Summary
holding that three previous suits filed by defendant against plaintiff involving the manufacture of generic versions of Prozac were "additional support for [plaintiffs] reasonable apprehension of an infringement suit" regarding its attempt to manufacture a generic version of Prilosec
Summary of this case from Teva Pharmaceuticals USA, Inc. v. Abbott LaboratoriesOpinion
01 Civ. 10102 (LAP)
September 13, 2002
MEMORANDUM AND ORDER
Plaintiffs Dr. Reddy's Laboratories, Ltd. and Dr. Reddy Laboratories, Inc. (collectively, "DRL") bring this action for: (1) declaratory judgment for noninfringement and/or invalidity of United States Patent Nos. 6,326,384 (the "'384 Patent"), 6,268,385 (the "'385 Patent") and 6, 312, 712 (the "'712 Patent") against defendant aaiPharma Inc. ("aaiPharma"); and (2) damages against aaiPharma for: (a) misappropriation of trade secrets; (b) tortious interference with economic advantage; (c) unfair competition; and (d) violation of the North Carolina Unfair Trade Practices Act, N.C. Gen. Stat. § 75.1 et seq. aaiPharma moves to dismiss the complaint pursuant to Rules 12(b) (1) and 12(b)(6) of the Federal Rules of Civil procedure for lack of subject matter jurisdiction with respect to Counts I and II of the complaint and for failure to state a claim upon which relief can be granted with respect to Counts III through VI. For the foregoing reasons, aaiPharma's motion to dismiss is denied.
BACKGROUND
I. Statutory Background
The Federal Food, Drug and Cosmetic Act (the "FFDCA") prohibits the sale of new drugs that are not approved by the Food and Drug Administration (the "FDA"). 21 U.S.C. § 355 (a). To gain FDA approval, a company must first complete a New Drug Application ("NDA") that "demonstrates the drug's safety and efficacy for its intended uses."SmithKline Beecham Consumer Healthcare, L.P. v. Watson Pharm., Inc., 211 F.3d 21, 25-26 (2d Cir. 2000). The NDA "must include, inter alia, drug samples, proposed labeling, and the results of clinical safety and efficacy tests." Id.; see also 21 U.S.C. § 355 (b). In 1984, Congress enacted the Hatch-Waxman Amendments to the FFDCA "to permit the competitors of pioneer drug companies to obtain expedited and cost-efficient approval of generic versions of bioequivalents of drugs that have already obtained prior FDA approval." In re Busiprone Patent Litig., 185 F. Supp.2d 340, 345 (S.D.N.Y. 2002). Prior to the passage of the Hatch-Waxman amendments,
"Bioequivalence" refers to the rate at which, and the extent to which, the body absorbs the active ingredient(s) in the drug. 21 U.S.C. § 355 (j)(8)(A); 21 C.F.R. § 320.1 (e).
both pioneer (brand name) and generic drug manufacturers who wished to bring a drug to market were required to file a[n NDA] with the FDA. This requirement posed a formidable barrier to market entry for generic drug companies because preparation of an NDA requires expensive clinical studies demonstrating the proposed drug's safety and effectiveness. In addition, a generic manufacturer could not begin the necessary research and clinical studies until any patents on the brand name drug it sought to copy had expired because its research efforts would have infringed the patents held by the pioneer drug company. This meant that a pioneer drug company's monopoly on its brand name drug was effectively extended to include not only the terms of any patents on the brand name drug, but also the time it took generic competitors to complete the NDA process after these patents had expired.aaiPharma Inc. v. Thompson, 296 F.3d 227, 230-31 (4th Cir. 2002)
Under the Hatch-Waxman Amendments, "the original application for FDA approval (the 'pioneer' applicant) must still prepare an NDA. Subsequent applicants who wish to manufacture generic versions of the pioneer drug, however, need only complete an Abbreviated New Drug Application (ANDA) that relies on the FDA's previous determination that the drug is safe and effective." Andrx Pharm., Inc. v. Biovail Corp. Int'l, 256 F.3d 799, 801 (D.D.C. 2001) (footnotes omitted). In other words, an ANDA is essentially a "piggy-back on the pioneer drug's human clinical trials and labeling."SmithKline Beecham, 211 F.3d at 26 (citations omitted).
The Hatch-Waxman Amendments further provide that the pioneer applicant's NDA filing "must include information on any patent that 'claims the drug for which the applicant submitted the application or which claims 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.'" In re Busiprone, 185 F. Supp.2d at 345 (citing 21 U.S.C. § 355 (b)(1)). "If a pioneer drug company obtains a patent that meets these criteria after the NDA has been filed or approved, the company is required to file supplemental information, on the new patent within thirty days of the issuance of the new patent." Id. (citing 21 U.S.C. § 355 (b)(1) (c)(2)). "Upon approval of an NDA or receipt of supplemental patent information, the FDA publishes the submitted patent information in a book called the 'Approved Drug Products with Therapeutic Equivalence Evaluations,' commonly referred to as the 'Orange Book.'" Id. (citing 21 U.S.C. § 355 (b)(1) (c)(2)).
"[W]hen a generic maker files an ANDA seeking approval of a generic version of a drug that is listed in the Orange Book, the applicant must certify that any patent information listed in the Orange Book does not bar FDA approval of a generic version of the drug." Mylan Pharms., Inc. v. Thompson, 139 F. Supp.2d 1, 6 (D.D.C.) (citing 21 U.S.C. § 355 (j) (2)(A) (vii); 21 C.F.R. § 314.94 (a) (12)), rev'd on other grounds, 268 F.3d 1323 (Fed. Cir. 2001). ANDA applicants have four certification options:
(I) that no patent information on the drug product that is the subject of the ANDA has been submitted to the FDA; (II) that the patent has expired; (III) that the patent will expire on a stated date; or (IV) that the patent is invalid or will not be infringed by the manufacture, use, or sale of the drug for which the ANDA applicant seeks approval.Id. (citing 21 U.S.C. § 355 (j)(2)(A) (vii) (I) to (IV)).
