United States District Court, D. New Jersey
MEMORANDUM AND ORDER
G. SHERIDAN, U.S.D.J.
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). 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
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.).
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.).
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 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.
Walker Process and Fraudulent Procurement
first present a Walker
Process[] 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.(Id. at ¶ 72). As such, Wyeth
had market exclusivity for venlafaxine products for 14
½ years. (Id. at ¶73).
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).
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).
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."
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.).
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).
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.
March 1996, Wyeth applied for a provisional utility
patent ('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).
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).
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).
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).
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).
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).
Wrongful Orange Book Listing and Sham Litigation
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.).
Reverse Settlement Allegations
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.).
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.).
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.
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
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.
Federal Law Preemption
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.
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).
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.
Fraudulent Patent Procurement and Enforcement
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.
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).
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.
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.
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.
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.
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 ...