Opinion
Case No. SACV 04-00243 CJC (FMOx).
December 22, 2005
Plaintiff and Counterdefendant Dey, L.P. ("Dey") moves pursuant to Federal Rule of Civil Procedure 60(b) for reconsideration of this Court's Order issued November 4, 2005, granting a motion filed by Defendant and Counterclaimant Eon Labs, Inc. ("Eon") to shorten the automatic 30-month statutory stay of FDA approval on Eon's Abbreviated New Drug Application under 21 U.S.C. § 355(j)(5)(B)(iii). In its Order, the Court ruled that Dey had failed to reasonably cooperate in expediting this action by acting unreasonably in identifying the individuals who invented the subject matter claimed in the patent in suit. Because Dey has not shown that reconsideration is warranted by new evidence or the need to correct a clear error or prevent manifest injustice, its motion for reconsideration is DENIED. A party suing under a patent has an obligation to conduct a good-faith investigation into inventorship. While 35 U.S.C. § 256 allows a patentee to move to correct innocent mistakes in inventorship, this right does not excuse the patentee from making an informed decision on the issue at the time it files its patent, when it initiates litigation, and during the course of that litigation. In this case, Dey cannot continue to reap $200,000,000 per year from its patent, free from generic competition, where it has failed and continues to fail to take a reasonable position on the critical issue of inventorship.
The Court also found that Dey failed to reasonably cooperate in expediting this action by not timely disclosing a 2003 study involving Combivent MDI, a drug solution which Eon contends is prior art to the '842 patent, and producing after the close of discovery certain documents pertaining to the study.
Eon's Memorandum in Support of its Motion to Shorten 30-Month Statutory Stay, p. 2.
A. Background
This patent infringement action involves Dey's U.S. Patent No. 6,632,842 B2 ("the '842 patent"), and Eon's attempts to market a generic version of a commercial drug described therein. The '842 patent does not claim the drug, but rather "a method of reducing medication error and enhancing therapeutic compliance of an individual suffering from chronic obstructive pulmonary disease," ("COPD"), a lung disease common in smokers. (Exhibit 1 to Complaint.) The claimed method sets forth a procedure by which COPD patients are administered single-dose containers containing a combination solution consisting of albuterol and ipratropium bromide and meeting certain other criteria (the "administering step"). (Exhibit 1 to Complaint.) In addition to the administering step, the '842 patent's claims require that patients be provided with specific prescribing, contraindication, and adverse reaction information (the "providing step"). ( Id.) Dey currently markets the albuterol/ipratropium bromide solution described in the '842 patent under the name "DuoNeb." (Complaint, ¶ 6.)
For instance, the claims prescribe that the volume of the solution is about 3 ml and that it be sterile, BAC free, satisfy certain stability criteria and contain specified amounts of ipratropium bromide and albuterol. (MFR, p. 12; Marc Morris Decl., ¶ 10, Exh. D thereto.)
1. Dey's Development of the Patented Subject Matter
The '842 Patent was the culmination of a long development process by Dey. In the 1990s, Dey began developing an inhalation solution that had many characteristics of the solution described in the '842 patent's administering claims, but with some differences. (Motion for Reconsideration, "MFR," pp. 12-13.) A number of individuals employed by Dey contributed to the development of the product. ( Id., p. 13.) Dey was unable to obtain FDA approval for the original product, despite years of trying. ( Id.)
In the late 1990s several new people came to work for Dey, and made changes to the inhalation solution and its delivery system. Among other things, these new employees contributed to the definition of "albuterol" contained in the '842 patent and made the product "stable" by using a foil overwrap which is described in the patent. (MFR, pp. 13-14.) Dey received FDA approval for the inhalation solution, "DuoNeb," in the late 1990s. Dey subsequently filed a patent application with the U.S. Patent and Trademark Office ("USPTO"), and, on December 28, 2001 filed a "continuation in part" ("CIP") application. (MFR, p. 5, n. 6.) The '842 Patent was issued on October 14, 2003, based on the CIP application. ( Id.; Complaint, ¶ 9.) By the time Dey filed the applications leading to the '842 patent's issuance, the developers who had developed the inhalation solution in the early 1990s no longer worked for Dey. (MFR, p. 14.)