II. Factual Background
General Facts
Prilosec is the brand name of a pharmaceutical product sold by AstraZeneca ("AstraZeneca"). (Am. Compl. ¶ 29). The generic version of Prilosec is omeprazole. (Id. ¶¶ 29-30). Prilosec is an extended-release omeprazole product that is prescribed for gastroesophageal reflux disorder, peptic ulcer and other gastrointestinal ailments. (Id. ¶ 30).
DRL filed an ANDA with the FDA seeking approval to sell an omeprazole product. (Id. ¶ 12). On June 25, 2001, DRL obtained tentative approval of its omeprazole ANDA from the FDA. (Certification of Andrew J. Miller in Opposition to Motion to Dismiss ("Miller Cert.") ¶ 14) DRL asserts that, upon final FDA approval of DRL's omeprazole product, DRL intends to market the product in the United States. (Am. Compl. ¶ 12). Further, DRL claims that it has spent "several million dollars to develop its product," which includes "all costs related to obtaining FDA approval and construction of a plant to manufacture its omeprazole product." (Miller Cert. ¶ 13).
Where a defendant raises factual issues concerning jurisdiction, it is appropriate for the Court to look at evidence presented outside the complaint for resolution. Indium Corp. v. Semi-Alloys, 781 F.2d 879, 884 (Fed. Cir. 1985).
Allegations Regarding Patent Infringement
aaiPharma is the owner by assignment of the '384, '385 and '712 Patents. (Am. Compl. ¶¶ 9-11). The '385 Patent was issued on July 31, 2001; the '712 Patent was issued on November 6, 2001; and the '384 Patent was issued on December 4, 2001. (Id., Exs. A, B, C). All three patents deal with omeprazole. (See id.)
DRL alleges that aaiPharma has stated that it would license the '384, '385 and '712 Patents to generic companies. (Id. ¶ 14). DRL further alleges that aaiPharma "has threatened to file a lawsuit if DRL refuses to purchase a license under its omeprazole related patents, which include the '384, '385 and '712 [Platents." (Id.)
While DRL does not specify in its complaint the sources of aaiPharma's alleged threats against DRL, it appears that those sources are two Wall Street Journal articles published on July 20, 2001 and August 10, 2001, respectively. The July 20 article provides in pertinent part:
In another sign of the legal hurdles facing generic-drug companies, a North Carolina research company received two patents Tuesday that may delay the launch of cheap generic versions of the huge-selling ulcer drug Prilosec.
Aai Pharma Inc. of Wilmington, N.C., said its patents describe the ratio of two crystalline structures within Prilosec, and that generic companies are unlikely to be able to make Prilosec properly without using — and therefore paying for — Aai's discoveries. Prilosec is made by AstraZeneca PLC, which has a nonexclusive licensing agreement to the patents, said Fred Sancilio, aaiPharma's chairman and chief executive.
Mr. Sancili said he would offer to license the patents to generic makers but not necessarily on the same terms offered AstraZeneca. If generic companies refuse to pay his company, "I think there is a threat of a lawsuit" filed by Aai against the generic companies, he said.
Aai's patents could prove beneficial to AstraZeneca, which has been fighting for years to extend its exclusive hold on Prilosec, the world's biggest-selling brand drug with $6 billion in annual sales. AstraZeneca's exclusive rights to Prilosec expire in October. . . .
Mr. Sancilio said his company finally figured out the true chemical structure of Prilosec, something he contends AstraZeneca has never known and originally described incorrectly when the drug was patented and approved for sale.
If AstraZeneca chooses to list Aai'a patents in a federal registry called the orange book, the patents could delay generic competitors to Prilosec by as much as 30 months — which would be a multimillion dollar boon to AstraZeneca but harm consumers, the generic makers say.
(Defendant's Notice of Motion to Dismiss All Claims, Declaration of Johnathan L. Greenblatt in Support of Defendant's Motion to Dismiss All Claims, sworn to on February 6, 2000 ("Greenblatt Decl."), Ex. B (emphasis added)).
The August 10 article, in turn, provides in pertinent part:
AaiPharma Inc.'s (AAII) stock tumble earlier in the session Friday was a result of investors misunderstanding how AstraZeneca PLC's (AZN) decision not to list the company's patent on for omeprazole in the Food and Drug Administration's Orange Book would affect the company, according to company officials.
AaiPharma's founder and Chief Executive Fred Sancilio told the Dow Jones Newswires Friday that AstraZeneca's decision will actually allow AaiPharma to license the active ingredient of AstraZeneca's top-selling ulcer medicine Prilosec to generic makers, once Prilosec comes off the patent. . . .
Much of Friday's sell-off was prompted by the looming concern that Andrx Group (ADRX) is waiting in the wings to launch a generic version of Prilosec in October when certain patents for AstraZeneca's branded version expires. . . .
AaiPharma's Sancilio said Andrx, along with other generic drug makers, will in all likelihood have to come to Aaipharma in order to license the key ingredients for a generic Prilosec.
He said it would be difficult to make a generic Prilosec without violating the patents that are already in place for the Aaipharma's compunds.
"If they must license the patents from us, it would eliminate a big obstacle in their way," Sancilio said.
(Id., Ex. A (emphasis added)).
Allegations Regarding DRL's Remaining Claims
Beginning in the mid-1990s, aaiPharma and DRL began a relationship whereby DRL would supply bulk products, including omeprazole, to aaiPharma so that aaiPharma could determine whether to file an ANDA for a finished dosage product, which would contain DRL's bulk product. (Am. Compl. ¶ 18). According to DRL, "[t]here was an understanding between DRL and aaiPharma that the shipment of bulk product, including DRL's shipment of its bulk omeprazole to aaiPharma, was for aaiPharma's determination of whether to file an ANDA and for no other purpose." (Id. ¶ 21). DRL alleges that DRL's bulk omeprazle is a trade secret because "it contains formula and involves processes which give DRL an advantage over its competitors," (id. ¶ 19), and that DRL has expended "a large amount of money and effort" to maintain that trade secret, (id. ¶ 20). DRL alleges that aaiPharma breached its duty of confidentiality and used DRL's bulk omeprazole "for purposes other than for the filing of an ANDA." (Id. ¶¶ 22-23). Specifically, DRL alleges that aaiPharma and AstraZeneca conspired to obtain DRL's trade secrets, whereby aaiPharma tested the bulk product it received from DRL "in order to find ways to keep DRL's generic bulk omeprazole product off the market and to extend Astra[Zeneca]'s monopoly" and shared DRL's trade secrets and aaiPharma's test results with AstraZeneca. (Id. ¶¶ 24-26). The purpose of this conspiracy was to "keep DRL's generic omeprazole off the market." (Id. ¶ 28).
