should be dismissed in its entirety based on federal preemption principles. Second, Defendants argue that several state law claims are time-barred. Third, Defendants contend that certain states require pre-filing notices, which Plaintiffs failed to comply with, and proscribe class actions under their respective consumer protection statutes. Fourth, 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 Plaintiffs' state law claims in its entirety, 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 Fed.Appx. 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 two 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' 171, '958, and '120 Patents, 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.

         1. 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 '171, '958, and '120 Patents; (2) the fraudulent patent listing of the '171, '958, and '120 Patents in the FDA's Orange Book; and (3) the "sham" litigation against seventeen generic manufacturers, seeking to enforce the '171, '958, and '120 Patents. Defendants 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. 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 litigation do not, this case does not arise under federal patent law for purposes of federal patent preemption. Id. (quoting Christians on, 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 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, Wyeth improperly listed the '171, '958, and '120 Patents in the Orange Book, the generic drug was delayed entry because of sham litigation, and a reverse payment settlement agreement was negotiated to prolong a monopoly. As such, because ...


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