"A CIP application contains subject matter from a prior application and may also contain additional matter not disclosed in the prior application." Augustine Medical, Inc. v. Gaymar Industries, Inc., 181 F.3d 1291, 1302, 50 U.S.P.Q. 2d 1900, 1908 (Fed. Cir. 1999) ( citing Waldemar Link v. Osteonics Corp., 32 F.3d 556, 558, 31 U.S.P.Q. 2d 1855, 1857 (Fed. Cir. 1994)). Different claims in a CIP application may receive different filing dates. Id. The part of a CIP application that duplicates material contained in the original application (and specified in the original in a manner that satisfies the description requirement of 35 U.S.C. § 112) is credited with the filing date of the original application. Therma-Tru Corp. v. Peachtree Doors, Inc., 44 F.3d 988, 992, 33 U.S.P.Q. 2d 1274, 1276 (Fed. Cir. 1995). The part of the CIP application containing new material is treated as a new application and is given the CIP application's filing date. Augustine, 181 F.3d at 1302, 50 U.S.P.Q. at 1908.
2. Eon's Abbreviated New Drug Application
In early 2004, Eon sought to market a generic version of DuoNeb. Pursuant to 21 U.S.C. § 355(j), Eon filed an Abbreviated New Drug Application ("ANDA") with the FDA to obtain approval to engage in the commercial manufacture, use, and sale of a generic copy of DuoNeb for the treatment of symptoms of COPD. The Drug Price Competition and Patent Term Restoration Act of 1984, also called the Hatch-Waxman Amendments to the Federal Food, Drug, and Cosmetic Act, Pub.L. No. 98-417, 98 Stat. 1585, codified in relevant part at 21 U.S.C. § 355, allows a generic drug manufacturer such as Eon to file an ANDA, in lieu of a full New Drug Application, regarding the generic drug's safety and efficacy. 21 U.S.C. § 355(j). By filing an ANDA, the generic manufacturer avoids the need to submit full information regarding the generic drug, and may instead rely on safety and efficacy studies previously submitted to the FDA by the manufacturer of an already-listed drug (the "pioneer manufacturer"), so long as the ANDA applicant provides information showing that the generic drug is bioequivalent to the listed drug and is identical to it in certain other ways. 21 U.S.C. §§ 355(j)(1); 355(j)(2)(A)(i)-(v).
The Federal Food, Drug, and Cosmetic Act, 21 U.S.C. §§ 301 et seq., prohibits the introduction into interstate commerce of any drug unless an application has been filed with respect to the drug and been approved by the FDA. 21 U.S.C. § 355(a).
A pioneer manufacturer that holds a New Drug Application ("NDA") must notify the FDA of all patents that "claim the drug for which the [NDA] applicant submitted the application or which claim a method of using such drug and with respect to which a claim of patent infringement could reasonably be asserted if a person not licensed by the owner engaged in the manufacture, use, or sale of the drug." 21 U.S.C. §§ 355(b)(1); (c)(2). These patents are listed in the FDA's Approved Drug Products with Therapeutic Equivalence Evaluations, or the "Orange Book." Andrx Pharmaceuticals, Inc. v. Biovail Corp., 276 F.3d 1368, 1371, 61 U.S.P.Q. 2d 1414, 1415 (Fed. Cir. 2002).
An ANDA applicant must make one of the following four certifications as to each patent that claims either the listed drug or a use for the listed drug for which the ANDA applicant seeks approval and for which information was required to be filed under 21 U.S.C. § 355 subsections (b) or (c): (I) that such patent information has not been filed; (II) that the patent has expired, (III) of the date on which the patent will expire; or (IV) that the patent is invalid or will not be infringed by the manufacture, use, or sale of the new drug for which the ANDA is submitted. 21 U.S.C. § 355(j)(2)(A)(vii) (I-IV). When the generic manufacturer makes a subpart (IV) certification, the ANDA applicant must notify the NDA holder and explain the basis for its subpart IV certification. 21 U.S.C. § 355(j)(2)(B)(i)-(iv); 21 C.F.R. 314.95(c)(6). If the NDA holder sues the ANDA applicant for patent infringement within 45 days of the notification, the FDA may not approve the ANDA until the earlier of thirty months after the patentee's receipt of notice or entry of a court judgment reflecting a determination that the patent is invalid or not infringed. 21 U.S.C. § 355(j)(5)(B)(iii). The court in which the infringement suit is pending may, however, lengthen or shorten the stay on FDA approval if "either party to the action fail[s] to reasonably cooperate in expediting the action." 21 U.S.C. § 355(j)(5)(B)(iii).
Here, Eon made a subpart IV certification in connection with its ANDA, stating that Dey's '842 patent was invalid or would not be infringed by Eon's COPD product. Dey received that letter on January 20, 2004. (Complaint, ¶ 8.) Within 45 days of receiving the letter, on March 3, 2004, Dey sued Eon for patent infringement. As Dey sued Eon within 45 days of being notified of the subpart IV certification, the 30-month stay is now in effect.