Further, DRL alleges, aaiPharma and AstraZeneca entered into an agreement allowing aaiPharma to procure patents that would then be listed in the Orange Book by AstraZeneca. (Id. ¶ 32). This listing would "delay any launch of generic products[,] resulting in financial loss to the generic companies [such as DRL] and financial gain to AstraZeneca." (Id.). When AstraZeneca "realized it could not list the omeprazole patents in the orange book," DRL alleges, "it used the data received from aaiPharma to attempt to delay DRL's launch of generic omeprazole by submitting the data to the FDA and contending that DRL's bulk was not bioequivalent to Prilosec." (Id. ¶ 34). In response to this submission, the FDA "requested that DRL run tests costing hundreds of thousands of dollars, delaying DRL's approval and adversely impacting DRL's entitlement to Hatch-Waxman exclusivity." (Id. ¶ 36).
Prior Related Litigation
On July 26, 2001, Dr. Reddy's Laboratories, Ltd., which is a plaintiff in the instant case, and Reddy-Cheminor, Inc., which is not, filed a complaint against aaiPharma in the United States District Court for the Southern District of New York, docket no. 01 Civ. 6859. The Honorable Barbara S. Jones accepted reference of the case. On August 7, 2001, DRL filed an amended complaint (the "6859 Complaint") seeking a declaration of patent invalidity and noninfringement with respect to three patents, all of which are owned by aaiPharma: U.S. Patent No. 6,262,085 (the "'085 Patent"), U.S. Patent No. 6,262,086 (the "'086 Patent"), and the '385 Patent. On September 5, 2001, aaiPharma filed an answer to the amended complaint. (Greenblat Decl., Ex. C). That case is still pending.
Apparently, the '085 Patent and the '086 Patent — both of which were issued on July 17, 2001 — are the two patents to which the July 20, 2001 Wall Street Journal article refers.
Further, on August 3, 2001, Andrx Pharmaceuticals, Inc. filed a complaint against aaiPharma in the United States District Court for the Southern District of New York that, like DRL's amended complaint against aaiPharma in front of Judge Jones, seeks a declaration of noninfringement and invalidity with respect to the '085, '086 and '385 Patents. That case is also pending.
DISCUSSION
I. Declaratory Judgment Claim
A. Legal Standard
The Declaratory Judgment Act limits issuance of a declaratory judgment to cases of "actual controversy." 28 U.S.C. S 2201(a). If no actual case or controversy exists between the parties regarding the subject on which declaratory judgment is sought, the court lacks subject matter jurisdiction. Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 239-40 (1937); Solenoid Devices, Inc. v. Ledex, Inc., 375 F.2d 444, 445 (9th Cir. 1967); Spectronics Corp. v. H.B. Fuller Co., 940 F.2d 631, 634 (Fed. Cir. 1991) (where there is no actual controversy, the court has no discretion to decide the case). An actual controversy is one that is definite and concrete, not abstract or hypothetical. American Cyanamid Co., v. Ethicon, Inc., 443 F. Supp. 46, 48 (S.D.N.Y. 1977) (citing Aetna Life Insurance Co. v. Haworth, 300 U.S. 227, 239-41 (1937)). In Maryland Casualty Co. v. Pacific Coal Oil Co., 312 U.S. 270 (1941), the Supreme Court noted:
To determine the validity of a patent absent a case or controversy "would involve the court in rendering a forbidden advisory opinion."Arrowhead Indus. Water, Inc. v. Ecolochem, 846 F.2d 731, 735 (Fed. Cir. 1988).
The difference between an abstract question and a "controversy" contemplated by the Declaratory Judgment Act is necessarily one of degree, and it would be difficult, if it would be possible, to fashion a precise test for determining in every case whether there is such a controversy. Basically, the question in each case is whether the facts alleged, under all the circumstances, show there is a substantial controversy, between the parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.Id. at 273.
To establish an "actual controversy" in a patent invalidity declaratory action there must be (1) an explicit threat or action by the patentee, which creates a reasonable apprehension on the part of the declaratory judgment plaintiff that it will face an infringement suit, and (2) plaintiff must actually have either produced the device or have prepared to produce the device. Arrowhead Indus. Water, Inc. v. Ecolochem, 846 F.2d 731, 736 (Fed. Cir. 1988); see also Spectronics Corp., 940 F.2d at 634; B.P. Chem. Ltd. v. Union Carbide Corp., 4 F.3d 975, 978 (Fed. Cir. 1993). If either of these two requirements is not met, dismissal for lack of subject matter jurisdiction is required. Lex Computer Management Corp. v. CBS Inc., 684 F. Supp. 811, 813 (S.D.N.Y. 1988),aff'd, 861 F.2d 1095 (Fed. Cir. 1989). "[T]he 'actual controversy' must be extant at all stages of the review, not merely at the time the complaint is filed." Super Sack Mfg. Corp. v. Chase Packaging Corp., 57 F.3d 1054, 1058 (Fed. Cir. 1995) (quoting Preiser v. Newkirk, 422 U.S. 395, 401 (1975).
While an actual controversy exists if there is an express charge of infringement, Premo Pharm. Labs., Inc. v. Pfizer Pharm., Inc., 465 F. Supp. 1281, 1283 (S.D.N.Y. 1979), the Federal Circuit has also stated that it "cannot read the Declaratory Judgment Act so narrowly as to require that a party actually be confronted with an express threat of litigation to meet the requirements of an actual case or controversy."Goodyear Tire v. Releasomers, Inc., 824 F.2d 953, 956 (Fed. Cir. 1987). Absent an express charge of infringement, a declaratory judgment plaintiff must establish an actual controversy on the "totality of the circumstances" surrounding the claim. Id.; see also Shell Oil Co. v. Amoco Corp., 970 F.2d 885, 888 (Fed. Cir. 1992). In a motion to dismiss, the plaintiff has the burden of proving that its apprehension of suit was reasonable. Shell, 970 F.2d 885, 887.
Conduct producing a reasonable apprehension that a patent lawsuit may be filed can be subtle. EMC Corp. v. Norand Corp., 89 F.3d 807, 811 (Fed. Cir. 1996). Relevant to the issue of reasonable apprehension can be the fact that the parties are engaged in litigation at the time the perceived threat is made or the fact that the patent holder has stated an intent to enforce its patent rights. Arrowhead, 846 F.2d at 737. It is true that some cases have held such facts insufficient to find a reasonable apprehension of suit. Premo Pharm. Labs., 465 F. Supp. 1281 (defendant's having filed 38 previous lawsuits against other alleged infringers insufficient to raise reasonable apprehension of suit);Volkswagen of America, Inc. v. Engelhard Minerals Chem. Corp., 189 U.S.P.Q. (BNA) 297, 299-300 (S.D.N.Y. 1975) (parties had debated the validity of patent in question but no actual accusation of infringement). Nonetheless, this Court has held that it must consider the context in which statements allegedly raising an apprehension of suit were made. See American Cyanamid, 443 F. Supp. at 46 (statements by employees of a defendant patent owner were insufficient in context).
Nevertheless, "[e]ven if there is an actual controversy, 'the district court is not required to exercise declaratory jurisdiction, but has discretion to decline that jurisdiction.'" Cygnus Therapeutics Systems v. Asza Corp., 92 F.3d 1153, 1158-59 (1996) (quoting EMC Corp., 89 F.3d at 810).
B. Actual Controversy
1. Reasonable Apprehension
In its motion to dismiss, aaiPharma argues that DRL was not in reasonable apprehension of a patent infringement suit by aaiPharma with respect to the '384, '385 and '712 Patents. aaiPharma emphasizes that, with respect to its comments in the two Wall Street Journal articles, "DRL is merely one of many generic companies that manufacture omeprazole products and/or filed an Abbreviated New Drug Application ("ANDA") on omeprazole that may or may not fall within the scope of the '384, '384 and/or '712 [P]atents," (aaiPharma's Mem. Support Mot. Dismiss All Claims at 4), and therefore, "aaiPharma's alleged statements directed to the generic industry as a whole do not reach the level of an objective, immediate and actual threat of a suit by aaiPharma," (id. at 7). Further, aaiPharma asserts that both the '384 Patent and '712 Patent were issued after the two Wall Street Journal articles had issued, "negating the articles as being a threat to sue on these patents." (aaiPharma's Reply Mem. Support Mot. Dismiss All Claims at 5).
It is true that the comments made by aaiPharma regarding potential infringement suits were directed at generic omeprazole manufacturers as a whole and not DRL specifically. For purposes of DRL's reasonable apprehension that it would be subject to an infringement suit, however, this is a distinction without a difference: threats of infringement suits against an entire product industry can create reasonable apprehension among all individual members of that industry. See, e.g., DuPont Merck Pharm. Co. v. Bristol-Myers Squibb Co., 62 F.3d 1397, 1401 (Fed. Cir. 1995) (finding that court possessed jurisdiction over plaintiff's declaratory judgment action, based upon, inter alia, defendant's threat to bring patent infringement suits against generic drug manufacturers who attempt to market their products during the twenty-year period after the patent was first filed, which created a reasonable apprehension that plaintiff would face an infringement suit); Sigma Tau Industrie Farmaceutichue Riunite S.P.A. v. Lonza, Ltd., 36 F. Supp.2d 26, 30 n. 5 (D.D.C. 1999) ("The threat of infringement does not have to be directed against plaintiffs specifically. It is sufficient to create a reasonable apprehension if plaintiffs' customers, or other competitors, are threatened."); Nippon Electric Glass Co. v. Sheldon, 489 F. Supp. 119, 121 (S.D.N.Y. 1980) ("The accusation [of infringement] need not be made directly to the declaratory judgment plaintiff, but may be made to its customers or the industry at large."); Airship Indus. (UK) Ltd. v. Goodyear Tire Rubber Co., 643 F. Supp. 754, 759 (S.D.N.Y. 1986) (same) (quoting Nippon); Micro-Mega S.A. v. Jacklich, No. 84 Civ. 2943, 1985 WL 1246, at *3 (E.D.N.Y. Jan. 4, 1985) ("For example, if the patentee has threatened to sue for infringement the plaintiff's customers or warned the industry to which plaintiff belongs of patentee's rights, both situations have been held to be sufficient."); 10B Wright, Miller Kane, Federal Practice Procedure 3d, Patents, Copyrights § 2761 ("[T]he courts have held that a charge by the patentee that the device is an infringement is a prerequisite to finding an actual controversy, but the requirement of a charge is liberally construed. If the patentee has threatened an infringement suit or has notified the trade that a competitor is infringing, this is enough. . . ." (emphasis added) (footnote omitted)).
aaiPharma also suggests that it is clear from the text of the two Wall Street Journal articles "that there is no threat of litigation; indeed, the articles simply advise the generic companies of the existence of some patents and let them know that licenses are available." (aaiPharma's Reply Mem. Supp. Mot. Dismiss All Claims at 2-3). aaiPharma's suggestion is belied by the plain language of its chief executive, Fred Sancilio, quoted in the July 20 article. Mr. Sancillo specifically stated that "[i]f generic companies refuse to pay his company, 'I think there is a threat of a lawsuit' filed by Aai against the generic companies." (Greenblatt Decl., Ex. B).