3. Eon's Motion to Terminate the 30-Month Stay on FDA Approval
On September 22, 2005, Eon filed a motion with this Court to terminate the 30-month stay on the basis that Dey had failed to reasonably cooperate in expediting this action by, among other things, repeatedly changing its position on the inventorship of the '842 patent, and failing to produce in discovery documents related to a 2003 study comparing DuoNeb to a drug that Eon claims is prior art to the '842 patent. Eon asserted that neither of the two individuals listed as inventors on the '842 patent, Imtiaz Chaudry and Partha Banerjee, worked for Dey during Dey's initial development of the inhalation solution described in the '842 patent in the mid-1990s. Eon pointed out that, in 2004, Dey submitted and subsequently withdrew a petition to the USPTO to correct inventorship by adding Charles Rice as a named inventor. (Eon's Points and Authorities re Shortening Stay, p. 6.) After Dey withdrew the petition, Dey stated that it planned to ask the Court, at the conclusion of evidence at trial, to add Dr. John Siebert as an inventor and remove Dr. Partha Banerjee as a co-inventor. (Dey's Case Status Report, August 8, 2005, ¶ 3.) Dey has since argued that it had no way of knowing the identity of the '842 patent's inventors "until after discovery was over and all of the sworn testimony of the many people involved in the development could be properly considered." (MFR, p. 16.)
In an Order dated November 4, 2005, the Court granted Eon's motion to shorten the 30-month stay. (Court's Order, Nov. 4. 2005.) The Court based its holding on a finding that Dey's failure to form a clear position on inventorship at the beginning of this action, as reflected by its repeated changes of position on the issue, was unreasonable and would likely delay the action. ( Id.) The Court further held that Dey had shown no legitimate basis for its delay in disclosing the 2003 study and producing documents pertaining to it. ( Id.) Dey now seeks reconsideration of the Court's decision pursuant to Federal Rule of Civil Procedure 60.
B. Standard on a Motion for Reconsideration
Federal Rule of Civil Procedure 60(b) provides, "the court may relieve a party . . . from a final judgment, order, or proceeding for . . . (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); [or] (6) any other reason justifying relief from the operation of the judgment." Fed.R.Civ.P. 60(b). A motion for reconsideration may be based on the availability of new evidence or the need to correct a clear error or prevent manifest injustice. School Dist. No. 1J, Multnomah Cty., Oregon v. ACandS, Inc., 5 F.3d 1255, 1262 (9th Cir. 1993). Local Rule 7-18 provides that a motion for reconsideration of a court's decision on a motion "may be made only on the grounds of "(a) a material difference in fact or law from that presented to the Court . . . that in the exercise of reasonable diligence could not have been known to the party moving for reconsideration at the time of [the Court's previous] decision, or (b) the emergence of new material facts or a change of law occurring after the time of such decision, or (c) a manifest showing of a failure to consider material facts presented to the Court before such decision." L.R. 7-18.
C. Dey's Motion for Reconsideration
Dey argues that reconsideration is warranted because "(a) material facts were not considered or were overlooked by the Court in forming its decision; (b) the November 4th Order incorrectly applie[d] the law of inventorship and the facts of this case; and (c) facts which became available after the hearing further demonstrate the failure to timely produce the 2003 study was unimportant and did not draw out discovery." (MFR, p. 5.) The Court will address each of these arguments in turn.
1. Failure to Consider Material Facts
Dey's first argument is that the Court's decision failed to consider certain facts material to the question whether Dey failed reasonably to cooperate in expediting this action. This argument relies on alleged errors in the Court's discussion of (1) Dey's changing position on inventorship, and (2) Dey's delay in disclosing the 2003 study and producing documents pertaining to it.
a. Inventorship
Dey takes issue with the Court's discussion of inventorship on several grounds. First, Dey argues that the Court based its ruling on a "wrong impression that there were only a few people who worked on the [development of the material in the '842 patent] over a short period of time . . . [but that] there were in fact many people involved in the development process leading to the claimed invention and the development occurred over a period of about 8 years." (MFR p. 8.) Dey further argues that the Court's decision incorrectly "presupposes that (a) correction of inventorship can only occur with respect to a few inventors, among many and (b) Dey had sufficient facts in its possession from which it concluded that inventorship was wrong and that it believed Dr. Siebert was an inventor and Dr. Banerjee was not prior to the close of discovery." (MFR, pp. 9-10.)