Further, it is true that, at the time the Wall Street Journal articles were published, two of the three patents upon which DRL seeks a declaratory judgment had not yet been issued. It is axiomatic that DRL cannot obtain a declaratory judgment of invalidity and/or noninfringement on a patent that has not yet been issued by the PTO at the time the complaint was filed. See, e.g., Gaf Building Materials Corp. v. Elk Corp., 90 F.3d 479, 482 (Fed. Cir. 1996) ("[A] threat is not sufficient to create a case or controversy unless it is made with respect to a patent that has issued before a complaint is filed."). Nonetheless, one can still be in reasonable apprehension of an infringement suit with respect to a patent that had not yet been issued at the time the alleged infringer was threatened, so long as that patent has issued at the time the complaint was filed. See, e.g., id. at 480, 482 (finding that plaintiff was in reasonable apprehension of infringement suit; letter threatening infringement suit was sent two months before patent actually issued). Here, aaiPharma's threatening public statements directed to the generic omeprazole-manufacturing industry coupled with the fact that all three patents at issue in DRL's declaratory judgment action deal with omeprazole leads to the conclusion that DRL had a reasonable apprehension that it would be sued for patent infringement on the '384 and '712 Patents even though those patents had not yet been issued when the Wall Street Journal articles were published. Indeed, aaiPharma does not dispute that, at the time the Amended Complaint was filed, the '384, '385 and '712 Patents had all been issued.
Additional support for DRL's reasonable apprehension of an infringement suit by aaiPharma can be found in the parties' prior litigation history. In addition to the 6859 Complaint and the Andrx Pharmaceuticals, Inc. / aaiPharma litigation described earlier, there are three cases filed by aaiPharma against Dr. Reddy's Laboratories, Ltd. and several other manufacturers in the United States District Court for the Eastern District of North Carolina, Southern Division. (Miller Cert. ¶¶ 1, 5 Exs. A, B, C). It is true that those cases involve a dispute over the manufacture of generic versions of Prozac (which aaiPharma had its own patents on), rather than Prilosec. (Id.). Further, aaiPharma asserts that Dr. Reddy's Laboratories, Ltd. and Reddy-Cheminor, Inc. sued aaiPharma first with respect to the Prozac cases, again seeking a declaratory judgment, and it was only afterwards that aaiPharma sued those plaintiffs for infringement of aaiPharma's Prozac patents. (aaiPharma's Reply Mem. Supp. Mot Dismiss All Claims at 3). Nonetheless, these facts demonstrate a significant legal history among the parties with respect to the manufacture of generic drugs, including omeprazole.
Along the same lines, I note that Mr. Miller, in his certification as counsel for DRL, asserts that he spoke with Steve Fontana, in-house counsel for aaiPharma, concerning aaiPharma's attempt to license its patents on generic Prozac to DRL. (Miller Cert. ¶ 8). Miller states that, during those conversations, Fontana told him that "aaiPharma would not link the resolution of the generic Prozac® matter with discussions concerning generic Prilosec® because what aaiPharma was demanding for its generic Prozac® was negligible compared to the very very significant sum which it intended to demand in the near future with respect to the generic Prilosec patents." (Id. ¶ 9).
Finally, aaiPharma asserts that, with respect to the 6859 Complaint pending in front of Judge Jones, aaiPharma filed an Answer in September 2001 that "affirmatively pled that it did not know how Dr. Reddy manufactures omeprazole or whether it infringes the patents in that litigation, which includes the '385 patent in suit here." (aaiPharma's Mem. Support Mot. Dismiss All Claims at 4; see Greenblat Decl., Ex. C, ¶ 21). Therefore, aaiPharma argues, "prior to the filing of this suit, DRL and its counsel were on notice that aaiPharma was still uncertain about its infringement position vis-à-vis DRL's omeprazole." (aaiPharma's Mem. Supp. Mot. Dismiss All Claims at 4). This argument is without merit. Regardless of any statements made by aaiPharma in its responsive pleadings in other cases, DRL was still in reasonable apprehension of an infringement suit by aaiPharma, given aaiPharma's threats to the generic omeprazole industry. See, e.g., Applexion S.A. v. Amalgamated Sugar Co., No. 95 C 858, 1995 WL 229049 (N.D. Ill. Apr. 17, 1995):
The fact that Amalgamated may not have comprehensive information about the Applexion process does not dispel the reasonable apprehension of suit that Amalgamated's acts [alleging infringement] created. See Arrowhead Indus. Water, 846 F.2d at 739 (patent holder's assertions that declaratory plaintiff had not disclosed enough about its process "comes with poor grace" given fact that patent holder had charged infringement) Even if it did not know with certainty whether Spreckels would use the process in an infringing manner, Amalgamated's acts created a reasonable apprehension that it would sue if the process were sold or used.Id. at *5 (footnote omitted); see also, e.g., Sumitomo Elec. Indus. Ltd. v. Corning, Inc., 169 F. Supp.2d 440, 446 (M.D.N.C. 2001) ("Corning's lack of both knowledge and information about Sumitomo's DCF cable eliminates the possibility of a direct allegation of infringement, but not an indirect one. . . . The patentee's intent or knowledge does not dictate the analysis, its conduct does."); Glaxo Wellcome, Inc. v. Pharmadyne Corp., Civ. No. AMD-96-455, 1996 WL 432290, at * (D. Md. 1996) ("Glaxo's statements that it has no basis for determining if Pharmadyne is in fact infringing the '431 patent, and that it has no plans to sue Pharmadyne on the '431 patent now, are to no avail. Even promises not to sue have been held insufficient to abate a declaratory plaintiff's fear."); Mobil Oil Corp. v. Advanced Eguip. Recycling Techs., Inc., 826 F. Supp. 112 (D. Del. 1993) (patentee's admission of non-infringement did not extinguish controversy absent a formal covenant not to sue, or a judicial determination of non-infringement).
2. Production or Preparation of Device
aaiPharma argues that DRL has also failed to establish an "actual controversy" because DRL has not demonstrated that it is engaged in "present activity which could constitute infringement or concrete steps taken with the intent to conduct such activity." (aaiPharma's Reply Mem. Supp. Mot. Dismiss All Claims at 6 (quoting B.P. Chem., 4 F.3d at 978)). To support its position, aaiPharma asserts, inter alia, that DRL has not yet sold any omeprazole product in this country and that DRL manufactures its product in India. (aaiPharma's Mem. Supp. Mot. Dismiss All Claims at 10).
Contrary to aaiPharma's arguments, DRL has established an actual controversy here. In June 2001, DRL obtained tentative approval of its omeprazole ANDA from the FDA. (Miller Cert. ¶ 14). Further, "DRL has spent several million dollars to develop its product, including all costs related to obtaining FDA approval and construction of a plant to manufacture its omeprazole product." (Id. ¶ 13). These facts satisfy the "concrete steps" requirement of a declaratory judgment action. See Glaxo Group Ltd. v. Apotex, Inc., 130 F. Supp.2d 1006, 1008 (N.D. Ill. 2001) ("[D]efendant has filed and the FDA has accepted for filing the ANDA, which, as both parties recognize, means that defendant is ready or has at least made meaningful preparations to be ready to market the allegedly infringing product."); Mylan Pharms., Inc. v. Thompson, 139 F. Supp.2d 1, 15-16 (D.D.C.) ("Mylan is in a position to begin marketing its generic product immediately upon FDA approval. Indeed, Mylan has already developed a generic equivalent of BuSpar(R), filed an ANDA with respect to that product, obtained tentative FDA approval of its ANDA, and packed its buspirone product into trucks and onto the loading dock on November 21, 2000 in anticipation of final FDA approval."), rev'd on other grounds, 268 F.3d 1323 (Fed. Cir. 2001); Glaxo, Inc. v. Novopharm, Ltd., 110 F.3d 1562, 1571 (Fed. Cir. 1997) (finding an actual controversy where, inter alia, alleged future infringer "indicated that it had submitted an ANDA accompanied by data sufficient to make FDA approval imminent," which demonstrated that alleged future infringer was "systematically attempting to meet the applicable regulatory requirements while preparing to import its product"); Hoechst Marion Roussel, Inc. v. Par Pharm., Inc., Civ. No. 95-3673 (DRD), 1996 WL 468593, at *5 (D.N.J. Mar. 14, 1996) ("Par's filing of an ANDA constituted a meaningful step towards the purpose of making, using or selling the generic drug.").
Even when, as aaiPharma alleges, one has not yet committed an allegedly infringing act in the United States, it is still possible — as aaiPharma readily admits — for one to take concrete steps towards that allegedly infringing act. DRL has demonstrated that it has taken those steps here.
aaiPharma makes two additional arguments as to why DRL has not taken concrete steps towards infringement to support declaratory judgment jurisdiction.
First, aaiPharma asserts that "Andrx, not DRL, is the only approved generic omeprazole supplier" because Andrx "was the first to challenge the innovator's (Astra-Zeneca) patents with a so-called Paragraph 4 certification of invalidity and/or noninfringement." (aaiPharma's Reply Mem. Supp. Mot. Dismiss All Claims at 6-7). According to aaiPharma, DRL has recently filed suit against the FDA seeking relief from the ruling that Andrx has exclusive rights, and "[a]t least until that suit is resolved, DRL has to wait until Andrx's exclusive marketing rights expire before it can be approved by the FDA and infringing sales commerce." (Id. at 7).
Second, aaiPharma asserts that "approval of DRL's omeprozole [sic] also appears to be dependent on the outcome of an extensive patent litigation trial currently being conducted by Judge Jones between Astra-Zeneca and four generic companies including both Andrx and DRL involving numerous Astra-Zeneca patents. If AstraZeneca prevails in that litigation, then DRL's approval may be delayed another five years." (Id. at 7).
I reject both of these arguments. Among other things, the arguments are entirely devoid of the detail that would be necessary for me to consider them. aaiPharma provides no factual or legal citations to support its assertions. Further, with respect to the trial before Judge Jones, aaiPharma gives no description of what products the aforementioned patents cover nor any explanation as to how that litigation will cause delay in DRL's approval.
II. Remaining Claims
Counts III through VI of the amended complaint allege:
(1) misappropriation of trade secrets; (2) tortious interference with economic advantage; (3) unfair competition; and (4) violation of the North Carolina Unfair Trade Practices Act, N.C. Gen. Stat. § 75.1 et seq. aaiPharma asserts that DRL's "unfair or deceptive acts or practices claims," viz., Counts III through VI, should be dismissed. aaiPharma argues DRL has failed to sufficiently plead injury as a result of the alleged acts of aaiPharma, as required in both civil actions for damages generally and as required specifically by both the North Carolina Trade Secrets Protection Act (N.C.G.S.A. § 66-155) and the North Carolina Unfair Trade Practices Act (N.C.G.S.A. § 75-1). aaiPharma further argues that, even assuming that DRL has sufficiently pled injury, aaiPharma's activities are immune under the Noerr-Pennington doctrine.
The parties appear to assume that North Carolina law applies to DRL's state law claims, but neither party addresses at all the relevant choice of law considerations. A federal court sitting in diversity must apply the choice of law rules of the forum state, in this case New York.Tri-State Employment Serv. v. Mountbatten Security Co., 295 F.3d 256, 260 (2d Cir. 2002). In tort cases, New York courts have adopted an "interest analysis" to determine which jurisdiction has the "greate[st] interest in having its law applied in the litigation." Ackerman v. Price Waterhouse, 683 N.Y.S.2d 179, 188 (App.Div. 1st Dep't 1998); see also Elgin Sweeper Co. v. Melson Inc., 884 F. Supp. 641, 650 n. 12 (N.D.N.Y. 1995) (Scullin, J.) ("In New York, the choice of law for tort causes of action is based upon the place which has the most significant contacts with the matter in dispute, thereby giving the place with the most interest in the problem paramount control over the legal issues arising in the case."). Under this approach, "the significant contacts are, almost exclusively, the parties' domiciles and the locus of the tort." Schultz v. Boy Scouts of Am., Inc., Inc., 65 N.Y.2d 189, 197 (1985). "[T]he locus in [a tort] case is determined by where the plaintiffs' injuries occurred." Id. "The place in which the injury is deemed to have occurred "is usually where the plaintiff is located.'" Cromer Fin. Ltd. v. Berger, 158 F. Supp.2d 347, 357 (S.D.N.Y. 2001) (quoting Odyssey Re (London) Ltd. v. Stirling Cooke Brown Holdings Ltd., 85 F. Supp.2d 282, 292 (S.D.N.Y. 2000) (citation omitted)).