Dey mischaracterizes the Court's decision. The Court's finding that Dey unreasonably failed to take a clear position on inventorship was not based on a perception that only a few individuals were involved in the process leading to the invention of the '842 patent's subject matter, or that Dey necessarily decided to correct inventorship before discovery closed. Nor was the decision based on a legal conclusion that inventorship can only be corrected as to a few inventors. The problem the Court identified with Dey's conduct was that Dey apparently made an insufficient effort to determine the true identity of the patented subject matter's inventors before initiating this litigation. Throughout this case Dey has denied that it has any obligation to investigate or acquire an informed opinion as to who the inventors are of the method claimed in the '842 patent, such as through witness interviews or examination of its own internal records. Not only does Dey contend that it was entitled to wait until after the close of discovery to identify the inventors, but it also claims it is entitled to wait to do so until after the close of the evidence at trial. (Dey's Case Status Report, August 8, 2005, ¶ 3.)
Dey's position is unreasonable. There is no reason Dey could not have conducted an investigation into the inventors' identity or formed a good faith opinion on the issue before it filed its Complaint. By Dey's own admission, its employees had been attempting to obtain FDA approval of the inhalation solution that was a precursor to DuoNeb since the early 1990s. Presumably Dey has documents indicating who was involved in the project's development and/or the process of seeking FDA approval during that time. Nor does Dey explain why it did not have a clearer position on inventorship before it filed the applications leading to the '842 patent. Dey fails to explain its inability to identify the individuals most centrally involved in the conception of the claimed subject matter at any time prior to trial. For Dey to wait until the close of evidence at trial to assert its "true" position on inventorship will likely raise a host of new disputed issues and prolong this action — a result that could have been avoided by an adequate prefiling inquiry.
Dey argues that it could not discover the patented material's inventors before the close of discovery because many of the people involved in the development process leading to the '842 patent no longer worked for Dey as of the start of this litigation. (MFR, p. 16.) Dey further argues that, due to those possible contributors' "potential self-interest," Dey could not determine inventorship before receiving "sworn testimony" from them. ( Id.) This argument, however, does not excuse Dey's failure to conduct a diligent investigation and make a reasonable determination on the issue of inventorship. Potential inventors' self-interest notwithstanding, there is no reason Dey could not have contacted and interviewed the people involved in the patented material's development process before bringing this action. Dey's concern regarding "self interest" could be addressed by investigating the bases of interviewees' statements and seeking corroboration from internal documents or from other former employees involved in the inhalation solution's development. Finally, Dey's assertion that it is entitled to postpone taking a position on inventorship until the close of evidence at trial is illogical even under its own reasoning: Even if Dey did need to obtain "sworn testimony" in discovery to determine the identity of the patented material's inventors, there appears to be no basis for Plaintiff's position that, having obtained such testimony, it still needed to wait until after the close of the evidence at trial.
Dey further argues that its changes of position on inventorship were not prejudicial to Eon because (1) Eon never propounded discovery to Dey asking Dey to identify the inventors, and (2) Dey made all information regarding conception of the patented material available to Eon by making Dr. Siebert available for a deposition and identifying all the people involved in the development process for DuoNeb. (MFR, p. 13.) These arguments are unpersuasive. First, the most likely reason Eon never asked Dey to identify the inventors of the material in the '842 patent is that the patent itself already listed two named inventors. Eon was entitled to assume that Dey had named those two individuals for good reason, and that Dey had a factual basis for doing so. Second, the fact that Dey identified all of the people involved in the development of DuoNeb during discovery does not mean that Eon would not likely have asked those individuals different questions had it known that Dey regarded them as potential or actual inventors. (Eon's Motion to Shorten Stay, p. 7; Reply in Support of Motion to Shorten Stay, p. 6.)
Moreover, this case's history shows that Dey's failure to inform itself as to the identity of the '842 patent's inventors created problems in discovery. In March, 2005, Eon complained to Dey that the witness Dey had designated as its 30(b)(6) expert on the issue of inventorship and one of the people listed as an inventor on the '842 patent, Dr. Imtiaz Chaudry, did not even work for Dey during the time Dey was developing DuoNeb, and had no knowledge as to who had been involved in its initial development. (Eon's Supplemental Reply Brief in Support of Motion to Shorten Statutory 30-Month Stay, Exh. H thereto.) Dey refused to designate any other 30(b)(6) witness, let alone anyone employed during DuoNeb's development, and stated that all individuals who were "still employed by Dey [who were involved in the development of DuoNeb] have been made available to you," and that Eon was "free to depose anyone you choose." ( Id.). Dey also reiterated its position that "inventorship of the '842 patent is presumptively correct as a matter of law." ( Id.). Dey's position appears to have been that it had no obligation to designate any additional 30(b)(6) witness with information regarding the initial development process, or to make sure that Dr. Chaudry was informed about individuals involved in DuoNeb's development.
That is not the law. An entity designating a 30(b)(6) witness to testify on its behalf has an obligation to "make a conscious good faith endeavor to designate the persons having knowledge of the matters sought by [the interrogator] and to prepare those persons in order that they can answer fully [and] completely . . . the questions posed by [the interrogator] as to the relevant subject matters." Protective National Insurance Co. of Omaha v. Commonwealth Insurance Co., 137 F.R.D. 267, 278 (D. Neb. 1989) ( quoting Mitsui Co. v. Puerto Rico Water Resources Authority, 93 F.R.D. 62, 67 (D.P.R. 1981)). This duty to prepare witnesses extends not only to matters actually known by the designating party, but also to matters that "should be reasonably known" by it. Alexander v. F.B.I., 186 F.R.D. 148, 152 (D.D.C. 1999). If it becomes clear that a designated deponent is unable to respond to relevant areas of inquiry specified by the inquiring party with reasonable specificity, the responding party must designate an additional 30(b)(6) witness. Id. at 151. Certainly, it is "reasonable" to expect that Dey would know the roles played by various of its own employees in the development of the inhalation solution described in the '842 patent. Thus, if Dr. Chaudry was unable to provide information regarding who was involved in the development of DuoNeb in the years before he began working for Dey, Dey was obligated either to prepare him to provide such information or designate an additional 30(b)(6) witness. Its refusal to do either was unreasonable.
Finally, Dey argues that Eon is the one that has refused to cooperate in discovery. Dey argues that when it propounded discovery to Eon in June, 2005, asking Eon to identify who Eon believed were the patented material's true inventors and the factual basis supporting that belief, Eon asserted "a host of objections, including attorney-client privilege and the work product doctrine, and made no attempt to identify any person it believed to be an inventor." (MFR, p. 17.) This argument also is unavailing. Dey's "unreasonable delay" in this case is not merely a failure to reveal facts in discovery but a failure to commence this litigation with an adequately-formed idea as to the identity of the '842 patent's inventors. While Eon might have been more forthcoming in response to Dey's discovery request, Eon is not the party that initiated this action. Dey, by filing suit before understanding the factual basis for its own position on inventorship, has created confusion and the potential for delay of the trial.
Dey also takes issue with this Court's statement that, "Dey's failure to have a clearer understanding on the identity of the actual inventors of the subject matter claimed in the '842 patent . . . raises questions regarding its ownership rights under that patent." (MFR, p. 7; Nov. 4 Order, p. 4.) Dey argues that the Court should not have considered ownership because ownership is not in issue in this case. While Dey is correct that ownership per se is not in issue, in the sense that no person claiming to have been omitted as an inventor on the '842 patent has made any claim of ownership in this case, the identity of the inventors under the '842 patent could well bear on the fundamental question whether Dey has any rights under that patent. This is because "[i]nventorship provides the starting point for determining ownership of patent rights." 8 DONALD S. CHISUM, CHISUM ON PATENTS § 22.02 (2005) ( citing University Patents Inc. v. Kligman, 762 F. Supp. 1212, 1218-19 (E.D. Pa. 1991)). "[A]bsent some effective transfer or other obligation to assign patent rights, the individual inventor owns the right to apply for and obtain a patent." Id. Dey also argues that ownership is not in issue because "each [person who might claim to have been omitted as an inventor on the '842 patent] is obligated to assign his rights, if any, to Dey." (MFR, p. 7.) However, this is far from a foregone conclusion. Absent some exception based on contract or the nature of one's employment, an employee owns patent rights in the subject matter of which he or she is the sole or joint inventor despite having conceived the invention or reduced it to practice in the course of her employment. 8 CHISUM, § 22.03; Banks v. Unisys Corp., 228 F.3d 1357, 1359, 56 U.S.P.Q.2d 1222, 1224 (Fed. Cir. 2000). Two exceptions to this rule are where the inventing employee is party to a contract giving the employer ownership rights in the invention, or where the employee was hired to invent something or solve a particular problem. Banks, 228 F.3d at 1359, 56 U.S.P.Q. 2d at 1224. Dey provides no evidence or argument indicating that either exception applies in this case, or substantiating its claim that all potential inventors under the '842 patent would be obligated to assign their rights to it.
b. Delayed Production of 2003 Study
Dey also challenges the Court's finding that Dey acted unreasonably in failing timely to disclose in discovery a study (the "DART Study") that it conducted in 2003 comparing DuoNeb to a drug known as Combivent MDI, and waited until after fact discovery had closed to produce documents pertaining to the study. Specifically, Dey takes issue with this Court's statement that:
Dey fails to provide any justification other than inadvertence for its failure to produce in discovery documents relating to a study it conducted in 2003 comparing DuoNeb to Combivent MDI, which Defendants characterize as prior art to the '842 patent and on which they say they will rely to prove patent invalidity.
(November 4 Order, p. 6.) Dey asserts that the Order incorrectly "conclu[ded] that the DART study was `prior art.'" (MFR, p. 5.) According to Dey, the DART study could not be prior art to the '842 patent, because the study was published in 2003, "several years after the 2001 effective date of the patent." ( Id.) Thus, Dey argues, "the DART study cannot be used to invalidate [Plaintiff's] patent." ( Id.)
Dey clearly does not understand the Court's reasoning on this issue. First, the Court's use of the term "prior art" did not refer to the DART study itself but to Combivent MDI. Second, the Court did not express any opinion as to whether Combivent MDI actually was "prior art" to the '842 patent, but merely pointed out that Eon has taken the position in this action that it was. Indeed, Eon contends that Boehringer-Ingelheim's ("BI's") marketing of Combivent prior to Dey's obtaining the '842 patent renders the '842 patent invalid. Eon stated in its moving papers:
One of the items which is prior art to the '842 patent, and on which defendants will rely to prove invalidity of that patent, is a combination albuterol/ipratropium bromide product made and sold by Boehringer-Ingelheim, a competitor of [Dey's], under the name Combivent.
Eon states that Combivent MDI is Combivent administered through a device known as a "multi dose inhaler." (Eon's Memorandum of Points and Authorities in Support of Motion to Shorten the 30-Month Statutory Stay, p. 5.)
(Eon's Memorandum of Points and Authorities in Support of Motion to Shorten the 30-Month Statutory Stay, pp. 4-5.) The Court thus did not err when it pointed out that Eon characterizes Combivent MDI as invalidating prior art. Moreover, as Eon contends that BI was marketing Combivent MDI in 1999 (and perhaps earlier), and Dey contends that the '842 patent's effective date was December 28, 2001, Dey's argument that the alleged prior art post-dated the '842 patent is simply wrong.
Plaintiff's MFR, p. 5 n. 6.
Dey cites Glaxo, Inc. v. Torpharm, Inc., 1997 U.S. Dist. LEXIS 12816 (N.D. Ill., Aug. 28, 1997) for the proposition that "a failure to timely produce documents where, as here, thousands of documents were produced, was held not to constitute a failure to expedite justifying shortening of the stay." (MFR, p. 6.) Glaxo is inapposite. In Glaxo, the court held that the plaintiff did not fail to reasonably cooperate in expediting the litigation where it was still producing documents two months after the close of discovery, because "both parties [had] conducted a tremendous amount of discovery within a relatively short period of time," both parties had been forced to seek judicial intervention to resolve discovery disputes, some of the requesting party's discovery requests had been overbroad, and the plaintiff had otherwise cooperated in expediting the litigation. Glaxo, 1997 U.S. Dist. LEXIS 12816, at *8-9. The court did not say whether the late-produced documents were central to the claims in the case. In this case, by contrast, the late-produced study is central to Eon's contention that prior art invalidates the '842 patent, Dey has given no explanation other than inadvertence for late disclosure of the study, and, as explained above, Dey has otherwise drawn out this case and created discovery disputes by commencing this litigation without a clear idea as to the inventors of the '842 patent's subject matter.
Dey further argues that Eon has not shown that Dey's delay in producing the 2003 study impeded the progress of this action. Dey argues that Eon did not take advantage of Dey's offer, upon producing the 2003 study, to provide Eon with additional discovery relating to the study at Dey's own expense. (MFR, p. 6.) Dey also argues that Eon has not propounded any discovery to Dey relating to the study in the four months since the DART study and related documents were produced. (MFR, p. 6.)
These arguments miss the point. First, the test under 21 U.S.C. § 355(j)(5)(B)(iii) is whether a party "reasonably failed to cooperate in expediting" the litigation — not whether it affirmatively delayed it. Moreover, fact discovery already had closed on all issues except those raised by Eon's newly-asserted counterclaims by the time Dey disclosed the DART study in July 2005. (2nd Amended Joint Stipulation Regarding Case Management Order.) Thus, that Eon has not propounded new discovery based on the DART study is not surprising.
2. Incorrect Application of Law
Dey further argues that the Court's decision incorrectly applied the law. First, Dey argues that the Court erred in failing to recognize that the law of inventorship is complex and that, as a result, Congress has allowed inventorship to be easily corrected under 35 U.S.C. § 256 as to any or all inventors listed on a patent. Dey cites numerous cases for the proposition that inventorship is one of the most difficult and complex issues in patent law. (MFR, p. 10.) It also argues that inventorship is a question of law reviewed without deference by the Federal Circuit, that the inventors as named in an issued patent are presumed to be correct, and that a party seeking to be added to a patent as a co-inventor has the burden of proving by clear and convincing evidence that the inventor listed in the patent derived the invention from the claimant's work. (MFR, p. 10.) Although Dey does not explain how it believes these legal principles relate to its position that it did not fail reasonably to cooperate in expediting this action, Dey's argument presumably is that it should not be expected to have any position on inventorship prior to trial because inventorship is such a complex thicket.
35 U.S.C. § 256 provides:
Whenever through error a person is named in an issued patent as the inventor, or through error an inventor is not named in an issued patent and such error arose without any deceptive intention on his part, the Director may, on application of all the parties and assignees, with proof of the facts and such other requirements as may be imposed, issue a certificate correcting such error.
The error of omitting inventors or naming persons who are not inventors shall not invalidate the patent in which such error occurred if it can be corrected as provided in this section. The court before which such matter is called in question may order correction of the patent on notice and hearing of all parties concerned and the Director shall issue a certificate accordingly.
Without disputing Dey's characterization of the law on inventorship, the Court disagrees that those legal rules justify Dey's conduct in this case. Contrary to Dey's allegations, the only "law" that this Court applied in granting Eon's motion to lift the 30-month stay was the clause in 21 U.S.C. § 355(j)(5)(B)(iii) allowing the Court to lift the stay where a party "fail[s] to reasonably cooperate in expediting the action." 21 U.S.C. § 355(j)(5)(B)(iii). That inventorship is a difficult legal issue does not excuse Dey's failure to conduct a thorough investigation, before suing for infringement, into the roles played by its various employees and former employees in the process culminating in the patented subject matter. Nor does the fact that inventorship is decided as a matter of law based on underlying facts. Dey's legal position on inventorship should have been informed by an adequate factual investigation from the start. Indeed, the fact that inventors as named in a patent are presumed to be correct cuts against Dey's argument that it is entitled to delay investigating the factual basis for its assertions of inventorship until after the close of the evidence at trial: That a patentee's assertion of inventorship is presumed correct presupposes that it is supported by a valid factual basis. That an opponent must produce clear and convincing evidence to overcome the presumption of correctness makes it all the more reasonable that the opponent should be informed prior to the close of discovery who the alleged inventors are as to whom it bears that evidentiary burden.
The legislative history of the Hatch-Waxman Amendments suggests that failure to conduct an adequate prefiling investigation should come within 21 U.S.C. § 355(j)(5)(B)(iii)'s scope. Those amendments were passed to smooth the "cumbersome drug approval process [which] delayed the entry of relatively inexpensive generic drugs into the market place." In re Cardizem CD Antitrust Litigation, 105 F. Supp. 2d 618, 627 (E.D. Mich. 2000) ( quoting Mylan Pharmaceuticals, Inc. v. Shalala, 81 F. Supp. 2d 30, 32 (D.D.C. 2000)). The amendments reflect a Congressional intent "to make available more low cost generic drugs" and an effort "to balance two conflicting policy objectives: to induce name-brand pharmaceutical firms to make the investments necessary to research and develop new drug products, while simultaneously enabling competitors to bring cheaper, generic copies of those drugs to market." Id. ( quoting Mylan, 81 F. Supp. 2d at 32.). To permit a name-brand drug maker to derive hundreds of thousands of dollars each month from a patent, when it does not know who made the most significant contributions to the patented invention's conception, during an uninterrupted 30-month period following its filing suit on the patent, would frustrate Congress' intent to expedite the entry of less expensive drugs into the marketplace.
The Act's purpose of encouraging generic drug makers to market their products is demonstrated by the fact that the Act awards the first generic drug manufacturer to make a paragraph IV certification with an uninterrupted 180-day period free from competition from other generic competitors. That is, once the first generic manufacturer submits an ANDA, no other ANDA can be approved for the same generic product for 180 days, running from the date the prior ANDA applicant begins commercially marketing its drug. Cardizem, 105 F. Supp. 2d at 628-29 ( quoting Mylan, 81 F. Supp. 2d at 33.). 21 U.S.C. § 355(j)(5)(B)(iv) provides: "[I]f the [ANDA] contains a [subpart IV] certification, and is for a drug for which a first applicant has submitted an application containing such a certification, the application shall be made effective on the date that is 180 days after the date of the first commercial marketing of the drug (including the commercial marketing of the listed drug) by any first applicant." 21 U.S.C. § 355 (j)(5)(B)(iv)(I). "First applicant" is defined as "an applicant that, on the first day on which a substantially complete application containing a [subpart IV] certification . . . is submitted for approval of a drug, submits a substantially complete application that contains and lawfully maintains a certification described in paragraph (2)(A)(vii)(IV) for the drug." 21 U.S.C. § 355(j)(5)(B)(iv)(II)(bb).
Dey also argues that the Court's decision is mistaken because Dey's conduct in this case was "far less egregious than the patentee's conduct in U.S. Indust., Inc. v. Norton Co., where the corporate patent holder knew that there was a problem with inventorship, knew the name of the inventor more than a year before litigation commenced, and, despite failing to move for correction of inventorship until long after litigation commenced, still was not found to have delayed the case." (MFR, p. 18.) Norton, however, addressed significantly different circumstances from those present here. Most obviously, the issue in Norton was not whether to lift a statutory stay (indeed, the Hatch-Waxman Amendments creating the statutory stay had not even been passed at the time Norton was decided). Rather, the defendant patentee in Norton sought to correct inventorship by adding an inventor pursuant to 35 U.S.C. § 256, and the plaintiff sought to prevent amendment on the grounds of laches. ( Id. at *1-2, 8-9.) The court held that any prejudice from the patentee's delay in moving to amend inventorship would be more appropriately addressed by allowing for additional discovery than by "summary invalidation of the patent." Id. at *11.
No. 71-CV-359, 1974 U.S. Dist. LEXIS 6377, 184 U.S.P.Q. (BNA) 187 (N.D.N.Y. Nov. 7, 1974) (as amended).
Unlike in Norton, no party in this case seeks "summary invalidation" of the '842 patent. Indeed, no party even argues that Dey should not be permitted to amend inventorship pursuant to 35 U.S.C. § 256. Eon only seeks to terminate the statutory stay on FDA approval of its generic drug on the ground that Dey's failure to enter this litigation with a clear picture on inventorship has constituted a failure to reasonably cooperate in expediting the action. There is nothing inconsistent about holding both (1) that Dey may seek to correct inventorship if new facts demonstrate a need to do so, and also (2) that Dey nevertheless should be required to inform itself of the facts underlying its claims of inventorship early in the action rather than waiting until the close of the evidence at trial to discover the role played by each of its own current and former employees in the development of the patented material. Had the Hatch-Waxman Amendments been in effect at the time Norton was decided, and had the plaintiff sought to have the stay lifted, the Norton court might well have reached the same result that this Court reached in its decision.
Finally, Dey asserts that the Court's decision improperly penalizes Dey for engaging in a "non-frivolous assertion of its legal rights" to petition the Court and the PTO to correct inventorship pursuant to 35 U.S.C. § 256. (MFR, p. 20.) It cites Zeneca Ltd. v. Pharmachemie B.V., 16 F.Supp.2d 112 (D. Mass. 1998) for the proposition that 21 U.S.C. § 355(j)(5)(B)(iii)'s standard of "fail[ing] to reasonably cooperate in expediting the action" is "`not be construed so as to encompass nonfrivolous assertions of legal rights." (MFR, p. 20.) Zeneca, however, did not involve a party's failure to enter the case with an informed position on a key issue. Rather, the defendant in that case was alleged to have "failed reasonably to cooperate in expediting the action" by filing a motion (which ultimately was successful) contesting the court's exercise of personal jurisdiction over it. Zeneca, 16 F.Supp.2d at 116. The court held that the defendant had a due process right not to be sued in a court that had no personal jurisdiction over it, that its motion had legal and factual support, and, thus, that the challenge to personal jurisdiction did not constitute unreasonable failure to cooperate in expediting the litigation. Id. In this case, by contrast, the challenged conduct is not Dey's exercise of its right to seek correction of inventorship under 35 U.S.C. § 256 per se, nor is it the filing of any motion with solid legal and factual support. This Court does not dispute that Dey has the right to correct inventorship under appropriate circumstances. The Court only takes issue with Dey's assertion that it did not have to make a good faith effort to identify the inventors of the subject matter claimed by the '842 patent at the time it filed its application, before it initiated this litigation, and during the course of this litigation.
Dey further argues that reconsideration is warranted based on facts that became available after the hearing on Eon's Motion to Shorten the 30-Month Stay. Specifically Dey argues that Eon's expert reports, produced after the hearing, did not rely on or refer to the DART study or documents associated with it. (MFR, p. 1.) However, Dey does not produce copies of those expert reports. Moreover, that Eon' experts may not have relied on or referred to the DART study does not decrease the high likelihood that Eon would not have conducted its discovery in a different way had the study been timely disclosed.
D. Conclusion
For the foregoing reasons, Dey's motion for reconsideration of this Court's November 4, 2005 Order granting Eon's motion to shorten the statutory 30-month stay is DENIED.