Here, it is alleged that plaintiff Dr. Reddy's Laboratories, Ltd. is an Indian corporation with its principal place of business in India, (Am. Compl. ¶ 1); plaintiff Dr. Reddy's Laboratories, Inc. is a New Jersey corporation with its principal place of business in New Jersey, ( id. ¶ 2); aaiPharma is a Delaware corporation with its principal place of business in North Carolina and regularly conducts business in New York; (id. ¶ 3), and non-party Astra-Zeneca is a limited partnership under the laws of Delaware with its principal place of business in Pennsylvania, (id. ¶ 5). Presumably, the plaintiffs' injuries have occurred in India and New Jersey, where those companies are incorporated. For purposes of aaiPharma's motion to dismiss, however, I need not actually determine which law is applicable to DRL's claims, as DRL has sufficiently pled injury.
A. Injury
aaiPharma asserts that "DRL has utterly failed to properly [sic] allege injury from aaiPharma's activity." (aaiPharma's Mem. Supp. Mot. Dismiss All Claims at 11). According to aaiPharma, "DRL has not plead that it is prepared to bring an omeprazole drug to market or that, but for aaiPharma's alleged acts, it would have anticipated FDA approval." (Id). Absent such pleadings, aaiPharma asserts, there is no nexus between the alleged acts and the asserted injury:
Initially, DRL argues that because the FDA required them to do additional testing and that testing cost money, DRL was harmed. DRL fails to demonstrate, however, any proximate causal connection between any furnishing of information to the FDA and a decision by the FDA to ask DRL for additional information or testing. aaiPharma does not control the FDA. The FDA exercises its own judgment. Apparently in the FDA's judgment, something associated with DRL's product created a health and/or safety concern, or raised regulatory questions, that required more testing or information. Whatever factor or factors caused the FDA to ask for more testing or information from DRL is unknown and a matter of speculation. aaiPharma cannot be held responsible for the FDA's actions protecting the public interest.
(aaiPharma's Reply Mem. Supp. Mot. Dismiss All Claims at 10-11).
aaiPharma's argument is meritless. Rule 8(a)(2) of the Federal Rules of Civil Procedure provides that a complaint need only provide a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). Rule 8 does not require "a claimant to set out in detail the facts upon which he bases his claim." Leatherman v. Tarrany County Narcotics Intelligence Coordination Unit, 507 U.S. 163, 168 (1993).
DRL alleges, inter alia, that aaiPharma conspired with AstraZeneca to allow aaiPharma to procure patents that would be listed in the Orange Book. (Am. Compl. ¶ 32). When that plan failed, DRL alleges, AstraZeneca used the data that aaiPharma misappropriated from DRL "to attempt to delay DRL's launch of generic omeprazole by submitting the data to the FDA and contending that DRL's bulk was not bioequivalent to Prilosec®." (Id. ¶ 34). "In response to Astra[Zeneca]'s submission of such data," DRL alleges, "the FDA has requested that DRL run tests costing hundreds of thousands of dollars, delaying DRL's approval and adversely impacting DRL's entitlement to Hatch-Waxman exclusivity." (Id. ¶ 36). These statements sufficient plead DRL's alleged injury, notwithstanding the fact that aaiPharma does not have control over the FDA.
For example, in a recent patent infringement case, Ely Lilly Co. v. American Cyanamid Co., No. IP95-0536-C-B/S, 2001 WL 30191 (S.D. Ind. Jan. 8, 2001), the court considered a motion to dismiss defendant/counterclaimant Zenith Laboratories, Inc.'s ("Zenith") amended counterclaim, in which Zenith alleges violation of Section 1 of the Sherman Act. Id. at *1. Zenith alleged that plaintiff/counterclaim defendant Ely Lilly Co. ("Lilly"), in anticipation of the expiration of two of its patents on the antibiotic cefaclor, "began developing strategies to identify potential generic manufacturers of cefaclor and then to prevent them from producing cefaclor." Id. (citation omitted). Lilly implemented this strategy, Zenith alleged, by commencing an "outsourcing" program "to tie up the manufacturing capacity of potential manufacturers of bulk cefaclor so that they could not or would not produce cefaclor for sale in competition with Lilly, particularly in Lilly's most profitable market, the United States." Id. (citation omitted). Zenith alleged that it was injured by Lilly's anti-competitive behavior because Lilly prevented Zenith from entering the generic cefaclor market in the United States until approximately five months after Lilly's patents expired." Id. at *2. Specifically, Zenith alleged that it "began seeking a supplier of bulk cefaclor in 1992 so that it could market generic cefaclor in the United States upon expiration of Lilly's patents." Id. (citation omitted). Because of Lilly's agreements with its "outsourcing" companies, however, none of those companies except for one were willing to sell Zenith bulk cefaclor — but the FDA did not approve that company's Abbreviated Antibiotic Drug Application ("AADA") until nearly one year after another "outsourcing" company's AADA was approved. Id. (citation omitted).
The court denied Lilly's motion to dismiss:
Lilly argues that Zenith's assertion that Dobfar would have sold it bulk cefaclor, thus enabling it to enter the generic cefaclor market earlier, is "sheer speculation," and notes that Zenith
does not allege that it would have used Dobfar, rather than Opus, as a bulk cefaclor supplier but for Dobfar's decision . . . does not allege that, had Dobfar or Ranbaxy been willing to supply bulk cefaclor to Zenith, Zenith's choice of supplier would have been any differen[t] . . . [and does not allege] that it preferred Dobfar to Opos, whether on the basis of price, quality, availability of bulk cefaclor, or any other basis.
Lilly's Reply Brief at 5. This is all true; however, Zenith's counterclaim need not contain such extensive allegations. Rather, the question is whether Zenith can prove any set of facts, consistent with its counterclaim, that would entitle it to relief. See Sanjuan [v. Am. Bd. of Psychiatry Neurology], 40 F.3d [247,] 251 [(7th Cir. 1995)] (citation omitted) ("At this stage the plaintiff receives the benefit of imagination, so long as the hypotheses are consistent with the complaint.") It is not outside the realm of possibility that Zenith will be able to prove that but for Lilly's agreement with Dobfar, Zenith would have purchased bulk cefaclor from Dobfar rather than Opos and would have entered the U.S. generic cefaclor market sooner than late April 1995. . . .
Lilly finally argues that any delay in Zenith's entry into the generic cefaclor market was proximately caused by the slow FDA approval process, not by any action of Lilly; in other words, but for the time it took the FDA to approve Opos's and Zenith's AADAs, Zenith would have been able to enter the U.S. cefaclor market when Lilly's patent expired. However, Dobfar's AADA to sell bulk cefaclor was approved in April 1994, and Zenith may be able to prove that its AADA more likely than not would have been approved sooner had its application sought to use Dobfar's bulk cefaclor, rather than Opos's, to produce its generic cefaclor. There is, then, at least one set of facts which, if proved, will demonstrate that Zenith was injured by Lilly's alleged actions. The allegations contained in Zenith's amended counterclaim are not inconsistent with that set of facts; therefore, Zenith has not pled itself out of court, and Lilly's motion to dismiss on that ground must be denied.Id. at *4-*5; see also, e.g., Italian French Wine Co. v. Negociants U.S.A., Inc., 842 F. Supp. 693 (W.D.N.Y. 1993) (denying motion to dismiss unjust enrichment claim; plaintiff contended that, "as a result of [defendant's] acts in wrongfully interfering with Plaintiff's contractual relations with Negociants, Lauber was unjustly enriched by virtue of the profits accruing to Lauber which, but for Lauber's activities, would have accrued to Plaintiff").
Because I find that DRL has sufficiently pled injury, I need not address the parties' arguments with respect to whether the North Carolina Trade Secrets Act specifically requires DRL to plead injury.
B. Noerr-Pennington Immunity
Finally, aaiPharma invokes the Noerr-Pennington doctrine as a defense to DRL's allegations that, after aaiPharma obtained a shipment of bulk omeprazole products from DRL: (1) aaiPharma tested the bulk product to find ways to keep DRL's generic bulk omeprazole product off the market, in violation of the parties' agreement; (2) aaiPharma shared the results of that testing with AstraZeneca to delay the approval of DRL's own product; (3) AstraZeneca reported data reflecting the results of that testing with the FDA, contenting that DRL's bulk was not bioequivalent to Prilosec; and (4) in response to AstraZeneca's submission of this data, "the FDA has requested that DRL run tests costing hundreds of thousands of dollars, delaying DRL's approval and adversely impacting DRL's entitlement to Hatch-Waxman exclusivity." (Am. Compl. ¶¶ 16, 21-22, 25-26, 34-36). According to aaiPharma, "[t]he only way aaiPharma's (and/or Astra[Zeneca]'s) purported conduct could have caused such a delay was by petitioning the FDA (a governmental agency) and informing the agency of information relating to omeprazole. Even if true, such a petition to the FDA triggers the Noerr-Pennington doctrine and is immune from liability." (aaiPharma's Mem. Supp. Mot. Dismiss All Claims at 13).
The Noerr-Pennington doctrine provides immunity from liability for conduct seeking to influence government action. Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 136 (1961); United Mine Workers of Am. v. Pennington, 381 U.S. 657, 669-70 (1965). The immunity extends to persons who petition all types of government entities, including administrative agencies. California Motor Transp. Co. v. Trucking Unlimited, 404 U.S. 508, 510 (1972). WhileNoerr-Pennington has traditionally applied to antitrust claims, courts have expanded use of the doctrine to encompass state law tort claims that arise from government action. See, e.g., Alfred Weissman Real Estate, Inc. v. Big V Supermarkets, Inc., 707 N.Y.S.2d 647, 652 (App.Div.2d Dept. 2000) ("Although the Noerr-Pennington doctrine initially arose in the antitrust field, the courts have expanded it to protect First Amendment petitioning of the government from claims brought under Federal and State law, including claims asserted pursuant to . . . common-law tortious interference with contractual relations."); Bristol-Myers squibb Co. v. Ivax Corp., 77 F. Supp.2d 606, 616 (D.N.J. 2000) (unfair competition claim); Cheminor Drugs, Ltd. v. Ethyl Corp., 168 F.3d 119, 128-29 (3d Cir. 1999) (tortious interference and unfair competition claims); Fox News Network, L.L.C. v. Time Warner Inc., 962 F. Supp. 339, 345 (E.D.N.Y. 1997) ("The [Noerr-Pennington] doctrine originated as a limit on antitrust liability, but has been used to prohibit other types of proceedings, including civil rights actions and tortious interference claims.").
aaiPharma is not entitled to Noerr-Pennington immunity. While DRL alleges that aaiPharma conspired with AstraZeneca to share the results of aaiPharma's bulk omeprazole testing, AstraZeneca was the one that actually reported data to the FDA reflecting the results of that testing. Therefore, as DRL states, "even if the petitioning fell withinNoerr-Pennington immunity it was Astra — not aaiPharma — which engaged in and would arguably be protected by the petitioning immunity." (DRL's Mem. Opp. aaiPharma's Mot. Dismiss at 20).
aaiPharma attempts to evade this reality by grouping together its alleged activities with AstraZeneca's alleged activities and characterizing them as, in essence, a joint petition. (See aaiPharma's Mem. Supp. Mot. Dismiss All Claims at 13 ("The only way aaiPharma's (and/or Astra's) purported conduct could have caused such a delay was by petitioning the FDA (a governmental agency) and informing the agency of information relating to omeprazole."); id. ("All of DRL's allegations regarding aaiPharma's (and/or Astra's) efforts before the FDA are immune from scrutiny pursuant to the Noerr-Pennington doctrine and cannot support the unfair or deceptive acts or practices claims."); aaiPharma's Reply Mem. Supp. Mot. Dismiss All Claims at 15 (describing its own alleged misconduct as "providing information to the FDA through Astra-Zeneca")). But DRL has only alleged that AstraZeneca was the petitioning party here, not aaiPharma. aaiPharma's characterizations cannot change the pleadings.
CONCLUSION
aaiPharma's motion to dismiss the amended complaint is denied. Counsel for all parties shall appear at a status conference on October 18, 2002, at 9:00 a.m., Courtroom 12A, United States District Court, Southern District of New York, 500 Pearl Street, New York, New York.
SO ORDERED: