UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
IN RE: ACTOS DIRECT PURCHASER
ANTITRUST LITIGATION
THIS DOCUMENT RELATES TO:
All Actions
Master File No. 1:15-cv-03278-RA
DIRECT PURCHASER CLASS PLAINTIFFS’ CONSOLIDATED
OPPOSITION TO DEFENDANTS’ MOTIONS TO DISMISS
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 1 of 86
i
TABLE OF CONTENTS
I. INTRODUCTION ............................................................................................................................ 1
II. BACKGROUND ................................................................................................................................ 3
A. Statutory and Regulatory Background ............................................................................ 3
1. New drug applicants must identify patents that cover their
products. .................................................................................................................... 3
2. Drug sponsors are on their honor to submit truthful patent
information................................................................................................................ 4
3. The Hatch-Waxman Act is intended to get low cost generics
to market sooner. ..................................................................................................... 5
4. Hatch-Waxman Act allows for generic entry even in the face of
a brand company’s patents. ................................................................................... 6
a. Paragraph IV certifications. .................................................................... 6
b. Section viii statements allow generic companies to
come to market with labels “carving out” patented
methods of using the drug. ...................................................................... 7
5. The consequences of submitting false patent information. ........................... 9
6. The FTC finds brands improperly submitting patents as drug
product patents to delay the onset of generic competition. .........................10
B. Facts. ......................................................................................................................................11
1. Takeda’s patents. ...................................................................................................11
2. The first wave of generics files ANDAs. ..........................................................13
3. Teva files its generic ACTOS ANDA. .............................................................16
4. The challenge to the ’777 patent is tried. ........................................................17
5. Takeda sues Mylan and Teva for their ACTOplus met ANDAs. ...............18
6. In 2009 and 2010, Takeda reiterates the false characterization
of the ’584 and ’404 patents. ...............................................................................19
7. Takeda negotiates the March 2010 pact with Mylan, Actavis,
and Ranbaxy. ..........................................................................................................20
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 2 of 86
ii
8. Teva asserts a counterclaim to correct the false patent
information for the ’584 and ’404 patents. .......................................................23
9. Takeda negotiates the December 2010 pact with Teva. ..............................25
III. LEGAL STANDARD .....................................................................................................................26
IV. ARGUMENT ....................................................................................................................................27
A. The complaint alleges Takeda violated § 2 of the Sherman Act by
submitting false patent information to the FDA. ........................................................28
1. Submitting false patent information to the FDA violates § 2 of
the Sherman Act. ...................................................................................................28
2. The complaint alleges Takeda submitted false patent
information to the FDA. ......................................................................................32
a. The product claims in the ’584 and ’404 patents do not
cover the product ACTOS. ....................................................................32
b. Takeda repeated its submissions of false information to
the FDA. ....................................................................................................33
c. The law does not condone Takeda’s false patent
information as “reasonable.” ..................................................................34
B. The complaint alleges the defendants violated § 1 of the Sherman Act
by conspiring to limit generic competition for ACTOS and ACTOplus
met. .........................................................................................................................................38
1. The complaint alleges a violation of § 1 of the Sherman Act. .....................38
2. Violations of § 1 of the Sherman Act may be shown by direct
and circumstantial evidence. ...............................................................................40
3. Direct communications between each conspirator are not
required. ...................................................................................................................44
4. Agreeing to delay generic entry until August 17, 2012
contravened each generic defendant’s economic self-interest,
but that agreement was made attractive because each was
assured that no other generic manufacturer would enter the
market first. ............................................................................................................47
5. The defendants had strong motivations to coordinate their
actions. .....................................................................................................................50
C. The anticompetitive conduct caused antitrust injury. ................................................51
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 3 of 86
iii
1. Antitrust causation is a highly fact dependent inquiry. ...............................51
2. The complaint alleges the wrongful antitrust acts caused harm. ..............52
3. It is what Takeda told the FDA, not what the generic
defendants read in the Orange Book, that caused injury. ............................53
4. Generic ANDAs with carved-out labels would have been
readily approved. ...................................................................................................54
5. Takeda’s induced infringement litigation would not bar
generic entry. ..........................................................................................................57
6. The FDA’s two month delay in approving the Actavis ANDA
does not warrant dismissing Actavis. ...............................................................63
7. Teva’s lack of first-to-file status does not warrant dismissing
Teva. .........................................................................................................................65
D. Bad faith is not an element of Sherman Act §§ 1 and 2 claims, but is
pled here anyway. ................................................................................................................66
E. The defendants’ “early entry” and “license” labels are not a basis for
dismissal. ...............................................................................................................................68
F. The purchasers should be granted leave to amend. ....................................................69
V. CONCLUSION .................................................................................................................................70
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 4 of 86
i
TABLE OF AUTHORITIES
Page(s)
Cases
aaiPharma Inc. v. Thompson,
296 F.3d 227 (4th Cir. 2002) .......................................................................................................... 29, 30
Abbott Labs. v. Alra Lab., Inc.,
No. 92-cv-5806, 1993 WL 293995 (N.D. Ill. Aug. 4, 1993) ..........................................................30
In re Aggrenox Antitrust Litig.,
94 F. Supp. 3d 224, 242 (D. Conn. 2015) ...........................................................................................69
In re Aggrenox Antitrust Litig.,
No. 14-md-2516, 2015 WL 4459607 (D. Conn. July 21, 2015) ....................................................64
Allergan, Inc. v. Alcon Labs., Inc.,
324 F.3d 1322 (Fed. Cir. 2003) ...................................................................................................... 57, 58
Anderson News, L.L.C. v. Am. Media, Inc.,
680 F.3d 162 (2d Cir. 2012) ........................................................................................................... 26, 27
Armstrong Surgical Ctr., Inc. v. Armstrong Cnty. Mem’l Hosp.,
185 F.3d 154 (3d Cir. 1999) ..................................................................................................................28
Aro Mfg. Co. v. Convertible Top Replacement Co.,
365 U.S. 336 (1961) .................................................................................................................................33
AstraZeneca LP v. Apotex, Inc.,
633 F.3d 1042 (Fed. Cir. 2010) ...................................................................................................... 59, 60
Bd. of Trade of Chi. v. United States,
246 U.S. 231 (1918) .................................................................................................................................66
Bell Atl. Corp. v. Twombly,
550 U.S. 544 (2007) ................................................................................................................... 26, 27, 40
Bendix Autolite Corp. v. Midwesco Enters. Inc.,
486 U.S. 888 (1988) .................................................................................................................................38
Bigelow v. RKO Radio Pictures,
327 U.S. 251 (1946) ................................................................................................................... 51, 52, 62
In re Biovail Corp.,
F.T.C. No. C-4060 (Oct. 4, 2002) .........................................................................................................35
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 5 of 86
ii
Blue Cross & Blue Shield of Ohio v. Bingaman,
No. 94 CV 2297, 1996 WL 677094 (N.D. Ohio June 24, 1996), aff’d sub nom.
Blue Cross & Blue Shield of Ohio v. Klein, 117 F.3d 1420 (6th Cir. July 11,
1997) ...........................................................................................................................................................45
Brown v. Pro Football,
518 U.S. 231 (1996) .................................................................................................................................40
In re Buspirone Patent Litig.,
185 F. Supp. 2d 363 (S.D.N.Y. 2002) .................................................................................... 30, 31, 67
In re Buspirone Patent Litig. Multidistrict Patent Litig.,
60 Fed. App’x 806 (Fed. Cir. 2003) .....................................................................................................31
Cal. Motor Transp. Co. v. Trucking Unlimited,
404 U.S. 508 (1972) .................................................................................................................................28
Camoia v.City of New York,
No. 09-cv-2545, 2013 WL 867199 (E.D.N.Y. Mar. 7, 2013) ........................................................70
Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S,
132 S. Ct. 1670 (2012) ..................................................................................................................... passim
Carlson v. Chisholm-Moore Hoist Corp.,
281 F.2d 766 (2d Cir. 1960) ........................................................................................................... 63, 64
Chen v. Major League Baseball Props., Inc.,
798 F.3d 72 (2d Cir. 2015) .....................................................................................................................67
In re Cipro Cases I &II,
348 P.3d 845 (Cal. 2015) ........................................................................................................................62
Clipper Exxpress v. Rocky Mountain Motor Tariff Bureau, Inc.,
690 F.2d 1240 (9th Cir. 1982) ....................................................................................................... 28, 29
Clorox Co. v. Sterling Winthrop, Inc.,
117 F.3d 50 (2d Cir. 1997) .............................................................................................................. 66, 67
Confederated Tribes of Siletz Indians of Or. v. Weyerhaeuser Co.,
00-cv-1693, 2003 WL 24901381 (D. Ore. July 5, 2003) ................................................................28
In re Coordinated Pretrial Proceedings in Petroleum Prods. Antitrust Litig.,
906 F.2d 432 (9th Cir. 1990) .................................................................................................................44
In re DDAVP Direct Purchaser Antitrust Litig.,
585 F.3d 677 (2d Cir. 2009) ..................................................................................................................63
DeLoach v. Philip Morris Cos., Inc.,
No. 00-cv-1235, 2001 WL 1301221 (M.D.N.C. July, 24, 2001) ...................................................29
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 6 of 86
iii
Dextone Co. v. Bldg. Trades Council,
60 F.2d 47 (2d Cir. 1932) .......................................................................................................................43
Dr. Reddy’s Labs, Ltd. v. aaiPharma, Inc.,
No. 01-cv-10102, 2002 WL 31059289 (S.D.N.Y. Sept. 13, 2002) ................................................64
Duplan Corp. v. Deering Milliken, Inc.,
594 F.2d 979 (4th Cir. 1979) (per curiam) ...........................................................................................44
Exxon Co., USA v. Sofec, Inc.,
517 U.S. 830 (1996) .................................................................................................................................64
In re Flonase Antitrust Litig.,
798 F. Supp. 2d 619 (E.D. Pa. 2011) ...................................................................................................64
Foman v. Davis,
371 U.S. 178 (1962) .................................................................................................................................69
FTC v. Actavis, Inc.,
133 S. Ct. 2223 (2013) ................................................................................................................ 7, 50, 68
In re Gabapentin Patent Litig.,
649 F. Supp. 2d 340 (D.N.J. 2009) .......................................................................................................36
Geneva Pharms. Tech. Co. v. Barr Labs. Inc.,
386 F.3d 485 (2d Cir. 2004) ..................................................................................................................67
Global Network Commc’ns, Inc. v. City of New York,
458 F.3d 150 (2d Cir. 2006) ..................................................................................................................27
In re Goguen,
691 F.3d 62 (1st Cir. 2012) ....................................................................................................................64
Guide v. Desperak,
249 F.2d 145 (2d Cir. 1957) ..................................................................................................................33
Gunn v. Minton,
133 S. Ct. 1059 (2013) ............................................................................................................................61
Hanover Shoe, Inc. v. United Shoe Machinery Corp.,
392 U.S. 481 (1968) .................................................................................................................................27
Hasbrouck v. Texaco, Inc.,
842 F.2d 1034 (9th Cir. 1987) ..............................................................................................................64
Hill v. Reederei F. Laeisz G.M.B.H.,
435 F.3d 404 (3d Cir. 2006) ..................................................................................................................64
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 7 of 86
iv
Ill. Brick Co. v. Illinois,
431 U.S. 720 (1968) .................................................................................................................................27
Irvin Indus., Inc. v. Goodyear Aerospace Corp.,
974 F.2d 241 (2d Cir. 1992) ..................................................................................................................52
Israel v. Baxter Labs., Inc.,
466 F.2d 272 (D.C. Cir. 1972) ...............................................................................................................28
Jay Edwards, Inc. v. New England Toyota Distrib., Inc.,
708 F.2d 814 (1st Cir. 1983) .................................................................................................................62
Joy Techs., Inc. v. Flakt, Inc.,
6 F.3d 770 (Fed. Cir. 1993) ...................................................................................................................59
King Drug Co. of Florence, Inc. v. Cephalon, Inc.,
702 F. Supp. 2d 514 (E.D. Pa. 2010) ...................................................................................................50
King Drug Co. of Florence, Inc. v. SmithKline Beecham Corp.,
791 F.3d 388 (3d Cir. 2015) ..................................................................................................................69
King Drug Co. of Florence v. Cephalon, Inc.,
06-cv-1797, 2014 U.S. Dist. LEXIS 84818 (E.D. Pa. June 23, 2014) ................................... 49, 50
Knipe v. Skinner,
999 F.2d 708 (2d Cir. 1993) ..................................................................................................................38
Kottle v. Nw. Kidney Ctrs.,
146 F.3d 1056 (9th Cir. 1998) ..............................................................................................................28
Kroger Co. v. Sanofi-Aventis,
701 F. Supp. 2d 938 (S.D. Ohio 2010) ......................................................................................... 66, 67
Liriana v. Hobart Corp.,
170 F.3d 264 (2d Cir. 1999) ..................................................................................................................51
Litton Sys., Inc. v. Am. Tel. & Tel. Co.,
700 F.2d 785 (2d Cir. 1983) ..................................................................................................................29
Mickowski v. Visi-Trak Corp.,
36 F. Supp. 2d 171 (S.D.N.Y. 1999) ....................................................................................................59
Myzel v. Fields,
386 F.2d 718 (8th Cir. 1967) .................................................................................................................43
Nat’l Labor Relations Bd. v. Star Color Plate Serv.,
843 F.2d 1507 (2d Cir. 1988) ................................................................................................................38
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 8 of 86
v
NCAA v. Bd. of Regents,
468 U.S. 85 (1984) ...................................................................................................................................66
In re Neurontin Antitrust Litig.,
MDL No. 1479, 2009 WL 2751029 (D.N.J. Aug. 28, 2009) ................................................... 51, 66
In re Neurontin Mktg. & Sales Practices Litig.,
712 F.3d 21 (1st Cir. 2013) ....................................................................................................................64
In re Nexium (Esomeprazole) Antitrust Litig.,
42 F. Supp. 3d 367 (D. Mass. 2014). ..................................................................................... 40, 49, 69
In re Nexium (Esomeprazole) Antitrust Litig.,
968 F. Supp. 2d 367 (D. Mass. 2013) .................................................................................................... 5
Palmer v. BRG of Georgia, Inc.,
498 U.S. 46 (1990) ...................................................................................................................................40
Peckham v. Cont’l Cas. Ins. Co.,
895 F.2d 830 (1st Cir. 1990) .................................................................................................................52
Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc.,
508 U.S. 49 (1993) ...................................................................................................................................62
Ranbaxy Labs., Ltd. v. Burwell,
82 F. Supp. 3d 159, 198 (D.D.C. 2015) .......................................................................................... 5, 57
Reazin v. Blue Cross & Blue Shield of Kan.,
663 F. Supp. 1360 (D. Kan. 1987), aff’d, 899 F.2d 951 (10th Cir. 1990) .....................................45
In re Remeron Antitrust Litig.,
335 F. Supp. 2d 522 (D.N.J. 2004) ................................................................................................ 30, 66
Rowell v. Lindsay,
113 U.S. 97 (1885) ...................................................................................................................................33
Rowley v. City of New York,
No. 00 Civ. 1793, 2005 WL 2429514 (S.D.N.Y. Sept. 30, 2005) ..................................................38
New York ex rel. Schneiderman v. Actavis PLC,
787 F.3d 638 (2d Cir. 2015) .................................................................................................................... 5
In re Skelaxin (Metaxalone) Antitrust Litig.,
No. 12-md-2343, 2013 WL 2181185 (E.D. Tenn. May 20, 2013) ...............................................51
Spear Pharm., Inc. v. William Blair & Co.,
610 F. Supp. 2d 278 (D. Del. 2009) .....................................................................................................64
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 9 of 86
vi
St. Joseph’s Hosp., Inc. v. Hosp. Corp. of Am.,
795 F.2d 948 (11th Cir. 1986) ..............................................................................................................28
In re Stone Container Corp.,
125 F.T.C. 853 (1998).............................................................................................................................44
Stop & Shop Supermarket Co. v. SmithKline Beecham Corp.,
No. 03-cv-4578, 2005 WL 1213926 (E.D. Pa. May 19, 2005) ......................................................30
Sullivan v. NFL,
34 F.3d 1091 (1st Cir. 1994) .......................................................................................................... 52, 62
Takeda Chem. Indus., Ltd. v. Watson Pharms., Inc.,
329 F. Supp. 2d. 394 (S.D.N.Y. June 10, 2004) .......................................................................... 14, 58
Takeda Pharms. Co. Ltd. v. Sandoz, Inc.,
No. 07-cv-3844, 2007 WL 2936208 (S.D.N.Y. Oct. 9, 2007) ........................................................37
Takeda Pharms. U.S.A., Inc. v. West-Ward Pharm. Corp.,
785 F.3d 625 (Fed. Cir. 2015) ........................................................................................................ 60, 61
Teva Pharm., USA, Inc. v. Leavitt,
548 F.3d 103 (D.C. Cir. 2008) ................................................................................................................. 6
Toys “R” Us v. FTC,
221 F.3d 928 (7th Cir. 2000) .......................................................................................................... 48, 49
U.S. Philips Corp. v. Iwasaki Elec. Co. Ltd.,
607 F. Supp. 2d 470 (S.D.N.Y. 2009) ..................................................................................................59
United Food & Commercial Workers Local 1776 & Participating Emp’rs Health &
Welfare Fund v. Teikoku Pharma USA, Inc.,
74 F. Supp. 3d 1052, 1070 (N.D. Cal. 2014) ......................................................................................69
United States v. Apple, Inc.,
791 F.3d 290 (2d Cir. 2015) ........................................................................................................... passim
United States. v. Apple, Inc.,
952 F. Supp. 2d 638 (S.D.N.Y. 2013), aff’d 791 F.3d 290 (2d Cir. 2015) ....................................45
United States v. Blue Cross Blue Shield of Mich.,
809 F. Supp. 2d 665 (E.D. Mich. 2011) ..............................................................................................50
United States v. Consol. Packaging Corp.,
575 F.2d 117 (7th Cir. 1978) .................................................................................................................40
United States v. Cont’l Group, Inc.,
603 F.2d 444 (3d Cir. 1979) ..................................................................................................................43
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 10 of 86
vii
United States v. Grinnell Corp.,
384 U.S. 563 (1966) .................................................................................................................................28
United States v. Gypsum Co.,
33 U.S. 364 (1948) ...................................................................................................................................45
United States v. Masonite Corp.,
316 U.S. 265 (1942) .......................................................................................................................... 43, 45
United States v. Med. Mutual of Ohio,
No. 98 CV 2172, 1999 WL 670717 (N.D. Ohio Jan. 29, 1999) .....................................................45
United States v. Nat’l Lead Co.,
332 U.S. 319 (1947) .................................................................................................................................43
United States v. New Wrinkle,
342 U.S. 371 (1952) .................................................................................................................................69
United States v. Paramount Pictures, Inc.,
334 U.S. 131 (1948) .................................................................................................................................44
United States v. Portela,
167 F.3d 687 (1st Cir. 1999) .................................................................................................................41
In re Valassis Commc’ns, Inc.,
F.T.C. No. C-4160 (Apr. 19, 2006) ......................................................................................................44
Virginia Vermiculite, Ltd. v. W.R. Grace & Co.,
156 F.3d 535 (4th Cir. 1998) .................................................................................................................44
Walker Process Equip., Inc. v. Food Mach. & Chem. Corp.,
382 U.S. 172 (1965) .......................................................................................................................... 28, 67
Warner-Lambert Co. v. Apotex Corp.,
316 F.3d 1348 (Fed. Cir. 2003) .............................................................................................................57
Watson Labs., Inc. v. Sebelius,
No. 12-1344, 2012 WL 6968224 (D.D.C. Oct. 22, 2012), vacated as moot, 2013
WL 11250319 (D.C. Cir. June 10, 2013) ..................................................................................... passim
In re Wellbutrin SR/Zyban Antitrust Litig.,
281 F. Supp. 2d 751 (E.D. Pa. 2003) ............................................................................................ 51, 63
Whelan v. Abell,
48 F.3d 1247 (D.C. Cir. 1995) ...............................................................................................................28
Wight v. BankAmerica Corp.,
219 F.3d 79 (2d Cir. 2000) .....................................................................................................................69
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 11 of 86
viii
Williams v. Citigroup Inc.,
659 F.3d 208 (2d Cir. 2011) ..................................................................................................................70
Woods Exploration & Producing Co. v. Aluminum Co. of Am.,
438 F.2d 1286 (5th Cir 1971) ...............................................................................................................29
Statutes
15 U.S.C. § 1 ............................................................................................................................... 27, 38, 40, 43
15 U.S.C. § 2 ............................................................................................................................... 27, 28, 30, 66
15 U.S.C. § 15(a) .............................................................................................................................................27
21 U.S.C. § 355 ......................................................................................................................................... passim
35 U.S.C. § 271 .................................................................................................................................. 15, 16, 57
35 U.S.C. § 283 ................................................................................................................................................59
Drug Price Competition and Patent Term Restoration Act, Pub. L. No. 98-417,
98 Stat. 1585 (1984) .................................................................................................................................. 5
GDUFA Commitment Letter: Generic Drug User Fee Act Program
Performance Goals and Procedures (July 2012),
http://www.fda.gov/downloads/ForIndustry/UserFees/GenericDrugUser
Fees/UCM282505.pdf.............................................................................................................................. 5
Herbert Hovenkamp et al., IP and Antitrust: An Analysis of Antitrust Principles
Applied to Intellectual Property Law (Supp. 2012) ...............................................................................30
Phillip E. Areeda & Herbert J. Hovenkamp, Antitrust Law (2d ed. 2000) .........................................63
Phillip E. Areeda & Herbert J. Hovenkamp, Antitrust Law (3d ed. 2006) .........................................28
Other Authorities
21 CFR § 314 ........................................................................................................................................... passim
Abbreviated New Drug Application Regulations, 54 Fed. Reg. 28,872, 28,885 .............................53
Abbreviated New Drug Application Regulations; Patent and Exclusivity
Provisions, 59 Fed. Reg. 50,338 (Oct. 3, 1994) .................................................................... 4, 34, 35
Applications for FDA Approval to Market a New Drug: Patent Listing
Requirements and Application of 30-Month Stays on Approval of
Abbreviated New Drug Applications Certifying That a Patent Claiming a
Drug Is Invalid or Will Not Be Infringed, 68 Fed. Reg. 36,676 (June 18,
2003) ...........................................................................................................................................................11
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 12 of 86
ix
C. Scott Hemphill & Mark A. Lemley, Earning Exclusivity, 77 Antitrust L.J. 947
(2011) ..........................................................................................................................................................47
C. Scott Hemphill, Paying for Delay: Pharmaceutical Patent Settlement as a
Regulatory Design Problem, 81 N.Y.U. L. Rev. 1553 (2006) ............................................................50
FDA/CDER Resp. Caraco Pharms. Labs., Ltd. Citizen Pet., FDA-2008-P-0411-
0006 (Dec. 4, 2008) .................................................................................................................................... 9
FDA/CDER Resp. Novo Nordisk, Inc. Citizen Pet., FDA-2008-P-0343-0009
(Dec. 4, 2008) .............................................................................................................................................. 9
FDA/CDER Resp. Sandoz, Inc. Citizen Pet., FDA-2009-P-0411-0010, at 9
(Mar. 15, 2010) .................................................................................................................................. passim
FDA/CDER Resp. Watson Labs. Citizen Pet., Docket No. FDA-2008-P-0069,
at 1 (July 28, 2008) ........................................................................................................................... 56, 57
Fed. R. Civ. P. 15 ............................................................................................................................................69
Federal Rule of Civil Procedure 12(b)(6) ..................................................................................................26
FTC, Generic Drug Entry Prior to Patent Expiration 44 (July 2002),
https://www.ftc.gov/sites/default/files/documents/reports/generic-drug-
entry-prior-patent-expiration-ftc-study/genericdrugstudy_0.pdf ................................................ 5
Grace Lillian Wang, Teva v. Eisai: What's the Real “Controversy”?, 66 Food &
Drug L.J. 631 (2011) ................................................................................................................................. 7
H.R. 1706, The Protecting Consumer Access to Generic Drugs Act of 2009: Hearing
Before the Subcomm. on Commerce, Trade & Consumer Protection of the H. Comm.
on Energy & Commerce, 111th Cong. 218 (2009) ...............................................................................46
H.R. Rep. No. 98-857 (1984) .................................................................................................................... 5, 8
Melody Peterson, Bristol-Myers Squibb to Pay $670 Million to Settle Numerous
Lawsuits, N.Y. Times, Jan. 8, 2003, available at
http://www.nytimes.com/2003/01/08/business/bristol-myers-squibb-to-
pay-670-million-to-settle-numerous-lawsuits.html ........................................................................31
Sandoz, Inc. Citizen Pet., FDA-2009-P-0411-0001 (August 25, 2009) .............................................19
Steven C. Salop & Fiona Scott Morton, Developing an Administrable MFN
Enforcement Policy, 27 Antitrust 15 (2013) .........................................................................................50
Susan A. Creighton et al., Cheap Exclusion, 72 Antitrust L.J. 975 (2005) ..........................................30
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 13 of 86
x
U.S. Dep't of Justice & FTC, Horizontal Merger Guidelines 24 (Aug. 19, 2010),
https://www.ftc.gov/sites/default/files/ attachments/merger-
review/100819hmg.pdf ..........................................................................................................................44
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 14 of 86
1
I. INTRODUCTION
A brand company’s ability to lawfully delay generic entry differs depending on whether
its patent claims cover the drug product itself, or only methods of using the drug.
Under the Hatch-Waxman Act, generic companies seeking pre-expiry entry must
challenge the validity or infringement of unexpired drug product claims. A brand company can
then institute early infringement litigation. The FDA is barred from approving the generic for
30 months. And the brand can leverage the direct patent infringement litigation into a
settlement with a compromise entry date. Drug product claims also give would-be generics a
unique opportunity: If the generic is the first to challenge the product claims, it gets the
coveted 180-day exclusivity for that product. When the first filer eventually launches its
generic, it gets 180 days free of competition from other generic ANDA products, with all other
generic approvals held up for six months.
A brand company with only method-of-use claims does not have these powers. Would-
be generics are not required to challenge the validity or infringement of method-of-use claims.
Instead, they may “carve out” the patented use from the proposed label and certify that they
will not market their product for those uses; the FDA is then free to approve the generic. With
no challenge to the use claims, the brand cannot institute an early infringement case. There is
no 30-month stay. The brand has no direct infringement claim, and must wait to marshal
evidence that the generic has affirmatively encouraged others to use the generic for the
patented use. Even then, the remedy is enjoining the generic’s inducement, not forcing its
product off the market. Nor do method-of-use claims afford generics an opportunity to grab
the coveted 180-day exclusivity; while a generic may challenge the use claims and get
exclusivity regarding that particular use, other generics can carve the use out, get their
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 15 of 86
2
products on the market, and avoid the long wait of the patent challenge. The brand’s
opportunity to reach a favorable settlement is weak.
This action arises out of an overarching, anticompetitive scheme by brand company
Takeda to unlawfully forestall generic competition and extend its $3 billion-a-year monopolies
in two related drug markets – for pioglitazone hydrochloride tablets (ACTOS) and for the fixed
dose combination product containing both pioglitazone hydrochloride and metformin
(ACTOplus met).1 Takeda knowingly misrepresented to the FDA that it had two patents
containing product claims covering ACTOS when, in fact, it only had method-of-use claims
that applied to ACTOS. By doing so, it snatched powers to delay generic entry it should not
have had. And it created, for opportunistic generics, the ability to acquire a 180-day exclusivity
that should not have existed.
Count 1 charges Takeda with monopolistic misconduct. Counts 4 through 6 charge
that a first wave of generics – Actavis, Ranbaxy, and Mylan – with joining Takeda’s
exclusionary misconduct through agreements to perpetuate the undeserved 180-day
exclusivity, prolonging the bottleneck 20 months (from January 2011 to August 2012) and
affording Takeda billions more in sales. Count 8 charges that the last potential spoiler Teva
joined the conspiracy, accepting a portion of the anticompetitive benefits from the unlawful
180-day exclusivity in exchange for its dropping a challenge to the unlawful scheme. Counts 2
and 3 charge that all the defendants engaged in an overall conspiracy.
The defendants’ motions to dismiss are largely directed to a different lawsuit entirely –
the end-payor case that is now on appeal. The motions raise numerous irrelevancies (mostly
1 The direct purchaser class plaintiffs are also submitting the declaration of Brad DeMuth, which
summarizes the terms of the various settlements, and Appendix A, containing four charts from the complaint
detailing the impact of the unlawful scheme on ACTOS revenues and sales. Given the defendants’ “confidential”
designation of the settlement agreements, we are filing the Demuth declaration and accompanying exhibit under
seal.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 16 of 86
3
about reverse payment agreements or sham litigation) that need not be addressed here. To the
extent relevant arguments are made, they lack merit.
First, the complaint alleges that Takeda violated the Hatch-Waxman reporting
requirements by submitting false patent information to the FDA. At least one of the
defendants concedes this.
Second, the complaint alleges that the FDA was required to rely on Takeda’s
misinformation, and the record evidence submitted by the defendants shows the FDA’s
reliance.
Third, the allegations, and the agreements submitted by the defendants, show that each
of the generics joined in Takeda’s exclusionary misconduct.
Finally, the argument that the direct purchasers lack causation facts is frivolous. As
Teva admits, “Takeda’s wrongful conduct likely will mean that there will be no generic version
of Actos® available to consumers for more than 18 months after such products otherwise
would be available.”
II. BACKGROUND
A. Statutory and Regulatory Background
1. New drug applicants must identify patents that cover their products.
Branded drug manufacturers who wish to sell a new drug product must obtain FDA
approval by filing a New Drug Application (“NDA”).2 Both the FDCA and the FDA
regulations in effect from 1999 to 2002 required NDA applicants to identify the patents (1) that
claim the drug or a method of using the drug and (2) “with respect to which a claim of patent
infringement could reasonably be asserted if a person not licensed by the [patent] owner
2 21 U.S.C. § 355(a).
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 17 of 86
4
engaged in the manufacture, use, or sale of the drug.”3 The statute and FDA regulations
required the sponsor to not only identify the patents, but also specify whether the claims in the
patent covered the drug product itself (i.e., drug composition or substance claims), methods of
using the drug (method-of-use claims), or both.4 In the language of the rules, the applicant was
required to identify the “type” of claims in the patent that covered the drug: a “drug” (drug
substance) patent, a “drug product” patent, or a “method of use” patent.5
2. Drug sponsors are on their honor to submit truthful patent information.
The FDA does not police the brand manufacturer’s description of its patents. The
agency has neither the resources nor the expertise to review patent information for its accuracy
and relevance to an NDA.6 The FDA “believes that the declaration requirements [and] . . . an
applicant’s potential liability if it submits an untrue statement of material fact” ensures that
“accurate patent information is submitted.”7
The FDA publishes the patent information submitted by the NDA applicant in the
Orange Book.8 The FDA’s role is purely ministerial.9
3 See 21 U.S.C. § 355(b)(1) (emphasis added); ANDA Regulations; Patent and Exclusivity Provisions, 59 Fed.
Reg. 50,338, 50,363-64 (Oct. 3, 1994) (codified as amended at 21 C.F.R. § 314.53) (“An applicant . . . shall submit
information on each patent that claims the drug or a method of using the drug that is the subject of the new drug
application or amendment or supplement to it and with respect to which a claim of patent infringement could
reasonably be asserted if a person not licensed by the owner of the patent engaged in the manufacture, use, or sale
of the drug product.” (emphasis added)).
4 21 C.F.R. § 314.53(c)(1)(ii) (1999) & (2002); see also 21 C.F.R. § 314.53(b) (1999) & (2002) (describing the
three patent types that can be listed in the Orange Book as drug substance (ingredient) patents, drug product
(formulation and composition) patents, and method of use patents); 21 U.S.C. § 355(b)(1).
5 21 C.F.R. § 314.53(c)(1)(ii) (1999) & (2002).
6 ANDA Regulations; Patent and Exclusivity Provisions, 59 Fed. Reg. at 50,343 (“FDA does not have the
expertise to review patent information. The agency believes that its scarce resources would be better utilized in
reviewing applications rather than reviewing patent claims.”); id. at 50,345 (“FDA does not have the resources or
the expertise to review patent information for its accuracy and relevant to an NDA.”).
7 Id. at 50,345; see 21 C.F.R. § 314.53(c)(2)(ii) (1999) & (2002).
8 Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S, 132 S. Ct. 1670, 1676 (2012).
9 See, e.g., ANDA Regulations; Patent and Exclusivity Provisions, 59 Fed. Reg. at 50,343-45; see also
FDA/CDER Resp. Sandoz, Inc. Citizen Pet., Docket No. FDA-2009-P-0411-0010, at 9 (Mar. 15, 2010) (“FDA’s
role in listing patents and patent information in the Orange Book is ministerial . . . . FDA relies on the NDA
sponsors to provide an accurate patent submission.”).
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 18 of 86
5
Until 2003, there was no formal procedure for resolving listing disputes. The FDA
would not change the patent information unless the brand voluntarily withdrew or amended its
listed information10
3. The Hatch-Waxman Act is intended to get low cost generics to market
sooner.
Congress enacted the Hatch-Waxman Act11 “with the express purpose of expediting the
entry of non-infringing generic competitors into pharmaceutical drug markets in order to
decrease healthcare costs for consumers”12 and sought “to make available more low cost generic
drugs.”13
Under the Act, a manufacturer seeks approval of a generic drug by filing an abbreviated
new drug application (or ANDA).14 An ANDA relies on the scientific findings of safety and
effectiveness included in the brand’s NDA, but must further show that the generic drug will be
bioequivalent.15
The FDA construes its regulations to expedite generic approval and launch.16 The
FDA also prioritizes its actions in order to avoid a bottleneck and “[e]xpedite the availability
of low cost, high quality generic drugs.”17
10 FTC, Generic Drug Entry Prior to Patent Expiration 44 (July 2002),
https://www.ftc.gov/sites/default/files/documents/reports/generic-drug-entry-prior-patent-expiration-ftc-
study/genericdrugstudy_0.pdf
11 Drug Price Competition and Patent Term Restoration Act, Pub. L. No. 98-417, 98 Stat. 1585 (1984).
12 In re Nexium (Esomeprazole) Antitrust Litig., 968 F. Supp. 2d 367, 378 (D. Mass. 2013) (“Nexium I”).
13 H.R. Rep. No. 98-857, pt. 1, at 14 (1984); see generally New York ex rel. Schneiderman v. Actavis PLC, 787 F.3d
638, 643-44 (2d Cir. 2015).
14 21 U.S.C. § 355(j)(1).
15 21 U.S.C. § 355(j)(2)(A).
16 See, e.g., Ranbaxy Labs., Ltd. v. Burwell, 82 F. Supp. 3d 159, 198 (D.D.C. 2015) (“The FDA’s interpretation . . .
is entirely in keeping with . . . the larger Hatch-Waxman goal of streamlining generic drug approvals to allow
safe, effective generic drugs to reach the market sooner.”).
17 See GDUFA Commitment Letter: Generic Drug User Fee Act Program Performance Goals and Procedures
1 (July 2012), http://www.fda.gov/downloads/ForIndustry/UserFees/GenericDrugUserFees/UCM282505.pdf.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 19 of 86
6
4. Hatch-Waxman Act allows for generic entry even in the face of a brand
company’s patents.
The patent information submitted for the brand (i.e., the reference listed drug, or RLD)
serves as an ANDA’s frame of reference.18 Hatch-Waxman outlines two routes, depending on
the brand’s claim characterization, for a generic to enter the market in the face of the brand’s
patents on the RLD: (1) “paragraph IV certifications”19 and (2) “section viii statements.”20
a. Paragraph IV certifications.
A generic must provide a “certification” with respect to each patent identified in the
Orange Book “which claims the [RLD] or which claims a use for [that] drug for which the
applicant is seeking approval.”21 If the generic wishes to remain out of the market until
expiration of the identified patent, a generic can certify to that effect.22 But if the generic wants
FDA approval earlier than the expiration of a patent that contains claims that cover the drug
product, the generic must certify that the brand’s patent is invalid or not infringed by its
ANDA a so-called “paragraph IV certification.”23
“The patent statute treats such a filing [under paragraph IV] as itself an act of
infringement, which gives the brand an immediate right to sue.”24 A suit triggers an automatic
stay of the FDA’s ANDA approval for 30 months functionally, an automatic preliminary
injunction.25 Until the 30 months pass or a court issues a decision that the patent is invalid or
not infringed by the generic’s ANDA, the FDA may grant “tentative approval,” but cannot
18 Teva Pharm., USA, Inc. v. Leavitt, 548 F.3d 103, 106 (D.C. Cir. 2008)
19 21 U.S.C. § 355(j)(2)(A)(vii)(IV),
20 21 U.S.C. § 355(s)(A)(viii); see also Caraco, 132 S. Ct. at 1676-78.
21 21 U.S.C. § 355(j)(2)(A)(vii).
22 21 U.S.C. §§ 355(j)(2)(A)(vii)(I)-(III).
23 21 U.S.C. § 355(j)(2)(A)(vii)(IV); see Caraco, 132 S. Ct. at 1677.
24 Caraco, 132 S. Ct. at 1677 (citing 35 U.S.C. § 271(e)(2)(A)).
25 21 U.S.C. § 355(j)(5)(B)(iii).
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 20 of 86
7
grant the “final approval.”26 But after 30 months pass, the FDA may approve the ANDA and
the generic can launch. If the brand manufacturer’s suit is still ongoing by the time of FDA
approval and launch, the generic is said to launch “at risk.”27
The Act also provides first filers of an ANDA containing a paragraph IV certification
with a 180-day “exclusivity period.” The FDA will not approve a later-filed ANDA for at least
180 days after either (i) a court decision finding the patent invalid or not infringed, or (ii) the
first commercial marketing of the drug under the first ANDA, whichever is earlier.28 This
period “can prove valuable, possibly worth several hundred million dollars.”29 This 180-day
exclusivity creates a “bottleneck” that delays approval of all other generic applicants.
b. Section viii statements allow generic companies to come to market
with labels “carving out” patented methods of using the drug.
A second route to ANDA approval exists when the NDA applicant has submitted patent
information identifying claims for methods of using the drug.30 In that case, the ANDA
applicant may choose not seek approval of its drug for the ostensibly patented use, known as a
“section viii statement.”31 A section viii statement is commonly used when the brand’s patent
on the drug compound has expired and the brand holds patents on only some approved
methods of using the drug. If an ANDA applicant files a section viii statement, the patent
26 See id. The FDA may grant an ANDA tentative approval when it determines that the ANDA would
otherwise be ready for final approval but for the 30-month stay or any remaining patent or regulatory exclusivity.
21 U.S.C. § 355(j)(5)(B)(iv)(II)(dd)(AA).
27 See Grace Lillian Wang, Teva v. Eisai: What's the Real “Controversy”?, 66 Food & Drug L.J. 631, 638 n.46
(2011).
28 See 21 U.S.C. § 355(j)(5)(B)(iv).
29 FTC v. Actavis, Inc., 133 S. Ct. 2223, 2229 (2013) (internal quotations omitted).
30 Caraco, 132 S. Ct. at 1676-78.
31 21 U.S.C. § 355(j)(2)(A)(viii).
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 21 of 86
8
claiming the protected method of use will not serve as a barrier to ANDA approval, and if the
ANDA is otherwise approvable, the FDA may approve the ANDA.32
Where the patent claims only methods of using the applicable drug, an ANDA applicant
must choose either (i) to pursue a paragraph IV challenge to that patented use, or (ii) carve-out
the ostensibly patented use from its proposed label, and provide a section viii statement.33
Where the proposed labeling carves out the patented use, only a section viii statement is
acceptable.34 Where a patent has claims for the drug product (or substance) and methods of
using it, the generic may split its certification (to paragraph IV as to the product claims, and
section viii as to the use claims).35
If an ANDA applicant makes only a section viii statement, then the patentee or NDA
holder cannot obtain an automatic 30-month stay on generic competition. And the generic filer
cannot get a 180-day exclusivity for the drug. The FDA remains free to approve other ANDA
applicants with section viii statements, regardless whether the first filer has come to market or
not. In short, when the patent is reported to have only use claims that apply to the product,
32 Caraco, 132 S. Ct. at 1676-77; see also H.R. Rep. No. 98-857, pt. 1, at 21 (1984) (“The [ANDA] applicant
need not seek approval for all of the indications for which the listed drug has been approved. For example, if the
listed drug has been approved for hypertension and angina pectoris, and if the indication for hypertension is
protected by patent, then the applicant could seek approval for only the angina pectoris indication.”).
33 Id.
34 ANDA Regulations; Patent and Exclusivity Provisions, 59 Fed. Reg. at 50,347 (“[I]f a patent claims a
method of using the listed drug, and labeling for the ANDA applicant’s proposed drug product does not contain
any indications covered by the method of use patent, the ANDA applicant should not submit a [paragraph IV]
certification . . . for such a patent.”); see Watson Labs., Inc. v. Sebelius, No. 12-1344, 2012 WL 6968224, at *6 (D.D.C.
Oct. 22, 2012) (“According to FDA, the FDCA prohibits an ANDA applicant from filing a paragraph IV
certification challenging a patent for a use that it has carved out from its proposed labeling. Rather, an applicant
must file section viii statements for a proposed carve-out of labeling referring to a patented method of use.”
(internal citations omitted)), vacated as moot, 2013 WL 11250319 (D.C. Cir. June 10, 2013).
35 ANDA Regulations; Patent and Exclusivity Provisions, 59 Fed. Reg. at 50,347 (“If, however, there are
listed patents that present both a product and method of use claim, the applicant may file a paragraph IV
certification with respect to the product patent or patent claim and a statement that the product that is the subject
of the application does not involve a patented method of use with respect to the method of use patent or patent
claim.”).
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 22 of 86
9
there is no potential for a regulatory bottleneck for the approval of generics that carve-out the
ostensibly patented use.
When a patent contains multiple types of claims, an ANDA applicant may file a
paragraph IV certification to some claims and a section viii statement as to use claims.36 The
FDA’s position is that a paragraph IV certification and a section viii statement “are not
overlapping, and an applicant does not have the option of making a [paragraph IV]
certification in lieu of, or in addition to, a [section viii] statement.”37 So when a patent holder
identifies a patent as claiming both a drug product and a method of use, and an ANDA
applicant chooses to submit a section viii statement with respect to any method-of-use claims,
the ANDA applicant must also submit a paragraph I, II, III, or IV certification for any product
claims.38
5. The consequences of submitting false patent information.
Important regulatory and competitive consequences flow from the distinction between
patents described as containing relevant drug product claims and patents described as
containing only method-of-use claims. As the Supreme Court recognizes,
[The Hatch Waxman] Amendments instruct the FDA (assuming
other requirements are met) to approve an ANDA filed with a
section viii statement when it proposes to market a drug for only
unpatented methods of use. To fulfill that charge, the FDA must
determine whether any patent covers a particular method of use;
and to do that, the agency (which views itself as lacking expertise
in patent matters) relies on the [patent information] submitted in
the regulatory process. [Inaccurate patent information]
36 The FDA has a consistent practice of permitting ANDA applicants to submit applications containing both a
paragraph IV certification and a section viii statement for the same patent. See, e.g., FDA/CDER Resp. Sandoz,
Inc. Citizen Pet., Docket No. FDA-2009-P-0411-0010 (Mar. 15, 2010); FDA/CDER Resp. Novo Nordisk, Inc.
Citizen Pet., Docket No. FDA-2008-P-0343-0009 (Dec. 4, 2008); FDA/CDER Resp. Caraco Pharms. Labs., Ltd.
Citizen Pet., Docket No. FDA-2008-P-0411-0006 (Dec. 4, 2008).
37 See ANDA Regulations; Patent and Exclusivity Provisions, 59 Fed. Reg. at 50,347.
38 See, e.g., FDA/CDER Resp. Sandoz, Inc. Citizen Pet. at 7-8, Docket No. FDA-2009-P-0411-0010 (Mar. 15,
2010); FDA/CDER Resp. Novo Nordisk, Inc. Citizen Pet. at 10, Docket No. FDA-2008-P-0343-0009 (Dec. 4,
2008).
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 23 of 86
10
therefore throws a wrench into the FDA’s ability to approve
generic drugs as the statute contemplates.39
If, for example, a brand company misidentifies a patent whose only relevant claims are
method of use claims as containing both method of use claims and product claims covering the
drug, the improper identification results in the following consequences:
1. Any generic company seeking to market a generic version of the RLD must make a
paragraph IV certification to the product claims allegedly covering the RLD even if
it is carving out the ostensibly patented uses from its label;
2. The brand company will get notice of the paragraph IV certification, alerting it to
incoming generic competition and identifying the specific generic company (or
companies) that are seeking to enter the market;
3. The paragraph IV certification will act as a technical act of patent infringement,
allowing the brand company to commence infringement litigation against the
generic;
4. The filing of the infringement action will bar the FDA from approving the generic’s
ANDA for 30 months (or until the litigation is resolved, whichever is sooner); and
5. If the generic company is a “first filer”, the generic will receive 180 days of market
exclusivity, delaying all generic competition until those 180 days have passed or the
courts have ruled the product claims are invalid or not infringed.
None of this happens if the brand company properly identifies the patent as only containing
claims covering methods of using the RLD.
6. The FTC finds brands improperly submitting patents as drug product
patents to delay the onset of generic competition.
In the 1990s, some brand-name manufacturers submitted patent information
inappropriate for listing in the Orange Book.40 The ensuing litigation prevented or delayed the
FDA’s approval of ANDAs. In 2002, the FDA initiated rulemaking to ameliorate this
39 Caraco, 132 S. Ct. at 1684 (internal citation omitted); see also id. at 1688 (recognizing the FDA’s “statutory
duty to approve generic drugs that do not infringe patent rights”). Caraco involved use codes, a specific type of
patent information that must be provided under the Act.
40 See FTC Generic Drug Study at 39-56 & A-39 to A-45 (discussing Orange Book listing issues and
describing several such instances).
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 24 of 86
11
situation41 and adopted a final rule effective August 18, 2003.42 The 2003 rule therefore
“require[d] the NDA applicant or holder to identify specifically the approved uses claimed by
the method-of-use patent,” thereby enabling ANDA applicants and the FDA to “determine
whether the [ANDA] applicant must submit a patent certification or may submit a section viii
statement.”43 The agency acknowledged, though, that even its new system would ultimately
depend on the accuracy of information submitted by NDA applicants.44
Congress complemented the FDA’s rulemaking by authorizing generic manufacturers
in patent infringement suits to assert a legal counterclaim challenging the brand
manufacturer’s submission of patent information to the FDA.45
B. Facts.
1. Takeda’s patents.
In August 1987, the United States Patent and Trade Office (“PTO”) issued U.S. Patent
No. 4,687,777, containing claims for pioglitazone, the active pharmaceutical ingredient in
ACTOS.46
In January 1999, Takeda submitted an NDA seeking approval to manufacture, market,
and sell ACTOS. Six months later, in July 1999, the FDA approved the NDA for the use of
ACTOS to improve glycemic control in adults with Type 2 diabetes – either as monotherapy or
41 Applications for FDA Approval to Market a New Drug: Patent Listing Requirements and Application of
30-Month Stays on Approval of ANDAs Certifying That a Patent Claiming a Drug is Invalid or Will Not Be
Infringed, 67 Fed. Reg. 65,448 (proposed Oct. 24, 2008).
42 Applications for FDA Approval to Market a New Drug: Patent Listing Requirements and Application of
30-Month Stays on Approval of ANDAs Certifying That a Patent Claiming a Drug Is Invalid or Will Not Be
Infringed, 68 Fed. Reg. 36,676 (June 18, 2003).
43 Id.; see id. at 36,685 (“The specific method-of-use claims are essential to our review [of section viii
statements].”).
44 See, e.g., id. at 36,687 (“[W]e will not evaluate a patent to assess whether the declaration is accurate or
whether the patent has been appropriately submitted for listing.”); id. at 36,682 (“In determining whether an
ANDA applicant can ‘carve out’ the method of use, . . . we will rely on the description of the approved use provided
by the NDA holder or patent owner.”).
45 See 21 U.S.C. §§ 355(j)(5)(C)(ii), 1101(a)(2)(C).
46 Second Consol. Am. Class Action Compl. & Jury Demand (“Compl.”) ¶ 158, Jan. 8, 2016, ECF No. 55.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 25 of 86
12
in combination with a sulfonylurea, metformin, or insulin.47 The ’777 patent would expire on
January 17, 2011.48
At some point in 1999, Takeda submitted to the FDA information about the ’777 patent,
and the next year it appeared in the Orange Book with a new chemical entity identification.
In October 1999, the PTO issued U.S. Patent No. 5,965,584. The ’584 patent has two
types of claims, (1) those for a pharmaceutical composition comprising pioglitazone or salts
thereof in combination with a biguanide (e.g., metformin), and (2) those for methods for treating
diabetes which comprise administering a therapeutically effective amount of pioglitazone or
salts thereof in combination with a biguanide (e.g., metformin).49 The ’584 patent expires on June
19, 2016.50 The product claims (first set) do not cover the ACTOS product itself. The use
claims (second set) only cover the specified method of using ACTOS. The ’584 patent expires
on June 19, 2016.51
On November 5, 1999, Takeda submitted patent information to the FDA. Takeda told
the FDA that the ’584 patent claimed both the “[d]rug product” ACTOS and its “method of
use.”52 That was false.
In December 2001, the PTO issued U.S. Patent No. 6,329,404.53 The ’404 patent also
has two types of claims, (1) those for a pharmaceutical composition comprising pioglitazone or
salts thereof in combination with an insulin secretion enhancer (e.g., a sulfonylurea, such as
47 Compl. ¶¶ 159-60.
48 Compl. ¶158.
49 Compl. ¶ 166.
50 Id.
51 Id.
52 Compl. ¶ 170; see Ex. 9 to Decl. of Adam R. Lawton 7-8, ECF No. 66-4; see also FDA/CDER Resp. Sandoz,
Inc. Citizen Pet. At 1-2, Docket No. FDA-2009-P-0411-0010 (Mar. 15, 2010) (“When submitted, Takeda's patent
declarations for the ’584 and ’404 patents each stated that the patents claimed both the drug product and a method of
use.”) (emphasis added).
53 Compl. ¶ 172.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 26 of 86
13
glimepiride), and (2) those for methods for treating diabetes which comprise administering a
therapeutically effective amount of pioglitazone or salts thereof in combination with an insulin
secretion enhancer.54 The product claims (first set) do not cover the ACTOS product itself.
The use claims (second set) only covers the specified method of using ACTOS. The ’404 patent
also expires on June 19, 2016. 55
On January 3, 2002, Takeda submitted patent information to the FDA. Takeda told the
FDA that the ’404 patent claimed both the “[d]rug [p]roduct” ACTOS and its “[m]ethod of
[u]se.”56 That also was false.
Takeda submitted eight other patents to the FDA that, it reported, contained only
method-of-use claims covering ACTOS.57
2. The first wave of generics files ANDAs.
On July 15, 2003 – the first day generics could do so – defendants Actavis, Mylan, and
Ranbaxy (the “first wave generics”) filed ANDAs seeking FDA approval to manufacture,
market, and sell generic ACTOS.58
The Mylan ANDA carved-out the use of ACTOS in combination with other agents; it
contained a paragraph IV certification as to the ’777 ACTOS compound patent, split
certifications to the combo patents (paragraph IV as to product claims, section viii statements
54 Id.
55 Id.
56 Compl. ¶ 176; see Ex. 9 to Decl. of Adam R. Lawton, ECF No. 66-4, at 9-10; see also FDA/CDER Resp.
Sandoz, Inc. Citizen Pet., Docket No. FDA-2009-P-0411-0010 (Mar. 15, 2010).
57 Compl. ¶ 178.
58 Compl. ¶ 189.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 27 of 86
14
as to use claims), and section viii statements as to the other ACTOS patents.59 On November 3,
2004, the FDA granted tentative approval for Mylan’s ANDA.60
As accepted for filing by the FDA, the Actavis ANDA carved-out the use of ACTOS in
combination with other agents; it contained a Paragraph III certification as to the ’777 ACTOS
compound patent, split certifications to the combo patents (paragraph IV as to product claims,
section viii statements as to use claims), and section viii statements as to the other ACTOS
patents.61 On December 13, 2005, the FDA granted tentative approval for Actavis’s ANDA.62
The Ranbaxy ANDA also contained a paragraph III certification as to the ’777 Patent,
split certifications tot eh combo patents (paragraph IV as to product claims, section viii
statements as to use claims), and section viii statements as to the other ACTOS patents.63
In each case, the split certifications indicate that Mylan, Actavis, and Ranbaxy knew or
had reason to believe that section viii statements alone were insufficient to address the patent
information that had been filed by Takeda regarding the ‘584 and ‘404 patents. (Actavis
59 Compl. ¶ 191; see Sebelius, 2012 WL 6968224, at *7, *10.
60 See http://1.usa.gov/1SbVqJo (FDA Approval History for Mylan ANDA 076801); see also Mylan’s Pretrial
Br., Takeda Chem. Indus. v. Mylan Labs., Inc., No. 03-cv-8253, 2005 U.S. Dist. Ct. Motions LEXIS 27367, at *33-*34
(S.D.N.Y. Dec. 2, 2005) (noting that “FDA has ‘tentatively’ approved Mylan’s ANDA and therefore has found the
proposed labeling of Mylan’s Package Outsert acceptable, which excludes any reference or suggestion to use the
Mylan products for the combination therapies covered by Takeda’s Orange Book-listed patents for the ACTOS®
products.”)
61 Compl. ¶ 193. As originally filed, Actavis’s ANDA included only paragraph IV certifications for the
method-of-use patents. In August 2003, Actavis “amended its ANDA to change its certifications to the [method-
of-use patents] to Section viii statements, while maintaining its Paragraph IV certifications as to the composition
claims” of the combo patents. Sebelius, 2012 WL 6968224, at *6, *11. Actavis’s proposed labeling also revised the
reference to combination therapy contained in the ACTOS label. “Among other things, [Actavis] change[d] the
direction in the Actos label that read ‘for patients not responding adequately to monotherapy, combination therapy’
should be considered” to ‘[f]or patients not responding adequately to monotherapy, other therapy should be
considered.’” Takeda Chem. Indus., Ltd. v. Watson Pharms., Inc., 329 F. Supp. 2d. 394, 399 (S.D.N.Y. June 10, 2004).
62 Sebelius, 2012 WL 6968224, at *6 , *11.
63 Compl. ¶ 195; Takeda Chem. Indus., Ltd. v. Mylan Labs., Inc., 417 F. Supp. 2d 341, 366 & n.28 (S.D.N.Y. 2006)
(Ranbaxy “filed paragraph IV certifications relating to the composition claims” and “included . . . Section viii
Statements with respect to the method claims” of the combo patents).
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 28 of 86
15
learned this directly from the FDA; its application was at first rejected until corrected to reflect
a split certification, with the FDA explaining to it the need to do so).64
By filing paragraph IV certifications, each first filer acquired a right that it would not
have had in the absence of Takeda’s wrongful description of those patents as covering the
ACTOS product – the right to be treated as “first-to-file” ANDA applicants entitled to enjoy
180-day exclusivity from other generic company ANDA-approved sales, and the ability to
bottleneck the entry of other generics (subject to certain exceptions) until such time as one of
these first wave generics chose to launch its product.65
The FDA ultimately concluded that Mylan, Ranbaxy, and Actavis were entitled to
“shared” 180-day exclusivity with respect to generic ACTOS; each had first-to-file exclusivity
(subject to exceptions) from non-first wave generics for the first six months from when the first
of any one of the first wave generics chose to launch their generic product (assuming the
company had final approval from the FDA, of course).66 This status was only available under
the combo patents by reason of Takeda’s false description of those patents as claiming the
ACTOS product.67
After receiving the first filers’ paragraph IV certifications, Takeda initiated patent
infringement suits against each of the first wave generics.68 In each case (the complaints are
more or less identical), Takeda alleged “upon information and belief” (i) counts under 35 USC §
271(e)(2)(A) that conduct by Ranbaxy, Mylan, and Actavis would induce infringement of claims
64 Sebelius, 2012 WL 6968224, at *6, *11.
65 Compl. ¶ 197.
66 Id.
67 Id.
68 Compl. ¶ 198. In addition, Takeda filed nearly identical complaints against each of the first wave generics
in other districts. See Compl., Takeda Chem. Indus., Ltd. v. Mylan Labs. Inc., No. 03 1608, 2003 WL 25593100
(W.D. Pa. Oct. 23, 2003); Compl., Takeda Chem. Indus., Ltd. v. Watson Pharm., Inc., No. 03-cv-01335 (D. Nev. Oct.
23, 2003); Compl., Takeda Chem. Indus., Ltd. v. Ranbaxy Labs., Ltd., No. 03-5055, 2003 WL 25816442 (D.N.J. Oct.
23, 2003).
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 29 of 86
16
of the combo patents, and (ii) counts under 35 USC § 271(b) that conduct by each of the first
wave generics would induce infringement of the method-of-use claims in the combo patents and
some of the other ACTOS patents.69 Takeda brought no claims against the first wave generics
alleging that the proposed generic products would directly infringe the product claims in the
’584 or ’404 patents. None of the complaints specified any actual acts of induced infringement
of those patents, instead relying on speculation as to what the generics might do in the future.70
3. Teva files its generic ACTOS ANDA.
On July 14, 2004, Teva filed an ANDA for approval of its generic ACTOS.71 The Teva
ANDA contained a paragraph III certification as to the ’777 patent. But unlike the first wave
generics’ ANDAs, Teva’s did not contain a paragraph IV certification with respect to either of
the combo patents;72 as to those, Teva included only section viii statements.73 The section viii
statements asserted that Teva’s label would “carve out” information regarding methods of
using ACTOS in combination with a biguanide or an insulin secretion enhancer (the methods of
use claimed by the combo patents).74
Teva’s decision not to include a paragraph IV certification with respect to the combo
patents reflects a strategy to have the FDA approve Teva’s ANDA without regard to whether
69 Mylan Compl. ¶¶ 46-65 (§ 271(e)(2)(A) claims), 66-137 (§ 271(b) claims); Compl., Takeda Chem. Indus., Ltd.
v. Watson Pharma., Inc., No. 03CV08254, 2006 WL 6810286 (S.D.N.Y. Oct. 17, 2003) (“Actavis Complaint”), ¶¶ 34-
58 (§ 271(e)(2)(A) claims), 59-112 (§ 271(b) claims); Ranbaxy Compl. ¶¶ 32-60 (§ 271(e)(2)(A) claims), 61-138 (§
271(b) claims); see also Am. Compl., Takeda Chem. Indus., Ltd. v. Mylan Labs., Inc., 03-cv-8253, 2004 U.S. Dist. Ct.
Pleadings LEXIS 7874 (S.D.N.Y. Sept. 29, 2004) (“Am. Mylan Compl.”), ¶¶ 46-65 (§ 271(e)(2)(A) claims), 66-136
(§ 271(b) claims).
70 See, e.g., Am. Mylan Compl. ¶¶ 52-53 (“Upon information and belief, Mylan's generic marketing practices
include listing generic products on its website and referring consumers to a corresponding brand name product.
Upon information and belief, Mylan intends to do the same for any approved generic pioglitazone . . . Upon
information and belief, Mylan has planned and intended to actively induce others to infringe the '584 patent when
their ANDA application is approved and plans and intends to do so on approval.”); Actavis Compl. ¶¶ 45-46 (same,
as to Actavis).
71 Compl. ¶ 204.
72 Compl. ¶ 205.
73 Id.
74 Id.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 30 of 86
17
any other ANDA applicant was otherwise entitled to a 180-day exclusivity period with respect
to ACTOS.75 This leap frog strategy would occur in one of two ways: either the FDA would
determine (without court proceedings) that the section viii statement was sufficient (and not
give credence to the product listing as to ACTOS in some way), or (if the FDA were unwilling
to do so), a court would determine the listing incorrect and require correction under §
355(j)(5)(C)(ii).76 Under either path, the FDA approval of Teva’s ANDA would not be delayed
by any 180-day exclusivity for another generic ACTOS product.77 Teva sought to leap frog
over the first wave generics – Mylan, Ranbaxy, and Actavis – and launch a generic version of
ACTOS once the ’777 patent expired in January 2011.78
In or about February 2006, Teva received tentative approval from the FDA for its
ACTOS ANDA.79 By doing so, the FDA accepted Teva’s section viii statement and carved-out
labeling of the methods of using ACTOS with metformin and insulin. Takeda did not sue Teva
for patent infringement for its ACTOS ANDA until May 2009, when it also sued Teva for
infringement for Teva’s ACTOplus met ANDA.80
4. The challenge to the ’777 patent is tried.
The Takeda actions against Mylan, Ranbaxy and Actavis were consolidated, and the
court opted to try Mylan’s challenge to the ’777 patent first.81 After a 2006 bench trial, the
75 Compl. ¶ 206.
76 Id.
77 Id.
78 Compl. ¶ 207.
79 See Mem. Supp. Teva’s Mot. Add Counterclaim 5, Takeda Pharm. Co. Ltd. v. Teva Pharm. Indus. Ltd., No.
09-cv-4665 (S.D.N.Y Mar. 30, 2010), ECF No. 49 (“On February 7, 2006, the FDA granted tentative approval to
Teva's ANDA.”).
80 Compl. ¶ 224.
81 Compl. ¶ 210.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 31 of 86
18
court found that the ’777 patent valid and infringed.82 In June of 2007 the Federal Circuit
affirmed.83
The decision on the ’777 patent had no bearing on the merits of Takeda’s induced
infringement claims based on the combo patents, nor did it have any bearing on whether
Takeda had submitted false information to the FDA regarding those patents.84
5. Takeda sues Mylan and Teva for their ACTOplus met ANDAs.
On August 29, 2005, the FDA approved Takeda’s NDA for ACTOplus met, which
combined two active ingredients, pioglitazone hydrochloride and metformin hydrochloride.85
Takeda listed the ’584 patent in the Orange Book as a drug product patent for ACTOplus met
and listed three additional patents as applicable method-of-use patents.86
On or about March 5, 2008, Mylan submitted an ANDA seeking FDA approval to
market a generic ACTOplus met (entitling Mylan, as the first filer, to 180 days of exclusivity),
and made a paragraph IV certification to each relevant patent.87 On August 5, 2008, Takeda
sued Mylan.88
In late 2008 or early 2009, Teva submitted an ANDA for generic ACTOplus met.89
Takeda sued.90 Takeda asserted that Teva’s ACTOS ANDA and its ACTOplus met ANDA
induced infringement of the use claims in the combo patents.91
82 Compl. ¶ 211.
83 Id.
84 Compl. ¶ 212.
85 Compl. ¶¶ 214-15.
86 Id.
87 Compl. ¶ 217.
88 Compl. ¶ 219.
89 Compl. ¶ 222.
90 Compl. ¶ 224.
91 Id.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 32 of 86
19
6. In 2009 and 2010, Takeda reiterates the false characterization of the ’584
and ’404 patents.
In August 2009, presumably recognizing that Teva’s leap frog may be successful,
another generic manufacturer (Sandoz) filed a petition requesting that the FDA refrain from
granting final approval for any ACTOS ANDA that did not contain paragraph IV certifications
to the ’584 and ’404 patents.92
In November 2009, Takeda wrote the FDA to “confirm the listing” of the combo patents
“under the terms . . . [of the] original submissions.”93 It noted a “section viii statement alone is
insufficient when a listed patent includes claims other than a method-of-use claims.”94 Takeda
demanded that the FDA require all ANDA applicants for generic ACTOS submit a certification
and not a section viii statement.95
On January 22, 2010, in a comment to the petition, Takeda again stated that it
“characterized [the combo patents] for FDA in the appropriate patent declarations as
containing both ‘Drug product’ and ‘Method of use’ claims,” and confirmed that “[s]ince the
original submission of these patents to FDA, Takeda has continued to certify to the
applicability of the patents to Actos® under the original declarations . . . .96 Takeda
reiterated to the FDA that, as a result, “a statement under ‘section viii’ . . . for each patent is, by
itself, legally insufficient.”97
92 Compl. ¶ 232; see Sandoz, Inc. Citizen Pet., Docket No. FDA-2009-P-0411-0001 (August 25, 2009).
93 See Ex. 9 to Decl. of Adam R. Lawton, ECF No. 66-4, at 4.
94 Id.
95 Id. at 6.
96 Compl. ¶ 232; see Ex. 9 to Decl. of Adam R. Lawton, ECF No. 66-4, at 2.
97 Id.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 33 of 86
20
7. Takeda negotiates the March 2010 pact with Mylan, Actavis, and Ranbaxy.
By early 2010, the FDA was poised to grant final approval to the Mylan and Actavis
ANDAs in late January 2011. The FDA had granted tentative approval to Mylan’s and
Actavis’s ANDAs years earlier; this meant the only remaining requirement for final approval
was resolution of patent stay requirements. But the ’777 patent would expire on January 17,
2011, and the 30-month stay from the combo patent certifications had long expired. Takeda
and the generics faced a trial in June on Takeda’s allegations the generics might affirmatively
engage in acts to induce infringement of the use claims in the combo patents. But the first
wave generics had formally carved out those uses from their proposed FDA labels, and the
FDA had accepted them. The generics denied any plans to induce infringement. And even in
the unlikely event Takeda prevailed, the remedy for induced infringement would be to enjoin
inducing conduct, not bar entry of the product.
As things stood, Mylan and Actavis would each gain final approval in late January 2011
and launch generic ACTOS.98 If they could preserve the falsely-created 180-day exclusivity,
they would reap supracompetitive sales.
But Teva remained in the likely spoiler role. Teva was pursuing its section viii
statement strategy. Once successful, Teva (who also had tentative approval) could also launch
its generic in January 2011, as could any other ANDA filers (such as Sandoz, Torrent,
Aurobindo, and others) whose applications became complete and had similar section viii carve-
outs. The 180-day exclusivity, and the potential to bottleneck other generics, would be lost.99
In mid-March 2010, Takeda orchestrated a group deal in which all three of the first
wave generics – Mylan, Actavis, and Ranbaxy – reached an overall agreement memorialized in
98 Compl. ¶ 239; cf. id. ¶ 352.
99 Comp. ¶ 247.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 34 of 86
21
documents with nearly identical terms (the “March 2010 pact”).100 Takeda and the first wave
generics agreed to two common, unlawful goals: (i) preserving and prolonging the falsely
created 180-day exclusivity for ACTOS, and (ii) delaying entry of generic ACTOS products.
Takeda received identical commitments from each generic to delay entry of generic
ACTOS until August 17, 2012 (20 months after the January 17, 2011 date), with similar delay
commitments for ACTOplus met.101 The first wave generics understood that their agreement
to delay would bottleneck other generic entrants for six months after the delayed launch of
generic ACTOS.
For the first wave generics, and in exchange for the delay, the March 2010 pact was
structured to maximize the likelihood that the first wave generics would keep their undeserved
180-day exclusivity. The agreements contained coordinated launch provisions designed to
dissuade Teva’s (or any other generic’s) efforts to challenge exclusivities and gain early
entry.102 The March 2010 pact secured coordinated launch amongst several generics – the
multiple threat was a further disincentive to Teva’s continuing the section viii leapfrog. First,
Mylan, Actavis, and Ranbaxy agreed to maintain their paragraph IV certifications as to the
falsely described product claims of the ’584 and ’404 patents; they agreed to treat Takeda’s false
patent information as truthful, and never challenge it.103 Second, the first wave generics agreed
to amend their ANDAs to change their section viii statements on all ACTOS patents (including
the combo patents) to paragraph IV certifications and to no longer carve out the protected uses
from its labeling; doing so gave them a hassle-free, non-carved-out label, an arguable advantage
100 Compl. ¶ 248.
101 Compl. ¶ 250.
102 Compl. ¶¶ 257-58.
103 See Ex. 1 to Kokkines Decl. (Ranbaxy Agreement), Sections 2.4, 2.5; Ex. 2 to Kokkines Decl. (Mylan
ACTOS Agreement), Sections 2.4, 2.5; Ex. 4 to Kokkines Decl. (Watson Agreement), Sections 2.4, 2.5.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 35 of 86
22
over Teva and their other competitors.104 Third, the first wave generics agreed to permit
Takeda to negotiate a later deal with Teva in which Teva would be allowed to join in the fruits
of the falsely created 180-day exclusivity.105 Finally, as further sweeteners to Ranbaxy and
Actavis, Takeda agreed to provide them both higher-than-market side deals in which Takeda
granted them licenses to market another drug for which they had never filed an ANDA, generic
ACTOplus met.106
The settlements were announced within days of each other (March 10, 15, and 16),107
using nearly identical language.108 The entry dates for all products were identical.109 The
conditions of entry were identical, with the language for the coordinated entry dates nearly
identical for all three.110 The terms of the agreements were to be confidential, yet each
agreement permitted Takeda to share the otherwise secret coordinated launch provisions with
other generic competitors.111
Up until March of 2010, the first wave generics had acted unilaterally, in their
respective self-interests. But by entering into the March 2010 pact, these generics exacerbated
the consequences of Takeda’s false submissions to the FDA by rejiggering their patent
certifications and prolonging the bottleneck preventing generic entry.112
104 See Ex. 1 to Kokkines Decl. (Ranbaxy Agreement), Section 2.4; Ex. 2 to Kokkines Decl. (Mylan ACTOS
Agreement), Section 2.4; Ex. 4 to Kokkines Decl. (Watson Agreement), Section 2.4.
105 See Ex. 1 to Kokkines Decl. (Ranbaxy Agreement), Section 3.1; Ex. 2 to Kokkines Decl. (Mylan ACTOS
Agreement), Section 3.1; Ex. 4 to Kokkines Decl. (Watson Agreement), Section 3.1; see also Compl. ¶ 299.
106 Compl. ¶¶ 272-74.
107 Compl. ¶ 252.
108 Id.
109 Id.
110 Id.
111 Id.
112 Compl. ¶¶ 259, 268.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 36 of 86
23
8. Teva asserts a counterclaim to correct the false patent information for the
’584 and ’404 patents.
On March 15, 2010, the FDA granted Sandoz’s petition, noting that the FDA relies
“solely on the NDA sponsor’s patent declaration describing relevant patent claims in Orange
Book-listed patents.”113 The FDA noted that Takeda’s original patent information for ACTOS
had indeed “stated that the patents claimed both the drug product and a method of use.”114 As a
result, ACTOS ANDAs could not gain approval through a section viii statement to the combo
patents; an ANDA applicant seeking pre-expiry entry was required to submit a paragraph IV
certification.
On March 30, 2010, Teva moved to add a counterclaim to “correct or delete the
misleading and/or incorrect information [Takeda] submitted to the FDA concerning the scope
of the drug product claims in the ’584 and ’404 patents in relation to the Actos® NDA.”115 The
corrected information “would show that the drug product claims in the ’584 and ’404 patents do
not cover Actos®,” and that would mean “there is no basis for requiring Teva to submit a
paragraph IV certification to those claims in connection with Teva’s Actos® ANDA.”116 As a
result, the FDA would be free to approve Teva’s ANDA “after . . . the ’777 patent . . . expires in
January 2011.”117 Teva saw Takeda’s submissions as false: “The information submitted by
Takeda was false, misleading, and/or incorrect in that it stated or strongly implied that the
113 Compl. ¶ 234.
114 Id.
115 Teva Mem. Support Mot. Add Counterclaim 2; see Compl. ¶¶ 282-83, 285.
116 Teva Mem. Support Mot. Add Counterclaim 2-3; see also id. at 2 (“Simply put, the drug product claims in
those patents do not cover the Actos® drug product, and therefore those claims cannot properly be listed for the
Actos® NDA.”).
117 Id. at 3.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 37 of 86
24
drug product claims in those two patents cover the Actos® drug product, when in fact they
unequivocally do not.118
Teva argued that the consequence of Takeda’s false filings was generic delay. As “a
direct result of Takeda’s submissions, the FDA now states that Teva must submit paragraph IV
certifications to those claims as part of its ANDA for a generic version of Actos®. The
inevitable effect of this change will be to substantially and impermissibly delay FDA approval
for Teva’s ANDA.”119 Teva continued,
Teva will be substantially harmed unless Takeda is required to
correct or delete the patent information concerning the drug
product claims of the ’584 patent and the ’404 patent in the
Orange Book in relation to the Actos® NDA. The consequence of
those incorrect listings – and the resulting directive by the FDA
that ANDA applicants must file paragraph IV certifications – will
likely cause a substantial delay of approximately two years in FDA
approval of Teva’s ANDA, from January 2011 to February 2013.
In addition, Takeda’s wrongful conduct likely will mean that
there will be no generic version of Actos® available to consumers
for more than 18 months after such products otherwise would be
available. By contrast, if Takeda were required to correct or
delete the information it previously submitted to the FDA, none
of these improper delays would occur, and ANDAs for generic
versions of Actos® could be approved in the manner and within
the time-frames that Hatch-Waxman actually contemplates.120
118 Id. at 1; see also id. at 1 n.1 (“Teva does not challenge Takeda's listing of the method-of-use claims (as
opposed to the drug product composition claims) of those patents in relation to Actos®”).
119 Id. at 1-2.
120 Id. at 6-7 (emphasis in original). Teva further stated:
January 2011 is the month that the ’777 patent expires and when the FDA
would be free to approve Teva’s Actos® ANDA (which already has tentative
approval) but for the issue raised by this counterclaim. If, however, Teva is
required to file paragraph IV certifications to drug product claims in the ’584
and ’404 patents, then Teva will be blocked from launching until 181 days after
the first-filers trigger their exclusivity. Certain first-filers have announced
settlements with Takeda in which they likely will not launch their generic
versions of Actos® until August 2012. If Teva is required to wait 181 days
after those launch dates to obtain FDA approval, that would delay Teva’s
approval until February 2013.
Id. at 7 n.5.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 38 of 86
25
9. Takeda negotiates the December 2010 pact with Teva.
In the second half of 2010, sensing the risk that Teva would prevail on its counterclaim
and enter the market with generic ACTOS as early as January 2011 with section viii
statements, Takeda folded Teva into the conspiracy.121
On December 22, 2010, Takeda and Teva entered into an agreement. Although Teva
had previously complained of Takeda’s efforts to delay generic ACTOS launch for over a year-
and-a-half, Teva now flip-flopped and agreed to that delay. It would (i) drop its challenges to
Takeda’s patents with respect to both ACTOS and ACTOplus met, (ii) drop its counterclaim
asserting that Takeda had submitted false and misleading patent information as to the combo
patents, and (iii) stay out of the market with generic ACTOS until August 17, 2012, and stay
out of the market with generic ACTOplus met until the date on which Mylan entered the
market.122
In exchange, Takeda allowed Teva to enjoy the fruits of the falsely created 180-day
exclusivity (as had been planned in the March 2010 pact):
First, Takeda gave Teva an authorized generic distributorship for ACTOS in which
Teva could enter the market at the same time as the first wave generics, i.e., August 17, 2012.
Takeda’s ability to do so had been expressly reserved in the March 2010 pact as a means by
which to entice Teva to drop its section viii efforts and join the delay of generic ACTOS.123
Second, Takeda agreed that – with the exception of the “licenses” to which it had
already agreed with Mylan, Ranbaxy, and Actavis – Takeda would not grant any other generic
drug manufacturer a release of patent liability for entering the ACTOS market earlier than 180
121 Compl. ¶¶ 286-89.
122 Compl. ¶¶ 290, 295.
123 Compl. ¶ 299; see Ex. 1 to Kokkines Decl. (Ranbaxy Agreement), Section 3.1(c); Ex. 2 to Kokkines Decl.
(Mylan ACTOS Agreement), Section 3.1(c); Ex. 4 to Kokkines Decl. (Watson Agreement), Section 3.1(c).
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 39 of 86
26
days after Teva entered the market.124 This assured Teva that it would be the last to partake in
the falsely created 180-day exclusivity. Takeda also agreed it would not enter with its own
authorized generic during that period.125
Finally, Takeda gave Teva an exclusive authorized generic distributorship for
ACTOplus met through which Teva could enter the market at the same time as Mylan, i.e.,
December 2012 (or August, under certain circumstances that did come to pass).126 Of course,
Takeda and Teva agreed to the same coordinated launch provisions as the first wave generics,
assuring the coordinated timing of entry for all.127
The combination of disincentives created by the March 2010 pact, coupled with the
promises made by Takeda in the December 2010 pact, caused Teva to drop its section viii
statement approach to launching generic ACTOS by the end of January of 2011 and to stay out
of the ACTOS and ACTOplus met markets longer than it otherwise would have. The falsely
created 180-day exclusivity for ACTOS generics would be perpetuated well beyond January
2011, with Teva now joining the first wave generics in the benefits of that exclusivity.
III. LEGAL STANDARD
On a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a court must
look to the plaintiffs’ operative complaint for the controlling facts, accept all factual allegations
as true, and “construe all reasonable inferences that can be drawn from the complaint in the
light most favorable to the plaintiff.”128 To survive a motion to dismiss, a plaintiff need only
allege “enough facts to state a claim to relief that is plausible on its face.”129 The plausibility
124 Compl. ¶ 302.
125 See Ex. 5 to Kokkines Decl. (Teva Agreement), Section 3.2.
126 Compl. ¶¶ 304, 306.
127 Compl. ¶¶ 303, 307.
128 Anderson News, L.L.C. v. Am. Media, Inc., 680 F.3d 162, 185 (2d Cir. 2012).
129 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 40 of 86
27
standard is not akin to a “probability requirement,” but “simply calls for enough fact to raise a
reasonable expectation that discovery will reveal evidence of [the claim].”130 “Because
plausibility is a standard lower than probability, a given set of actions may well be subject to
diverging interpretations, each of which is plausible.”131 The court cannot rely on any
materials outside the operative complaint to “make a finding of fact that controvert[s] the
plaintiff’s own factual assertions.”132
IV. ARGUMENT
Section 2 of the Sherman Act forbids monopolization “or attempt[s] to monopolize, or
combine or conspire with any other person or persons, to monopolize.”133 Section 1 of the
Sherman Act provides “[e]very contract, combination . . . or conspiracy, in restraint of trade or
commerce . . . is declared to be illegal.”134 The Clayton Act authorizes private parties to seek
treble damages for past injury caused by conduct that violates the antitrust laws, including §§ 1
and 2 of the Sherman Act.135
The direct purchasers allege claims under both §§ 1 and 2 of the Sherman Act. They
have standing to sue for overcharge damages in antitrust cases136 and are entitled to recover
the entire amount of a proven overcharge.137
130 Id. at 556.
131 Anderson News, 680 F.3d at 184.
132 Global Network Commc’ns, Inc. v. City of New York, 458 F.3d 150, 156 (2d Cir. 2006).
133 15 U.S.C. § 2.
134 15 U.S.C. § 1.
135 15 U.S.C. § 15(a) (“Except as provided in subsection (b), any person who shall be injured in his business or
property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United
States in the district in which the defendant resides or is found or has an agent, without respect to the amount in
controversy, and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable
attorney’s fee.”).
136 Ill. Brick Co. v. Illinois, 431 U.S. 720 (1968).
137 Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481 (1968).
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 41 of 86
28
A. The complaint alleges Takeda violated § 2 of the Sherman Act by submitting
false patent information to the FDA.
1. Submitting false patent information to the FDA violates § 2 of the
Sherman Act.
“The offense of monopoly under § 2 of the Sherman Act has two elements: (1) the
possession of monopoly power in the relevant market and (2) the willful acquisition or
maintenance of that power as distinguished from growth or development as a consequence of a
superior product, business acumen, or historic accident.”138 Takeda does not challenge the
monopoly power allegations.
Falsehoods to public officials can be exclusionary conduct that violates the Sherman
Act.139 “The supplying of fraudulent information . . . threatens the fair and impartial
functioning of . . . agencies and does not deserve immunity from the antitrust laws.”140 Courts
recognize agencies “rely on the information presented by the parties before them” because they
“seldom, if ever, have the time or resources to conduct independent investigations.”141 The
138 United States v. Grinnell Corp., 384 U.S. 563, 571-72 (1966).
139 Cal. Motor Transp. Co. v. Trucking Unlimited, 404 U.S. 508, 513 (1972) (“Misrepresentations, condoned in
the political arena, are not immunized when used in the adjudicatory process.”); Walker Process Equip., Inc. v. Food
Mach. & Chem. Corp., 382 U.S. 172, 177 (1965) (“Proof of this assertion [that the patentee obtained the patent by
knowingly and willfully misrepresenting facts to the Patent Office] would be sufficient to strip [the patentee] of
its exemption from the antitrust laws.”); Kottle v. Nw. Kidney Ctrs., 146 F.3d 1056, 1063 (9th Cir. 1998) (A plaintiff
“can overcome a 12(b)(6) motion if his allegations demonstrate that [the defendant] so misrepresented the truth to
the Department [of Health] that the entire [administrative] proceeding was deprived of its legitimacy.”); Whelan
v. Abell, 48 F.3d 1247, 1255 (D.C. Cir. 1995); (“However broad the First Amendment right to petition may be, it
cannot be stretched to cover petitions based on known falsehoods.”); St. Joseph’s Hosp., Inc. v. Hosp. Corp. of Am.,
795 F.2d 948, 955 (11th Cir. 1986) (holding misrepresentations to a governmental agency are not immune from
antitrust liability); Confederated Tribes of Siletz Indians of Or. v. Weyerhaeuser Co., 00-cv-1693, 2003 WL 24901381,
at *7 (D. Ore. July 5, 2003) (upholding jury verdict finding antitrust liability for “knowingly [making] false
statements to the Oregon Department of Forestry to obtain an exemption from log export regulations” that “had
the effect of denying . . . logs to the Plaintiff mills”); Phillip E. Areeda & Herbert J. Hovenkamp, Antitrust Law
¶203f (3d ed. 2006) (“Several courts have regarded as actionable under the antitrust laws the competitive injury
that flows from the knowing submission of false information to a government body.”); cf. Armstrong Surgical Ctr.,
Inc. v. Armstrong Cnty. Mem’l Hosp., 185 F.3d 154, 164 n.8 (3d Cir. 1999) (distinguishing case other fraudulent
misrepresentation cases, including Walker Process, where agencies were “wholly dependent upon the antitrust
defendants for the factual information” on which the agency “predicated” its action).
140 Clipper Exxpress v. Rocky Mountain Motor Tariff Bureau, Inc., 690 F.2d 1240, 1261 (9th Cir. 1982); see also
Israel v. Baxter Labs., Inc., 466 F.2d 272, 278 (D.C. Cir. 1972) (stating that misrepresentation of safety and efficacy
data to the FDA should not be allowed “to hide behind the cloak of an antitrust exemption”).
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 42 of 86
29
FDA has limited resources, making it dependent on truthful information from pharmaceutical
companies.142
The Second Circuit and other courts recognize that the prohibition on falsehoods
extends to misrepresentations affecting the agency’s execution of its non-discretionary or
ministerial duties.143
In Litton Systems, Inc. v. American Telephone & Telegraph Co.,144 the Second Circuit
rejected AT&T’s pleas for antitrust immunity where AT&T made material misrepresentations
in a tariff filing it was required by law to file with the FCC.145 The FCC played a purely
ministerial role in accepting the tariff filing – it did not pass upon the legality or propriety of a
submitted tariff.146 The Litton court observed that no antitrust immunity attached to the tariff
filing because the tariff-setting was “private commercial activity” and the “decision to impose
and maintain the [] tariff was made in the AT&T boardroom, not at the FCC.”147 “AT&T
[could not] cloak its actions in Noerr-Pennington immunity simply because it is required, as a
regulated monopoly, to disclose publicly its rates and operating procedures.”148
Litton’s logic applies in the prescription pharmaceutical context. The FDA plays a non-
141 Clipper Exxpress, 690 F.2d at 1262.
142 Compl. ¶¶ 77, 86-87; see also aaiPharma Inc. v. Thompson, 296 F.3d 227, 237 (4th Cir. 2002) (The FDA
lacks “both the resources and expertise to police the correctness of Orange Book listings.”).
143 See, e.g., Litton Sys., Inc. v. Am. Tel. & Tel. Co., 700 F.2d 785, 807 (2d Cir. 1983); Woods Exploration &
Producing Co. v. Aluminum Co. of Am., 438 F.2d 1286, 1298 (5th Cir 1971) (oil company could face antitrust liability
for material misrepresentations to the Texas Railroad Commission affecting competitors’ oil rations, because
Texas law set a predictable formula as to how much oil could be drawn from an oil field); DeLoach v. Philip Morris
Cos., Inc., No. 00-cv-1235, 2001 WL 1301221, at *2, *12 (M.D.N.C. July, 24, 2001) (antitrust liability could be
established against tobacco companies who falsely reported the amount of tobacco they intended to purchase,
which, when inputted into the U.S. Department of Agriculture’s non-discretionary “statutory formula,” artificially
depressed the price of tobacco, harming tobacco farmers).
144 700 F.2d 785 (2d Cir. 1983).
145 Id. at 807-08.
146 Id.
147 Id. at 807.
148 Id.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 43 of 86
30
discretionary, “purely ministerial role” in listing a patent in the Orange Book.149 As in Litton,
the decision of what patent claims are included in a brand’s patent information and how those
claims are described (i.e., as product or method-of-use claims) is made in the brand’s boardroom,
not at the FDA. And a brand company cannot escape antitrust liability simply because the
Hatch-Waxman amendments require it, as a regulated entity, to submit patent information
describing the types of patent claims covering its RLD.
Courts have found that brand companies’ misrepresentations to the FDA about their
patent coverage leads to inaccurate information being listed in the Orange Book, delays generic
launch, and violates § 2 of the Sherman Act.150 In In re Buspirone Patent Litigation,151 the
plaintiffs – including now-defendants Mylan and Actavis – alleged that a brand company
fraudulently submitted patent information claiming that a patent covered uses of buspirone and
then exploited the listing to gain a competitive advantage (i.e., bringing patent infringement
suits against generics, thereby triggering automatic 30-months stays).152 Bristol-Myers argued
149 aaiPharma, 296 F.3d at 230.
150 In re Buspirone Patent Litig., 185 F. Supp. 2d 363, 372-73 (S.D.N.Y. 2002) (denying motion to dismiss
antitrust claims where the complaint alleged a brand company’s patent information submissions falsely claimed the
patent covered approved uses of buspirone); Abbott Labs. v. Alra Lab., Inc., No. 92-cv-5806, 1993 WL 293995, at *2-
3 (N.D. Ill. Aug. 4, 1993) (declining to dismiss claim of fraud based on allegation that brand company “knowingly
and falsely represented to the FDA” that a patent covered Depakote); In re Remeron Antitrust Litig., 335 F. Supp. 2d
522, 532 (D.N.J. 2004) (denying motion to dismiss because, “[w]ithin the maze of Hatch-Waxman, if a patent-
holder’s actions . . . use a lawful patent to manipulate the ANDA process, such actions could lead to
anticompetitive effects in the relevant market”); Herbert Hovenkamp et al., IP and Antitrust: An Analysis of Antitrust
Principles Applied to Intellectual Property Law § 15.32b (Supp. 2012) (Where a patentee “list[s in the Orange Book]
either a clearly invalid patent or one that obviously does not cover the drug claimed,” allowing the patentee to
acquire or maintain market power, “the abuse of the FDA process should be actionable under § 2 [of the Sherman
Act].”); Susan A. Creighton et al., Cheap Exclusion, 72 Antitrust L.J. 975, 984 (2005) ( “If the patent listings do not
meet the statutory and regulatory requirements for inclusion in the Orange Book, the listing may constitute an
unlawful restraint on competition.”). Cf. Stop & Shop Supermarket Co. v. SmithKline Beecham Corp., No. 03-cv-4578,
2005 WL 1213926, at *4 (E.D. Pa. May 19, 2005) (recounting allegations that brand company “knowingly and
willfully ma[de] false and misleading representations to the FDA to obtain multiple listings in the Orange Book”).
151 185 F. Supp. 2d 363.
152 Id. at 366.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 44 of 86
31
that its conduct was not actionable under the Sherman Act.153 Judge Koeltl denied Bristol-
Myers’s motion to dismiss, holding that its submission of false patent information fell within
the Sherman Act’s reach:
Where, as here, it is alleged that a party with intimate legal
knowledge about a patent has made knowingly false statements
about its scope to a governmental agency that has neither the
authority nor the ability to determine the accuracy of the
representations and is instead making publication decisions that
can have palpable anticompetitive effects, the Walker Process
exception applies [and plaintiffs’ Sherman Act §2 claim
stands].154
Judge Koeltl observed that,
[T]he FDA is required by law to publish the information
[provided by Bristol-Myers] in the Orange Book. Hence, the
FDA’s actions are non-discretionary and do not reflect any
decision as to the validity of the representations in an Orange
Book listing.155
And he concluded that,
[C]onduct through which private parties seek to achieve
anticompetitive aims by making representations to the
government in circumstances where the government does not
perform any independent review of the validity of the statements,
does not make or issue any intervening judgment and instead acts
in direct reliance on the private party’s representations [is not
immune to antitrust scrutiny].156
A year later, Bristol-Myers paid $535 million to resolve the buspirone litigation, including the
antitrust claims brought by Mylan and Watson/Actavis.157
153 Id. at 373. The Buspirone defendant claimed the Noerr-Pennington doctrine immunized its fraudulent
petitioning because its FDA submission was not objectively baseless. Id. at 369. The district court held that
Noerr-Pennington did not apply and that plaintiffs had, in any event, alleged exceptions to Noerr-Pennington. Here,
the complaint alleges such exceptions, Compl. ¶¶ 169, 171, and the defendants have not argued for Noerr-
Pennington immunity.
154 Burpirone, 185 F. Supp. 2d at 374 (internal citation omitted).
155 Id. at 371 (internal citations omitted).
156 Id. at 370.
157 See In re Buspirone Patent Litig. Multidistrict Patent Litig., 60 Fed. App’x 806 (Fed. Cir. 2003); Melody
Peterson, Bristol-Myers Squibb to Pay $670 Million to Settle Numerous Lawsuits, N.Y. Times, Jan. 8, 2003, available at
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 45 of 86
32
2. The complaint alleges Takeda submitted false patent information to the
FDA.
The direct purchasers allege that Takeda falsely represented to the FDA that the ’584
and ’404 patents’ product claims covered ACTOS.158 They did not.159 And those
misrepresentations – reiterated over the years – set in motion a chain of events that wrongfully
delayed generic entry.160 As defendant Teva has recognized, “Takeda’s wrongful conduct likely
will mean that there will be no generic version of Actos® available to consumers for more than
18 months after such products otherwise would be available.”161
a. The product claims in the ’584 and ’404 patents do not cover the
product ACTOS.
The ’584 and ’404 patents each include both claims covering a combination product, and
a method-of-using the ACTOS active ingredient in that combination.162 As a matter of law, the
combination product claims do not cover ACTOS alone. The Supreme Court long ago held
that “[i]f anything is settled in the patent law, it is that the combination patent covers only the
totality of the elements in the claim and that no element, separately viewed, is within the
http://www.nytimes.com/2003/01/08/business/bristol-myers-squibb-to-pay-670-million-to-settle-numerous-
lawsuits.html.
158 Compl. ¶¶ 170, 176. The direct purchasers do not dispute that the ’584 and ’404 patents were required to
be listed in the Orange Book. And we accept, of course, that those patents had method-of-use claims that were
properly identified as covering ACTOS (though the method-of-use claims could be carved out with a section viii
statement, and would not delay generic entry).
159 Compl. ¶¶ 167, 173.
160 Compl. ¶¶ 186, 229-30.
161 Compl. ¶ 237.
162 Compl. ¶¶ 166, 172; Ex. 6 to Decl. of Adam R. Lawton, ECF No. 66-1; Ex. 7 to Decl. of Adam R. Lawton,
ECF No. 66-2.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 46 of 86
33
grant.”163 “Infringement of a combination occurs only through a combination comprising every
one of its elements[.]”164
Takeda’s own actions confirm that the product claims in the ’584 and ’404 patents do
not cover ACTOS. In its many lawsuits against the generics over ACTOS, Takeda never
accused a generic of directly infringing the product claims in the ’584 and ’404 patents. Takeda’s
many infringement lawsuits only accused the generics of infringing by inducement the method-of-
use claims of those patents.165 If Takeda believed the product claims in its patents did claim
ACTOS, why did it never sue the generics for directly infringing those claims?
b. Takeda repeated its submissions of false information to the FDA.
Takeda submitted false patent information regarding the ’584 patent in 1999,166 and
regarding the ’404 patent in 2002.167 Takeda doubled down on these false statements in 2009
and 2010, in response to the citizen petition.168 And it insisted that “section viii statements
alone [were] insufficient,” requesting that the FDA “direct any companies that have submitted
[ANDAs] referencing Actos to submit complete patent certifications to these patents.”169
163 Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U.S. 336, 344 (1961) (internal citations omitted).
164 Guide v. Desperak, 249 F.2d 145, 147 (2d Cir. 1957) (internal citation omitted); see also Rowell v. Lindsay, 113
U.S. 97, 102 (1885) (“The patent being for a combination, there can be no infringement unless the combination is
infringed.”).
165 See Am. Mylan Compl. ¶¶ 50, 53, 60, 63, 69, 77 (alleging that Mylan launched generic pioglitazone with
the intention that physicians prescribe it in combination therapy – a method of using Actos – and that therefore
Mylan intended to induce infringement of the ’584 patent); Watson Compl. ¶¶ 44, 46, 54, 56, 62, 69 (same, as to
Watson); Compl. ¶¶ 42, 44, 54, 58, 59, 64, Takeda Chem. Indus. Ltd. v. Ranbaxy Labs., Ltd., No. 03-cv-5055 (D.N.J.
Oct. 23, 2003) (“Ranbaxy Compl.”) (same, as to Ranbaxy); Compl. ¶¶ 101, 103-04, 109, 111-12, Takeda Pharm Co.
Ltd., v. Teva Pharm. Indus., Ltd., No. 09-cv-4665 (S.D.N.Y. May 18, 2009) (“Teva Compl.”) (same, as to Teva).
166 Compl. ¶ 170.
167 Compl. ¶ 176.
168 Compl. ¶¶ 232, 237.
169 Ex. 9 to Lawton Decl. at 3.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 47 of 86
34
c. The law does not condone Takeda’s false patent information as
“reasonable.”
Takeda tries to justify its conduct by claiming that it could “reasonably” assert that the
’584 and ’404 patents would be infringed if a person not licensed by Takeda manufactured, sold,
or used generic ACTOS, and that this made the characterization of those patents as claiming
the ACTOS product itself proper.170 This is wrong as a matter of law.
The language of the statute. The FDCA and FDA regulations require NDA applicants to
identify, by type, patents that both (1) claim the drug described in the NDA or claim a method
of using the drug described in the NDA, and (2) that could reasonably be asserted if someone
else made or sold the drug before those patents expire:
The applicant shall file with the application the patent number
and the expiration date of any patent which 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.171
Both the statute and implementing regulations distinguish between drug product claims
and method-of-use claims.172 The regulations require that NDA applicants only identify
product claims that cover the drug described in the NDA: “For patents that claim a drug
substance or drug product, the applicant shall submit information only on those patents that
claim a drug product that is the subject of a pending or approved application, or that claim a drug
substance that is a component of such a product.”173 The FDA’s comments to the regulations
instructed applicants “to identify, to the best of their ability, the type of patent covering the
170 Takeda Br. 9-10.
171 21 U.S.C. § 355(b)(1) (emphasis added).
172 Id.; ANDA Regulations; Patent and Exclusivity Provisions, 59 Fed. Reg. at 50,363.
173 ANDA Regulations: Patent and Exclusivity Provisions, 59 Fed. Reg. at 50,344 (Oct. 3, 1994) (emphasis
added).
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 48 of 86
35
drug or drug product. This information will help FDA determine which claims cover the drug
or drug product and which claims cover a method of use.”174
The comments also cautioned that misreporting patent information could “misle[a]d” potential
applicants or “result in injury to other applicants.”175
The purposes of the statute. Congress and the FDA require brand companies to provide
this patent information “[t]o facilitate the approval of generic drugs as soon as patents
allow[.]”176 The entire regulatory framework is geared around the expectation that a brand
company will accurately describe only the claims that actually cover the RLD and accurately
identify the type of claim.177
The distinction between product claims and method-of-use claims is vital. As the
Supreme Court recognizes, “whether section viii is available to a generic manufacturer depends
on how the brand describes its patent.”178 Congress decided that method-of-use claims should
not tie up otherwise approvable ANDAs.179 So when a brand company tells the FDA that it has
only method-of-use claims, a generic can carve out the patented uses and submit a section viii
174 Id. (noting, in response to comments, “if the formulation patent claimed the drug product in the application,
the applicant must file information on that patent” (emphasis added)).
175 Id.
176 Caraco, 132 S. Ct. at 1676.
177 Id. at 1684 (“An overbroad use code therefore throws a wrench into the FDA’s ability to approve generic
drugs as the statue contemplates.”).
178 Id. at 1677; see id. at 1687 (“Whether a brand lists [in the Orange Book] a patent that covers no use or
describes a patent on one use as extending to others, the brand submits misleading patent information to the FDA.
. . . And the brand’s action may in either case delay or block approval of a generic drug that infringes no patent –
and that under [Hatch-Waxman] should go to market.”); see also In re Biovail Corp., F.T.C. No. C-4060 (Oct. 4 ,
2002) (consent order prohibiting brand manufacturer from “the listing or continued listing of any patent in the
Orange Book in violation of applicable law” in case where brand manufacturer “was aware” at the time it listed its
additional patent in the Orange Book that said additional patent did not “cover the formulation . . . it was
marketing”).
179 21 U.S.C. § 355(j)(2)(A)(viii); Caraco, 132 S. Ct. at 1681-82 (“[A]s Congress understood,” “a single drug
may have multiple method of use, only one of which a patent covers,” so “[t]he statutory scheme, in other words,
contemplates that one patented use will not foreclose marketing a generic drug for other unpatented ones.”)
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 49 of 86
36
statement, the FDA may then approve the generic, and the generic may launch.180 But when a
brand company tells the FDA that it has product claims covering its drug, the FDA will
require a paragraph IV certification, grant an exclusivity to the first filer, impose a 30-month
stay (once the brand sues for infringement), and not approve the ANDA until the expiration of
the stay or a final decision on the infringement merits in the generics’ favor.181
Takeda’s patent information submissions were not “proper.” Takeda asserts “there was
nothing improper in Takeda’s patent submissions.”182 To make the argument, Takeda
disingenuously quotes only half of the applicable statute, relying on the “reasonably asserted”
prong but omitting the key “patent that claims the NDA drug” prong, probably because the
product claims in the patents do not claim ACTOS.183 Takeda’s brief fails to address the FDA’s
regulations, comments to the regulations, and the purpose of the statute (as recognized by the
Supreme Court in Caraco).
And as a matter of law, “the propriety or lawfulness of the predicate activities of a
monopolization scheme do not determine whether the scheme itself is actionable or
unlawful.”184 Takeda’s “reasonable” argument fails.
One might expect Takeda to make a cute argument that its submissions did not amount
to an outright falsehood, as it only said the patents had product claims, not that they claimed
the ACTOS product. But the submissions were made in the NDA file for ACTOS;185 why else
180 Compl. ¶ 154.
181 Compl. ¶ 153. There is, technically, a third option: a generic company could choose to wait out the
expiration of any valid patents before launching, by filing a “paragraph III” certification. 21 U.S.C. §
355(j)(2)(A)(vii)(III). None of the generics here did so.
182 Takeda Br. 9.
183 Takeda Br. 9 (“The Hatch-Waxman Act mandated that Takeda list any patent 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.”).
184 In re Gabapentin Patent Litig., 649 F. Supp. 2d 340, 360 & n.23 (D.N.J. 2009).
185 Ex. 9 to Lawton Decl. at 7. (regarding the ’584 patent, writing: “Type of Patent: Drug Product, Method of
Use.”)
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 50 of 86
37
say the patents had product claims if the claims were not being characterized as claiming the
ACTOS product? And, in any event, Takeda’s later reiterations to the FDA were explicit,
“confirming” the earlier misrepresentations and insisting the FDA require patent certifications
because of ACTOS product claims “because these two patents contain both composition claims
and method-of-use claims.”186
And consider the context: Takeda made these submissions against the backdrop of the
statute, regulations, and purposes of the Act of ensuring that use patents do not prolong access
to generics for unpatented utilization.
Takeda argues Judge Cote’s 2007 decision declining to dismiss Takeda’s induced
infringement claims in the Sandoz case supports its “reasonableness” argument.187 But Judge
Cote’s Rule 12(b)(6) rulings only addressed whether Takeda had adequately alleged inducement
of method-of-use claims.188 Her rulings do not hold the ’584 or ’404 patents claim the ACTOS
product itself. In fact, Judge Cote wrote that the ’584 and ’404 patents “cover the combination
of pioglitazone with other antidiabetic agents”;189 perforce that excludes them claiming ACTOS
alone.
And Judge Cote observed that “Sandoz’s arguments require the weighing of evidence
and inferences,” noted that “Takeda will not be entitled to a de facto extension of the life of the
’777 patent through frivolous [patent infringement] claims premised on the theory that its
combination-use patents are being infringed.” and concluded that “[j]udgment on the
merits . . . must await the completion of discovery, summary judgment, and/or trial.”190
186 Id.
187 Takeda Br. 9.
188 Takeda Pharms. Co. Ltd. v. Sandoz, Inc., No. 07-cv-3844, 2007 WL 2936208, at *2 (S.D.N.Y. Oct. 9, 2007)
(addressing a motion to dismiss infringement claims, unrelated to Orange Book listings).
189 Id. at *1
190 Id. at *4-5.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 51 of 86
38
B. The complaint alleges the defendants violated § 1 of the Sherman Act by
conspiring to limit generic competition for ACTOS and ACTOplus met.
1. The complaint alleges a violation of § 1 of the Sherman Act.
Rather than address the conspiracy-related allegations in this complaint,191 the
defendants made the strategic choice to mischaracterize the direct purchaser class plaintiffs’
allegations as “materially indistinguishable from those alleged and rejected in the End Payor
case.”192 But the direct purchaser class plaintiffs’ allegations should be addressed on their
merits. And they make clear that:
1. Takeda’s false information regarding the ’584 and ’404 patents created an
opportunity for would-be generic manufacturers to take advantage of falsely
created, but highly valuable, 180-day exclusivity period;
2. The first wave generics – Mylan, Ranbaxy, and Actavis – knew Takeda’s patent
information for the ’584 and ’404 patents was false, that it unlawfully created a
valuable 180-day exclusivity, that each was taking advantage of, and cashing out
on, falsely created exclusivity;
3. Takeda and the first wave generics knew their March 2010 agreements would
prolong for many months a bottleneck impairing the ability of later ANDA filers
(Sandoz, Torrent, Aurobindo) and subsequent filers to gain market entry – they
knew their agreements were intended to accomplish a common, unlawful end;
4. The first wave filers knew of each other’s pending ANDAs, were party to the
same patent litigation, and settled within days of each other on materially
identical terms. All agreed: (i) to the same August 17, 2012 delayed entry date
and substantially similar coordination clause terms and otherwise agreed; (ii) to
maintain the paragraph IV certifications as to the ’584 and ’404 patents but not
to ever contest the validity, enforceability, or infringement of those patents; (iii)
not to assist third-parties challenging the ’584 and ’404 patents; (iv) to withdraw
all, and thereafter never make, any section viii method-of-use carve-out
statements, and; (v) to keep the settlement terms strictly confidential,
191 See, e.g., Compl. ¶¶ 248-79.
192 Joint Br. 25. Because the defendants made the deliberate choice to ignore the direct purchasers’ new and
substantially revised conspiracy-related allegations, this Court should not entertain any argument in reply
challenging their sufficiency. See Knipe v. Skinner, 999 F.2d 708, 711 (2d Cir. 1993) (stating that “[a]rguments
may not be made for the first time in a reply brief”); Nat’l Labor Relations Bd. v. Star Color Plate Serv., 843 F.2d
1507, 1510 n.3 (2d Cir. 1988) (rejecting party’s “attempts to raise for the first time [a new question] in its reply
brief”); Rowley v. City of New York, No. 00 Civ. 1793, 2005 WL 2429514, at *5-6 (S.D.N.Y. Sept. 30, 2005) (refusing
to entertain arguments in reply that could have been raised in opening brief); cf. Bendix Autolite Corp. v. Midwesco
Enters. Inc., 486 U.S. 888, 893-97 (1988) (refusing to evaluate an argument the Sixth Circuit did not consider
because it was first raised in a reply brief).
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 52 of 86
39
5. Each agreement permitted hub-player Takeda to disclose to all would-be generic
competitors the otherwise secret provisions embodying the delayed launch date,
the maintained and substituted paragraph IV certifications, and coordination
clauses;193
6. The first wave generics knew that the same delayed entry date, paragraph IV,
and coordination clauses in each settlement – the only settlement terms that
could be communicated directly to all other would-be generic competitors –
assured that no generic manufacturer (whether participating in the conspiracy or
not) would enter the market ahead of any participating conspirator;
7. The terms authorizing Takeda to share the settlement terms with other would-
be generic competitors existed only because the parties intended that agreement
to be shared with other would-be competitors as either an invitation to join the
conspiracy or a deterrent that market entry outside the conspiracy would invite
ruinous competition from all conspirators;
8. The economic effect of the coordination clause forced Teva, whose section viii
method-of-use carve-out approach otherwise was in competition to beat out the
first filers’ market entry, to join the conspiracy and participate in the fruits of the
180-day exclusivity that was wrongfully created by Takeda’s false patent
information and expressly affirmed in each of the first filers’ settlement
agreements;
9. Under the December 2010 pact Teva joined the conspiracy in a remarkable flip-
flop. Back in March 2010 it took the position that Takeda’s false patent
information would wrongfully delay generic ACTOS entry for over a year and a
half, and bottleneck its entry. But under the December 2010, Teva was brought
into the conspiracy and allowed to share in the fruits of the (previously
considered unlawful by Teva) 180-day exclusivity; now that it got paid off, Teva
was willing to join the coordinated effort to delay generic entry; and
10. The defendants employed the same tactics to incorporate ACTOplus met into the
mix.
193 The defendants filed the at-issue settlement agreements under seal in February 2016. At the time the
plaintiffs filed the Second Consolidated Amended Complaint in November 2015, the extent to which each
settlement agreement contained the same material terms, as set forth in the text above, was not then known.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 53 of 86
40
2. Violations of § 1 of the Sherman Act may be shown by direct and
circumstantial evidence.
A tacit agreement may be inferred from the conspirators’ actions and conduct, rather
than through express communications.194 Circumstantial evidence that meets this standard
may demonstrate, for example, parallel behavior that would probably not result from chance,
“‘coincidence, independent responses to common stimuli, or mere interdependence unaided by
an advance understanding among the parties.’”195 “Plus factors” that may raise an inference of
conspiracy include “‘a common motive to conspire, evidence that shows that the parallel acts
were against the apparent individual economic self-interest of the alleged conspirators, and
evidence of a high level of interfirm communications.’”196
Courts “do treat separate bilateral agreements as evidence of a single conspiracy when
the agreements are sufficiently interdependent and made in the context of other plus factors
suggesting coordination.”197 Interdependence requires determining “whether the activities of
one aspect of the scheme are necessary or advantageous to the success of another aspect of the
194 Brown v. Pro Football, 518 U.S. 231, 241 (1996) (“Antitrust law also sometimes permits judges or juries to
premise antitrust liability upon little more than uniform behavior among competitors, preceded by conversations
implying that later uniformity might prove desirable . . . or accompanied by other conduct that in context suggests
that each competitor failed to make an independent decision.” (internal citations omitted)). Courts recognize that
when competitors “devise some subtle, unique form of conspiracy tailored to best serve their own purposes which
purposely leaves few tracks or fingerprints, it may violate the law even though it cannot be easily accommodated
in the familiar mold of a simple and limited conspiracy.” United States v. Consol. Packaging Corp., 575 F.2d 117, 126
(7th Cir. 1978).
195 Twombly, 550 U.S. at 556 n.4 (quoting 6 Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law ¶ 1433
(2d ed. 2003)).
196 United States v. Apple, Inc., 791 F.3d 290, 315 (2d Cir. 2015) (quoting Mayor & City Council of Baltimore, Md.
v. Citigroup, Inc., 709 F.3d 129, 136 (2d Cir. 2013)); In re Nexium Esomeprazole Antitrust Litig., 42 F. Supp. 3d 231,
250-51 (D. Mass. 2014) (“Nexium II”).
197 Nexium II, 42 F. Supp. 3d at 252 (citing Interstate Circuit, Inc. v. United States, 306 U.S. 208, 226 (1939)); see
also Palmer v. BRG of Georgia, Inc., 498 U.S. 46 (1990) (per curium); Apple, 791 F.3d at 316, 320 (considered in
context, independently lawful contracts can by themselves “provide strong evidence [of a] consciously
orchestrated[ ] conspiracy”).
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 54 of 86
41
scheme.”198 And “[t]he “‘overlap’” requirement can be satisfied by the pervasive involvement of
a single “‘core conspirator.’”199
Here, the defendants shared a common goal of maintaining the falsely created 180-day
exclusivity for ACTOS generics. The benefits of the individual agreements would only accrue
if all generic defendants agreed to: (i) delay generic entry until the same date; (ii) to maintain
the false 180-day exclusivity created by the paragraph IV certifications on the ’584 and ’404
patents while simultaneously agreeing to (a) not ever contest the validity, enforceability,
and/or infringement of those patents, and (b) withdraw all, and to never make any further,
section viii method-of-use carve-out statements.200
The agreements contain explicit interdependent terms that link each settling generic
defendant’s entry date to the entry of its competitors and provides each with the assurance that
its agreement to stay off the market would be contingent upon all others doing the same.201
The uniform delayed entry date, coordination clause, required paragraph-IV certifications, and
provision allowing those terms to be shared with other would-be competitors ensured that no
other generic – no matter how much time and resources it spent in its litigation against
Takeda, and no matter how successful the generic drug manufacturer was in the litigation –
could enter the market before Mylan, Ranbaxy, and Actavis.202
The agreements created “a set of economic incentives” that made “attractive” each
generic defendant’s agreement to postpone entering the market – an agreement that squarely
contravened each generic defendant’s economic self-interest to be the first generic to enter the
198 United States v. Portela, 167 F.3d 687, 695 (1st Cir. 1999) (internal quotations omitted).
199 Id. at 695 (quoting United States v. Wilson, 116 F.3d 1066, 1076 (5th Cir. 1997)).
200 Compl. ¶¶ 248- 59.
201 Compl. ¶¶ 257-59, 262.
202 Compl. ¶ 258-59, 292.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 55 of 86
42
market – only if all the other would-be generic competitors agreed to the same terms.203 The
same delayed entry date, coordination clause, section-viii-to-paragraph-IV swap,204 and
provision allowing those terms to be shared with other would-be competitors in each
settlement provided the interdependence necessary to ensure the success of the scheme.
Takeda was the hub of this conspiracy. By ensuring each generic defendant that all of
their agreements had substantively identical terms effectuating delayed generic entry, Takeda
provided the means for maintaining Takeda’s monopoly profits for the benefit of all
conspirators.205 The agreements all authorized Takeda to share the terms of the otherwise
secret agreements with other generic competitors, further evincing the agreements’
interdependence and the overall conspiracy.206 That would only be so if sharing terms with
other competitors, in the hopes that they would join the scheme, was part of the plan from the
start.
It matters not that Takeda offered different inducements to each generic. Takeda
insisted on, and all generics agreed to, materially identical provisions accomplishing delayed
generic entry until August 17, 2012 and manipulating the patent certifications/statements to
shore up the wrongful exclusivities. 207 The only reason a rational brand company would agree
to this set of terms that might (hypothetically) permit acceleration of competition is if the
clause reduces the likelihood of the competition in the first place.
203 See Apple, 791 F.3d at 316-17 (affirming conspiracy on the basis of separate bilateral contracts, all executed
near in time to each other and containing materially similar terms, because each was “attractive only if
[defendants] acted collectively”).
204 See Sebelius, 2012 WL 6968224, at *6 n.7, *19 n.22.
205 Nexium II, 42 F. Supp. 3d at 254 (holding that “the similarities between the agreements with the generic
defendants “demonstrate[d] a degree of interdependence suggesting a single agreement, even if no such
agreement was expressly made”).
206 Compl. ¶ 252.
207 Joint Br. 26-27.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 56 of 86
43
That the December 2010 pact (with Teva) occurred nine months after the March 2010
pact is irrelevant. In United States v. Masonite Corp.,208 the United States alleged that a series of
agreements between Masonite and other hardboard manufacturers that followed the settlement
of patent litigation constituted an unlawful horizontal combination in violation of § 1 of the
Sherman Act. The Supreme Court reversed the district court’s dismissal after a full trial found
insufficient evidence of concerted action:
It is not clear at what precise point of time each appellee became
aware of the fact that its contract was not an isolated transaction
but part of a larger arrangement. But it is clear that, as the
arrangement continued, each became familiar with its purpose and
scope. . . . The circumstances surrounding the making of the 1936
agreements and the joinder in 1937 of the two other companies
leave no room for doubt that all had an awareness of the general
scope and purpose of the undertaking. As this Court stated in the
Interstate Circuit case: “. . . Acceptance by competitors, without
previous agreement of an invitation to participate in a plan, the
necessary consequence of which, if carried out, is restraint of
interstate commerce, is sufficient to establish an unlawful
conspiracy under the Sherman Act.”209
Here, the generic defendants knew that concerted action was contemplated and invited,
and by entering into the settlement agreements, each ratified their respective participation in
the conspiracy.210
208 316 U.S. 265 (1942).
209 Id. at 275 (quoting Interstate Circuit Inc. v. United States, 306 U.S. 208, 226-27 (1939)) (internal citations
omitted).
210 Apple, 791 F.3d at 317 (“By the very act of signing [the] Contract with Apple . . . each of the Publisher
Defendants signaled a clear commitment to [the scheme], thereby facilitating their collective action.”). The fact
that the generic defendants joined the conspiracy at different times is immaterial. See United States v. Cont’l Group,
Inc., 603 F.2d 444, 452, 453 (3d Cir. 1979) (holding, in a case where conspirators joined ten and nineteen years
after inception, no need “to prove that [each defendant] participated in the conspiracy from its inception, but only
that he knowingly became a member of the ongoing conspiracy” (internal citation omitted)); see also United States v.
Nat’l Lead Co., 332 U.S. 319, 325-27 (1947) (defendant joined the conspiracy thirteen years after inception);
Dextone Co. v. Bldg. Trades Council, 60 F.2d 47, 48 (2d Cir. 1932) (“[E]very person who participates in a conspiracy
is liable for everything done during the period of its existence regardless of the exact time at which he becomes a
member or the extent of his participation.”); Myzel v. Fields, 386 F.2d 718, 738 n.12 (8th Cir. 1967) (“[I]t is well
settled even under civil or criminal conspiracy that one who knowingly joins a conspiracy even at a later date takes
the conspiracy as he finds it, with or without knowledge of what has gone on before.”).
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 57 of 86
44
3. Direct communications between each conspirator are not required.
The defendants argue that there can be no conspiracy because the purchasers allege no
facts establishing “that the Generic Defendants communicated with each other in advance of
entering the settlements, or that the settlements were negotiated together.”211 This is
inaccurate and irrelevant.
First, the complaint alleges that the generics communicated through hub Takeda.212
Takeda shared the key term of the agreements with each generic defendant.213 It is
inconceivable that each generic defendant entered its respective settlement with the identical
coordinated delayed entry date not knowing and intending that such agreement would be part
of an overarching conspiracy to delay generic entry and deter other would-be competitors.214
211 Defs.’ Joint Mot. Dismiss Br. 27.
212 Compl. ¶ 252.
213 Compl. ¶ 252; see, e.g., In re Coordinated Pretrial Proceedings in Petroleum Prods. Antitrust Litig., 906 F.2d
432, 447 (9th Cir. 1990) (communication of information necessary for the conspiracy can come through press
releases or other publicly available information and “‘the form of the exchange . . . should not be determinative of
its legality” (quoting Richard A. Posner, Antitrust Law: An Economic Perspective 146 (1976)); see also U.S. Dep’t of
Justice & FTC, Horizontal Merger Guidelines 24 (Aug. 19, 2010), https://www.ftc.gov/sites/default/files/
attachments/merger-review/100819hmg.pdf (“Coordinated interaction also can involve a similar common
understanding that is not explicitly negotiated but would be enforced by the detection and punishment of
deviations that would undermine the coordinated interaction.”); In re Valassis Commc’ns, Inc., F.T.C. No. C-4160
(Apr. 19, 2006) (statements made during an earnings conference call that the company was raising prices
constituted an invitation to its only competitor to collude); In re Stone Container Corp., 125 FTC 853 (1998) (press
releases along with other public and private company plan statements constituted an invitation for competitor
collusion).
214 “[A]cquiescence in an illegal scheme is as much a violation of the Sherman Act as the creation and
promotion of one.” United States v. Paramount Pictures, Inc., 334 U.S. 131, 161 (1948). Accordingly, each Generic
Defendant became a knowing and willful participant in the conspiracy and is responsible for perpetuating its
success. Duplan Corp. v. Deering Milliken, Inc., 594 F.2d 979, 982 (4th Cir. 1979) (per curiam) (“Where, as here, the
[defendants] were knowing participants in a scheme whose effect was to restrain trade, the fact that their motives
were different from or even in conflict with those of the other conspirators is immaterial.”); Virginia Vermiculite,
Ltd. v. W.R. Grace & Co., 156 F.3d 535, 541 (4th Cir. 1998) (“[I]t is sufficient that [defendant], regardless of its
own motive, merely acquiesced in the restraint with the knowledge that it would have anticompetitive effects.”).
Indeed, the “the later agreements” with the subsequently settling generic defendants constitute “overt acts” in
furtherance of the conspiracy. Hr’g Tr. at 6, Dec. 11, 2013, In re Nexium Antitrust Litig., No. 12-md-02409 (D.
Mass.), ECF No. 668.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 58 of 86
45
Under these pre-discovery circumstances, it is entirely plausible to infer a “meeting of the
minds.”215
Second, the law imposes no direct communication requirement.216 Direct
communication was unnecessary because the defendants were well aware of agreements’
anticompetitive purpose and understood the benefits to coordination and manipulation of the
patent certifications (and the disadvantages of being left on the sidelines).
Third, although coordination clauses may appear “at first blush” to benefit consumers
by accelerating entry, this is a mirage.217 Basic economics reached this conclusion long ago in a
variety of analogous contexts, such as most favored nation clauses (“MFNs”), best-price
provisions, and the like – all of which appear to benefit consumers by requiring lower prices but
in fact can be used anticompetitively to raise prices.218 The Chairman and CEO of Apotex, Inc.,
at the time the nation’s fifth largest generic manufacturer, decried their use in testimony before
Congress:
[N]o subsequent filer is going to take up the patent fight
knowing it will get nothing if it wins. Consumers are the biggest
losers under this system. . . . .
215 Apple, 791 F.3d at 318 (concluding that the near-simultaneous signing of separate but materially identical
bi-lateral agreements sufficiently established the conspiracy’s “meeting of the minds”).
216 Masonite Corp., 316 U.S. at 274-75 (holding conspiracy established where conspirator-spokes knew of the
operative terms of each other’s agreement with the conspirator-hub notwithstanding that none of the conspirator-
spokes communicated with each other); cf. United States v. Gypsum Co., 33 U.S. 364, 394 (1948) (“[W]hen a group
of competitors enters into a series of separate but similar agreements with competitors or others, a strong
inference arises that such agreements are the result of concerted action.”).
217 Id. at 218.
218 See, e.g., United States. v. Apple, Inc., 952 F. Supp. 2d 638, 694 (S.D.N.Y. 2013) (MFN did not “promote
competition, but destroyed it”), aff’d 791 F.3d 290, 315 (2d Cir. 2015); see also Blue Cross & Blue Shield of Ohio v.
Bingaman, No. 94 CV 2297, 1996 WL 677094, at *4 (N.D. Ohio June 24, 1996) (“MFN clauses could violate the
Sherman Act by restraining competition.”), aff’d sub nom. Blue Cross & Blue Shield of Ohio v. Klein, 117 F.3d 1420
(6th Cir. July 11, 1997); Reazin v. Blue Cross & Blue Shield of Kan., 663 F. Supp. 1360, 1418 (D. Kan. 1987) (MFNs
“[can] effectively prevent[] competing insurance companies from offering more favorable insurance rates to
consumers.”), aff’d, 899 F.2d 951 (10th Cir. 1990);United States v. Med. Mutual of Ohio, No. 98 CV 2172, 1999 WL
670717, at *12 n.6 (N.D. Ohio Jan. 29, 1999) (the proposition that MFNs are procompetitive as a matter of law
“soundly rejected”).
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 59 of 86
46
. . . . These “poison pills” undermine the incentive of subsequent
filers to carry on the patent fight and empower first filers to
accept later entry dates. Acceptance of later entry dates in
settlements is possible because the “poison pill” guarantees the
first filer’s ability to retain exclusivity no matter how long the
period of delay it agrees to is.219
Consider the Second Circuit’s decision in Apple. 220 Apple sought to offer a competitive
alternative to the Kindle through the launch of its iPad and iBookstore, and negotiated separate
bi-lateral agreements with six market-dominating book publishers. Each agreement was
executed near in time to each other and contained materially identical terms, including the
same MFN that set high e-book prices but left each book publisher less profit than if they had
sold the same e-book through Amazon. Each publisher knew that the other publishers were
given the same MFN. The economic effect was to make “it imperative, not merely desirable”
that the publisher defendants renegotiate their Amazon agreement in order to increase overall
market prices and overall long-term gains (which would more than offset any short-term
revenue sacrifice from the Apple deal).221 The Second Circuit held that the separate bilateral
agreements themselves, even if not independently unlawful, “in context . . . provide[d] strong
evidence that Apple consciously orchestrated a conspiracy among the Publisher Defendants.”222
This was because each agreement was “attractive” to each of the publisher defendants only if
they “acted collectively” and “in tandem.”223 The Court further held that execution of that
219 H.R. 1706, The Protecting Consumer Access to Generic Drugs Act of 2009: Hearing Before the Subcomm. on
Commerce, Trade & Consumer Protection of the H. Comm. on Energy & Commerce, 111th Cong. 218, 226 (2009)
(statement of Dr. Bernard C. Sherman, CEO, Apotex Inc.).
220 791 F.3d 290.
221 Id. at 304-05.
222 Id. at 316.
223 Id.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 60 of 86
47
bilateral agreement constituted each publisher defendants’ ratification of its joinder in the
conspiracy.224
A similar result should be reached in this case. Like Apple, Takeda orchestrated, and
each generic ratified, the conspiracy. Since the materially identical clauses are a form of a most
favored nation’s clause that, if hypothetically triggered, would work to the disadvantage of the
party granting the MFN, then the grant must in some way also be working to the advantage of
the brand.225 Thus, the coordination clauses, paragraph IV certification requirement, and
delayed entry date work in unison to push back generic entry and result in higher prices paid
by consumers by further reducing the incentive of other generic manufacturers to continue
challenging the patent.226
4. Agreeing to delay generic entry until August 17, 2012 contravened each
generic defendant’s economic self-interest, but that agreement was made
attractive because each was assured that no other generic manufacturer
would enter the market first.
Takeda faced challenges to its patent from each of the generic defendants. To eliminate
those challenges, Takeda needed to reach a resolution with all of them. The identical terms
that Takeda employed to facilitate these settlements reflects the economic reality that it was
contrary to each generic defendant’s economic self-interest to agree to stay off the market if the
other generics did not also agree to the same delayed entry date and have the assurance,
provided by the coordination clause, that no other generic would be able to leap-frog its generic
to market ahead of the participating generic defendant. Thus, Takeda, acting as the go-
between, was able to orchestrate an agreement between the generic defendants not to compete
with each other and thereafter police the conspirators. Without the coordination clause,
224 Id. at 317-18.
225 Compl. ¶¶ 261-62.
226 C. Scott Hemphill & Mark A. Lemley, Earning Exclusivity, 77 Antitrust L.J. 947, 964 (2011).
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 61 of 86
48
paragraph IV certification requirement, and delayed entry date, each generic defendant –
operating pursuant to its independent economic self-interest – would have sought the earliest
possible entry date without regard to what its fellow generics (its competitors) had agreed to,
either by litigating the patent suit to conclusion, or otherwise.
Toys “R” Us v. FTC227 is especially instructive. In Toys “R” Us, several toy
manufacturers entered into agreements with Toys “R” Us agreeing not to sell certain toys to
the retailer’s competitors, specifically warehouse clubs.228 The court observed that “each
manufacturer was afraid to curb its sales to the warehouse clubs alone, because it was afraid its
rivals would cheat and gain a special advantage.”229 Because “the only condition on which each
manufacturer would agree to [the retailer’s] demands was if it could be sure its competitors
were doing the same thing,” Toys “R” Us “assure[d] individual manufacturers that no one
would be singled out” and then “served as the central clearinghouse for complaints about
breaches in the agreement.”230 And the Seventh Circuit held: “That is a horizontal agreement.”231
Here, the generic defendants faced the same competitive dilemma that confronted the
toy manufacturers in Toys “R” Us – each agreed to delay generic entry only on the condition
that its competitors would do the same thing. The delayed entry date and coordination clause
provided the protection each generic needed to assure it that its competitors could not come to
market earlier. And while Toys “R” Us was “careful to meet individually with each of its
suppliers to explain its new policy” and separately negotiate the agreements,232 such formalistic
solicitude does not immunize the collusive conduct that was actually at work.
227 221 F.3d 928 (7th Cir. 2000).
228 Id. at 931-32.
229 Id. at 936.
230 Id. at 933, 936.
231 Id. (emphasis added).
232 Id. at 932.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 62 of 86
49
Faced with a substantially similar coordination clause among generic defendants, the
court in Nexium II held that “[d]elayed entry, not contingent launch, is the substance of each
settlement agreement, and the actual concession for which [the brand manufacturer] allegedly
paid valuable consideration.”233 The court framed the issue as “whether it was [in the best
interest] for each generic manufacturer to agree to delay entering the generic market” rather
than whether it was in the generic defendants’ best interests to accept the benefits of the
conspiracy, which it obviously was.234 In answering that question, the court viewed the
existence of the coordination clause as evidence that agreeing to delay entry was against the
settling generics’ economic self-interests:
The unattractiveness of being “stuck on the sidelines” . . . meant
that to each Generic Defendant, delayed entry on its own was not
a viable proposition unless it could be assured of its position vis-a-
vis its competitors. This dilemma set up a clear incentive for the
Defendants to cooperate with each other, and they did so by
providing for contingent launch clauses that would coordinate the
Generic Defendants’ entries into the market.235
Here, the coordination clause (operating with the paragraph IV requirements, delayed
entry date, and faux-secrecy provision), as Nexium II recognized, is simply the mechanism by
which the brand “assured” each settling generic defendant that the other generic defendants
would agree to the same terms.236 These facts are no different than the situation faced by the
parties in Toys “R” Us and Nexium, where all competitors agreeing to the same terms provides
the “rim” necessary for a hub-and-spoke conspiracy.237
233 42 F. Supp. 3d at 257.
234 Id.
235 Id.
236 Id. at 257-58.
237 Id. (“From the fact that the Nexium settlement agreements were not in the generic defendants’ self-interest
unless their agreements contained provisions aligning their behavior, a reasonable fact-finder could draw an
inference of conspiracy.”). Defendants ignore Toys “R” Us and Nexium II, and instead rely on the summary
judgment decision in King Drug Co. of Florence v. Cephalon, Inc., 2:06-cv-1797, 2014 U.S. Dist. LEXIS 84818 (E.D.
Pa. June 23, 2014). Joint Mot. Dismiss Br. 28-29 & n.10. In King Drug, at the pleading stage, the Court upheld
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 63 of 86
50
5. The defendants had strong motivations to coordinate their actions.
Takeda and the generic defendants had a strong motive to conspire. Sales of ACTOS in
the United States alone approximated $3 billion; hundreds of millions of dollars in sales awaited
the first generic market entrant.238 To prevent the loss of these sales and profits, Takeda
conspired with its would-be competitors.
The first wave generics shared an additional motive. Each knew that settling on those
terms effectively preserved the false 180-day ACTOS exclusivity; that reality, coupled with
Takeda’s promise not to launch a competing authorized generic during the 180-day exclusivity,
assured that the generic defendants could charge competition-free prices during that period.
The exclusivity period generates the “vast majority” of the first-filer’s profits.239 A first-filer “is
therefore much more willing to accept a later entry date than it would be if settlement did not
preserve exclusivity.”240 A result that conforms to standard economic analyses.241
similar coordination clause-predicated overarching conspiracy allegations and denied defendants’ motions to
dismiss. See King Drug Co. of Florence, Inc. v. Cephalon, Inc., 702 F. Supp. 2d 514, 532-33 (E.D. Pa. 2010). In its
summary judgment decision, however, the court employed a faulty analysis and consequently veered off course.
Rather than assess the generic defendants’ economic self-interest motivations and options absent the
anticompetitive conduct, the court instead put its thumb on the scale by including in its analysis the benefit of the
conspiracy bargain – “lucrative business deals and an assurance that each Generic Defendant would not be
disadvantaged regarding the entry of generic Provigil.” 2014 U.S. Dist. LEXIS 84818, at *57-58. The benefits
obtained as a result of a conspiracy bargain are of course – as Nexium II aptly observed – in the economic self-
interest of the conspirator-participant. The proper analysis, however, requires consideration of the generic
defendants’ economic self-interests absent the conspiracy bargain. Coordination of each generic defendant’s entry
coupled with the assurance that no other generic could enter the market any sooner are advantages that neither the
Hatch-Waxman Act nor successful litigation of the patent could provide. Each generic defendant should have sought to
beat its generic competitors to market at the earliest possible date. Any agreement to the contrary contravenes
the generic competitor’s economic self-interest. Nexium II, 42 F. Supp. at 256 (“The record – and common sense –
also shows that each Generic Defendant would be reluctant to agree to delay its entry unless [the brand
manufacturer] could secure the same guarantee of delay from all its generic competitors, lest a competitor capture
the generic market before [the agreed upon entry date].” (internal citation omitted)).
238 Compl. ¶¶ 5, 266.
239 Actavis, 133 S. Ct. at 2229.
240 C. Scott Hemphill, Paying for Delay: Pharmaceutical Patent Settlement as a Regulatory Design Problem, 81
N.Y.U. L. Rev. 1553, 1593 (2006) (“[e]njoying the exclusivity period with certainty is more important to a generic
firm than its timing”).
241 See, e.g., United States v. Blue Cross Blue Shield of Mich., 809 F. Supp. 2d 665, 669 (E.D. Mich. 2011)
(defendant is willing to pay higher prices to hospitals in exchange for MFN because of its tendency to preserve
defendant’s market share); Steven C. Salop & Fiona Scott Morton, Developing an Administrable MFN Enforcement
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 64 of 86
51
Teva also understood the anticompetitive effect of the agreements’ terms. Teva knew
that even if it litigated, won, and entered early, the terms of the agreements would mean that
the other generic manufacturers would share in the fruits of Teva’s win.242
C. The anticompetitive conduct caused antitrust injury.
1. Antitrust causation is a highly fact dependent inquiry.
A defendant is liable for the harm caused by its anticompetitive conduct. “It is enough
that the illegality is shown to be a material cause of the injury; a plaintiff need not exhaust all
possible alternative sources of injury in fulfilling his burden of proving compensable injury.”243
According to the Second Circuit, when a defendant’s act is “deemed wrongful precisely
because it has a strong propensity to cause the type of injury that ensued, that very causal
tendency is evidence enough to establish a prima facie case of cause-in-fact.”244 The Supreme
Court acknowledges that a degree of uncertainty is always permitted, particularly when the
wrongdoing created the uncertainty.245 “[T]he wrongdoer may not object to the plaintiff’s
reasonable estimate of the cause of injury,” grounded in evidence, by arguing that it is “not
based on more accurate data which the wrongdoer’s misconduct has rendered unavailable.”246
Policy, 27 Antitrust ABA 15, 16 (2013) (buyer is willing to pay higher price when MFN dampens competition from
rivals); Steven C. Salop, Practices that (Credibly) Facilitate Oligopoly Co-ordination, New Developments in the
Analysis of Market Structure 265 (Joseph E. Stiglitz & G. Frank Mathewson eds., 1986) (party will accept less
competitive terms when MFN injures rivals because party will “count that injury as a benefit”).
242 Compl. ¶ 276.
243 Zenith Radio, 395 U.S. at 114 n.9 (emphasis added); see also In re Skelaxin (Metaxalone) Antitrust Litig., No.
12-md-2343, 2013 WL 2181185, at *16-17 (E.D. Tenn. May 20, 2013) (at early stage of litigation, plaintiffs not
required to disprove all possible alternative causes); In re Neurontin Antitrust Litig., MDL No. 1479, 2009 WL
2751029, at *11-12 (D.N.J. Aug. 28, 2009) (same); In re Wellbutrin SR/Zyban Antitrust Litig., 281 F. Supp. 2d 751,
757 (E.D. Pa. 2003) (same).
244 Liriana v. Hobart Corp., 170 F.3d 264, 271 (2d Cir. 1999).
245 Bigelow v. RKO Radio Pictures, 327 U.S. 251, 263-64 (1946) (rejecting defendant’s argument that “it is not
possible to say what th[e] conditions would have been if the restraints had not been imposed”).
246 Bigelow, 327 U.S. at 265.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 65 of 86
52
“Any other rule would enable the wrongdoer to profit by his wrongdoing at the expense of his
victim.”247
Causation is a question of fact, not appropriate for resolution at the motion to dismiss
stage. “Causation questions . . . are normally grist for the jury’s mill.”248 So at the pleading
stage, a plaintiff must simply “present sufficient evidence to support a finding” that, absent the
unlawful conduct, a more competitive outcome was “feasible,”249 even if it “remains unclear”
what would have happened if the defendants “had not engaged in [the] conduct.”250
2. The complaint alleges the wrongful antitrust acts caused harm.
The complaint plausibly links the defendants’ wrongful acts to the purchasers’ injuries.
If Takeda had not wrongfully told the FDA that the ‘584 and ‘404 patents included product
claims covering ACTOS, then no false exclusivity for ACTOS generics would have existed.
Takeda took advantage of the regulatory scheme and caused the FDA’s predictable regulatory
actions that created false exclusivities. In the absence of Takeda’s misrepresentations, the
generics’ section viii statements to the method of use claims would have allowed them to come
to market once the original ’777 patent expired in January 2011.251 The FDA had already
granted Teva tentative approval on February 7, 2006; only the ’777 patent stood in Teva’s way.
Teva is the world’s largest generic drug manufacturer; ACTOS is not difficult to make (as
evident from the large number of ANDA filers and tentative approvals); Teva would have been
motivated to enter quickly in order to start earning revenue from ACTOS sales; and Teva has
repeatedly entered generic markets at the soonest opportunity following FDA ANDA
247 Id. at 264.
248 Peckham v. Cont’l Cas. Ins. Co., 895 F.2d 830, 837 (1st Cir. 1990).
249 Sullivan v. NFL, 34 F.3d 1091, 1104 (1st Cir. 1994).
250 Irvin Indus., Inc. v. Goodyear Aerospace Corp., 974 F.2d 241, 246 (2d Cir. 1992).
251 Compl. ¶¶ 351-52
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 66 of 86
53
approval.252 A reasonable generic company in Teva’s position would have entered immediately
following FDA approval.253
The forces of industry practice, applied microeconomics, the law on induced
infringement claims, and common sense all teach that generics would have entered on or
shortly after January/February 2011 for both ACTOS and ACTOplus met, and certainly earlier
than the entry dates provided by the March and December 2010 pacts.
3. It is what Takeda told the FDA, not what the generic defendants read in
the Orange Book, that caused injury.
Takeda claims that the paragraph IV certifications at issue were not caused by Takeda’s
falsely describing its patents to the FDA because the false descriptions were not made public
until 2010.254
Until August 2003, the FDA’s technological limitations prevented the Orange Book
from showing a single patent as including more than one “type” of claim.255 But despite the
historic notice limitation, however, FDA regulations and instructions made unmistakably clear
that it is the patent information submitted by the NDA applicant (not the notice of it presented in
the Orange Book) that governs the FDA’s determination as to how reported patent claim
information impacts the timing and conditions for FDA approval.256
252 Compl. ¶ 352.
253 Id.
254 Takeda Br. 10-11.
255 See FDA/CDER Resp. Sandoz, Inc. Citizen Pet., Docket No. FDA-2009-P-0411-0010 (Mar. 15, 2010), at 2.
256 See, e.g., Abbreviated New Drug Application Regulations, 54 Fed. Reg. 28,872, 28,885 (proposed July 10, 1989)
(“[T]he patent information submitted to FDA, whether or not published in the list, should be the basis of the
[generic company’s] certification.”); 21 C.F.R. § 314.94(a)(12)(iii) (ability to submit only a section viii statement is
based on “patent information . . . submitted under . . . § 319.53”). As the Supreme Court recognized, “‘Patent
information submitted . . . under subsection (b) or (c)’ most naturally refers to patent information provided as part
of the comprehensive scheme of regulation premised on those subsections;” “the word ‘under’ naturally reaches
beyond that most barebones information to other patent materials the FDA demands in the regulatory process.”
Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S, 132 S. Ct. 1670, 1684, 182 L. Ed. 2d 678 (2012) (internal citation
and quotation omitted).
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 67 of 86
54
Takeda knows that its false submissions control FDA’s actions, not the generics. In its
response to the Sandoz citizen petition, it wrote the FDA that what should control is its
characterization of the patents, not anything that the generics said or did. The relevant inquiry
is not whether the generic defendants read Takeda’s (false) submissions. Rather, the focus is on
the predictable anticompetitive effect that Takeda’s misleading submissions had on the FDA’s
ANDA approval and exclusivity processes.
4. Generic ANDAs with carved-out labels would have been readily approved.
The Supreme Court in Caraco wrote: “Congress understood that a drug may have
multiple methods of use, not all of which a patent covers; and a section viii statement allows the
FDA to approve a generic drug for unpatented uses so that it can quickly come to market.”257
Section viii, the Court pointed out, “provides the mechanism for a generic company to identify
[particular unpatented uses of a drug], so that a product with a label matching them can
quickly come to market. The statutory scheme, in other words, contemplates that one patented
use will not foreclose marketing a generic drug for other unpatented ones.”258
The defendants argue that, even if Takeda had told the FDA the truth, it is unclear
whether generics would have chosen the section viii approach to the ’584 and ’404 patents, as
opposed to an optional paragraph IV route.259 But this ignores the law and regulations.
The generic defendants filed ANDAs that proposed labels that carved out combination
use of ACTOS.260 FDA regulations prohibit applicants from both carving out a use and
257 Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S, 132 S. Ct. 1670, 1673 (2012).
258 Id. at 1681-82.
259 Takeda Br. 10-12.
260 See., e.g., Mylan’s Pretrial Br., 2005 U.S. Dist. Ct. Motions LEXIS 27367, at *30; Sebelius, 2012 WL
6968224, at *4; Mem. Supp. Teva’s Mot. Add Counterclaim 4, Takeda Pharm. Co. Ltd. v. Teva Pharm. Indus. Ltd.,
No. 09-cv-4665 (S.D.N.Y Mar. 30, 2010), ECF No. 49.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 68 of 86
55
submitting a paragraph IV certification for the same use claims.261 As a result, without a
product claim listing and with their carved out labels, the generics would have had no choice but to
file only section viii statements with respect to the ’584 and ’404 patents.
Nor does it make any sense for the defendants to speculate that, without a product claim
listing, the generics would have withdrawn carved-out labeling to then pursue approval for the
combination uses – all the generics pursued section viii statements for the use claims, and
nothing about the absence of a product claim listing would bear on the sensible economic
decision to pursue early market entry with a section viii carve-out.
Takeda also throws against the wall the argument that the FDA might not have
approved a generic ANDA for ACTOS containing a section viii statement because the FDA
might have found that to be a safety risk.262 The generic co-defendants do not join Takeda on
this one, as they know it is specious.
None of the defendants contest that the generic defendants’ products were
therapeutically equivalent to ACTOS. In fact, the FDA gave tentative approval to the Mylan,
Actavis and Teva ANDAs with section viii statements and labeling providing for use of
pioglitazone as monotherapy.263 Tentative approval by the FDA means that an ANDA meets
261 As the FDA has explained, “an ANDA applicant does not have the option of choosing between a paragraph
IV certification and a section viii statement where the patent claims only a method of use; where the labeling does
not include [the method of use], only the section viii statement is appropriate.” Compl. ¶ 188 n.33.
262 Takeda relatedly argues that count 1 fails because the complaint does not identify a particular generic
company that would have obtained earlier approval based on a section viii request. To the contrary, the complaint
alleges that absent Takeda’s wrongful conduct, the generic defendants themselves would have obtained approval
based on such a request. See, e.g., Compl. ¶¶ 168, 174, 351-52.
263 Mylan submitted its ANDA in July 2003 with section viii statements addressing the composition claims of
the ’584 and ’404 patents and paragraph IV certifications for the method of use claims, Sebelius, 2012 WL 6968224,
at *7, *10, and Mylan’s proposed labeling carved out uses of its generic product with metformin or any other
antihyperglycemic agent. See, e.g. Mylan’s Pretrial Br., 2005 U.S. Dist. Ct. Motions LEXIS 27367, at *30
(“Mylan’s labeling omits any statement or suggestion that Mylan’s products can be used in a way that would
infringe Takeda's Combination Patents, i.e., in combination drug therapy.”). The FDA gave tentative approval to
Mylan’s ANDA, including the proposed labeling, on November 3, 2004. See FDA Approval History for
Pioglitazone Hydropchloride, ANDA No. 076801, http://1.usa.gov/1SbVqJo (last visited Mar. 21, 2016). Actavis
submitted section viii statements for the ’584 and ’404 patents and proposed labeling limited to monotherapy, and
the FDA gave Actavis’s ANDA tentative approval on December 13, 2005. Sebelius, 2012 WL 6968224, at *4-7,
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 69 of 86
56
the requirements for final approval, including bioequivalence to the RLD and labeling; there
only remains some statutory or regulatory exclusivity.264 Those substantive requirements
include not only scientific information, but also the adequacy of the labelling.265 Thus, the
FDA’s tentative approval of the ANDAs showed that the preconditions for acceptable labelling
– including the determination needed for the section viii carve outs that no safety or efficacy
issue arose from them – shows the plausibility of the FDA’s acceptance of the generic
companies’ section viii statements.
The FDA has articulated its approach to accepting proposed labels that carve out
combination use. It emphasizes that brand efforts to restrict access to non-patented uses is
contrary to the regulatory scheme.266
Under [the brand’s] interpretation of the misbranding
provisions, the existence of patent protection for Camptosar’s
first-line indication or any combination use would prohibit the
approval of a generic irinotecan product for any indication for the
duration of the patent on the use of the drug in combination, thereby
limiting the opportunity for consumers to benefit from the
existence of lower-cost generic products, even for the non-protected
. . . use of the product as monotherapy, during this period. On the
*10. Teva also submitted section viii statements for the ’584 and ’404 patents, and the FDA gave tentative
approval to Teva’s ANDA on February 2, 2006. Mem. Supp. Teva’s Mot. Add Counterclaim at 4, Takeda Pharm.
Co. Ltd. v. Teva Pharm. Indus. Ltd., No. 09-cv-4665 (S.D.N.Y Mar. 30, 2010), ECF No. 49 (“Teva filed section viii
statements to [the ’584 and the ’404 patents] indicating that Teva will not include language in the label for its
proposed generic version of Actos® that refers to combination use, and thereby that Teva's product will not
practice the method-of-use claims of the ’584 and the ’404 patents.”); id. at 5 (“On February 7, 2006, the FDA
granted tentative approval to Teva’s ANDA.”).
264 21 U.S.C. § 355(j)(5)(B)(iv)(II)(dd)(AA); 21 CFR § 314.127(a)(7) (“FDA will refuse to approve” an ANDA if
“[i]nformation submitted in the [ANDA] is insufficient to show that the labeling proposed for the drug is the
same as the labeling approved for the [RLD] except for changes required because of differences approved in a
petition under § 314.93 or because the drug product and the [RLD] are produced or distributed by different
manufacturers or because aspects of the listed drug's labeling are protected by patent, or by exclusivity, and such differences
do not render the proposed drug product less safe or effective than the listed drug for all remaining, nonprotected
conditions of use.” (emphasis added)). As Mylan noted in the underlying patent litigation, “[a]n FDA ‘tentative
approval’ means that all of the regulatory requirements for Mylan’s ANDA have been satisfied and that the
product can be marketed by the ANDA applicant in the United States once certain events outside of FDA’s control
have occurred, such as resolution of this patent infringement action in Mylan's favor.” Mylan’s Pretrial Br.
Combination Patents, Takeda Chem. Indus. v. Mylan Labs., Inc., No. 03-CV-8253, 2005 U.S. Dist. Ct. Motions
LEXIS 27367, at *34 (S.D.N.Y. Dec 2, 2005).
265 21 U.S.C. § 355(j)(2)(A) (listing requirements for an approvable ANDA).
266 See FDA/CDER Resp. Watson Labs., Inc. Citizen Pet., Docket No. FDA-2008-P-0069, at 1 (July 28, 2008).
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 70 of 86
57
other hand, our interpretation allows innovators to enjoy the
benefits associated with their efforts to develop new indications
(including patent protection and exclusivity for those indications)
while promoting competition with respect to indications for
which innovators are not entitled to protection (either because
they have not conducted research that entitles them to protection
or because any applicable protection has expired, been successfully
challenged, or has otherwise ceased to be a barrier to approval).267
Finally, Takeda’s speculation that a generic company that obtained approval of a
carved-out label would not have launched its product268 cannot be seriously entertained. The
defendant Teva’s statements to the federal court – that it had every expectation to launch its
product by the end of January 2011 – are enough to reject that bit of Takeda speculation.
5. Takeda’s induced infringement litigation would not bar generic entry.
Section 271(b) of the Patent Act provides that “whoever actively induces infringement of
a patent shall be liable as an infringer.”269 In 2003, when Takeda sued the first filers for
infringement, the law provided that filing an ANDA that carved out patented uses did not
amount to induced infringement:
[T]he request to make and sell a drug labeled with a permissible
(non-infringing) use cannot reasonably be interpreted as an act of
infringement (induced or otherwise) with respect to a patent on
an unapproved use, as the ANDA does not induce anyone to
perform the unapproved acts required to infringe. That a generic
maker may someday induce someone to infringe can only be
determined when that act occurs, and § 271(e)(2) was not
designed to cover such future acts.270
267 Id. (emphasis added). This reasoning is in keeping with the Hatch-Waxman Act’s aim of getting generics
to market quickly. See, e.g., Burwell, 82 F. Supp. 3d at 198 (“The FDA’s interpretation . . . is entirely in keeping
with . . . the larger Hatch-Waxman goal of streamlining generic drug approvals to allow safe, effective generic
drugs to reach the market sooner.”).
268 Takeda Br. 14-16.
269 35 U.S.C. §271(b)(emphasis added).
270 Warner-Lambert Co. v. Apotex Corp., 316 F.3d 1348, 1364-65 (Fed. Cir. 2003); see also Allergan, Inc. v. Alcon
Labs., Inc., 324 F.3d 1322, 1332 (Fed. Cir. 2003).
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 71 of 86
58
Takeda acknowledged that “the mere sale of a product capable of substantial noninfringing uses
does not constitute indirect infringement of a patent . . . [unless] active steps are taken to
encourage direct infringement.”271
The Federal Circuit holds that inducement requires proving both “specific intent” and
“action to induce infringement.”272 Judge Cote recognized this standard in the Rule 12(b)(6)
decision in the Watson litigation:
Mere knowledge of the allegedly infringing acts is not sufficient
to show inducement; there must be proof of actual intent to cause
the infringing activity. Such proof may be in the form of direct or
circumstantial evidence.273
So Takeda’s only hope of prevailing on its induced infringement claims was to show
that the generics had specific intent and had actually taken actions to induce infringement. But
the best Takeda could muster was a general allegation “on information and belief.”
As a matter of law, these rote allegations would not carry the day at summary judgment
or trial. Particularly not where each of the generics alleged that they had not, and would not,
undertake action to induce infringement. As Mylan stated in its pretrial brief:
. . . . Mylan has engaged in no affirmative activity that
encourages, aides or abets anyone to use Mylan’s products in such
a way, and there is no evidence that Mylan will, in the future,
engage in such activity.274
Takeda has said nothing to rebut this. And even if Takeda had somehow prevailed in
proving induced infringement against one of the generics, the relief granted would only have
271 See Mylan’s Second Pretrial Br., Takeda Chem. Indus. v. Mylan Labs., Inc., No. 03-cv-8253, 2005 U.S. Dist.
Ct. Motions LEXIS 27366, at *9 (S.D.N.Y. Dec. 2, 2005) (quoting Takeda’s Pre-Trial Mem. Combination Patents
at 20).
272 Id.
273 Takeda Chem. Indus., Ltd. v. Watson Pharms., Inc., 329 F. Supp. 2d 394, 401 (S.D.N.Y. 2004) (internal citation
omitted).
274 Mylan’s Pretrial Br. Combination Patents, Takeda Chem. Indus. v. Mylan Labs., Inc., No. 03-CV-8253, 2005
U.S. Dist. Ct. Motions LEXIS 27367, at *12-13 (S.D.N.Y. Dec 2, 2005).
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 72 of 86
59
been an injunction preventing the generic from continuing the inducing activities, not
preventing the infringing generic from coming to market.
Under patent law, an injunction may extend only as far as is necessary “to prevent the
violation of any right secured by the patent.”275 Where a patentee seeks an injunction to
prevent induced infringement, the scope of injunctive relief is “modest” – limited to enjoining
an alleged infringer from “actively inducing infringement” of the patent in suit.276 An
injunction for induced infringement cannot bar, outright, the sale of a product capable of
infringing a method-of-use patent, where the product is capable of other uses; such injunctive
relief “would impermissibly expand the scope of [a] patent monopoly by effectively granting
[the patentee] a monopoly over a product capable of noninfringing uses.”277
The defendants cite AstraZeneca LP v. Apotex, Inc.,278 to argue that inducement charges
can yield relief enjoining a generic product from the market.279 But the facts there are so
unique, a different lesson emerges. AstraZeneca held two patents covering a method of using
budesonide once daily.280 Apotex sought to “carve out” once-daily use, but for safety reasons
the FDA required Apotex to include in its label an instruction that patients be “titrated down”
275 35 U.S.C. § 283.
276 See, e.g., U.S. Philips Corp. v. Iwasaki Elec. Co. Ltd., 607 F. Supp. 2d 470, 483-84 (S.D.N.Y. 2009) (noting
patentee sought “an array of injunctive provisions,” but limiting injunctive relief to a prohibition on inducing
infringement.).
277 See, e.g., Mickowski v. Visi-Trak Corp., 36 F. Supp. 2d 171, 182 (S.D.N.Y. 1999) (citing Rohm & Haas Co. v.
Dawson Chem. Co., 599 F.2d 685, 703 n.24 (5th Cir. 1979)) (granting, instead, an injunction limited to prohibiting
“further publication or distribution of any product manual, sales literature, or other instructional or promotional
materials” describing how defendants products “may be used to practice the methods taught by claim 1 and claim
28 of the patents in suit”); see also Joy Techs., Inc. v. Flakt, Inc., 6 F.3d 770, 774-76 (Fed. Cir. 1993) (vacating
injunction as overbroad because mere sale of equipment, which could be used to perform a process protected by
patentee’s patent, did not constitute induced infringement); id. at 775 (“[T]he act of selling equipment which will
not be used so as to directly infringe a method claim cannot constitute one of the dependent types of infringement,
that is, either contributory infringement or inducement of infringement.”).
278 633 F.3d 1042 (Fed. Cir. 2010).
279 Joint Br. 23-24.
280 AstraZeneca, 633 F.3d at 1046-47.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 73 of 86
60
to the lowest possible dose, i.e., to once-daily use.281 The required labelling “would inevitably
lead some consumers to practice the claimed method.”282 So the only example the defendants
can show is when the FDA insists on labelling that will require doctors to engage in the
patented use.
Here, in contrast, the FDA sought no change to the carve outs, and there is nothing in
the proposed labels that would require a physician to prescribe ACTOS in combination with
another drug. Physicians could simply prescribe ACTOS as monotherapy. The fact that some
physicians might combine ACTOS with biguanide or a sulfonylurea is not enough to establish
induced infringement283 – AstraZeneca teaches that the infringement must be “inevitabl[e].”284
The defendants here are trying to accomplish that which Judge Cote warned about – extending
broad patent protection using only patents applicable to particular uses.
The Federal Circuit previously admonished Takeda that it cannot enjoin a competitor’s
launch by claiming induced infringement – especially where Takeda offers nothing more than a
suggestion of its competitor’s “mere knowledge of infringing uses” by doctors.285 In Mitigare,
Takeda held patents claiming a method of using colchicine products to treat acute gout
flares.286 Another company, Hikma, launched a colchicine product for gout prophylaxis.287
Takeda sued, asserting induced infringement claims.288 The district court denied Takeda’s
motion for a preliminary injunction, and the Federal Circuit affirmed. The Federal Circuit
281 Id. at 1047.
282 Id. at 1060.
283 Takeda Pharms. U.S.A., Inc. v. West-Ward Pharm. Corp. (“Mitigare”), 785 F.3d 625, 630-32 (Fed. Cir. 2015)
(affirming denial of injunction).
284 AstraZeneca, 633 F.3d at 1060.
285 Mitigare, 785 F.3d at 630.
286 Id. at 627.
287 Id. at 628.
288 Id.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 74 of 86
61
explained there is no induced infringement “‘when a defendant merely sells a commercial
product suitable for some lawful use.’”289 Merely selling a drug product that might be used by
physicians for an infringing use does not transform a drug maker into an infringer – “[t]he
label must encourage, recommend, or promote infringement.”290 Induced infringement requires
“specific intent and action,” and this requirement is “particularly important in the Hatch-
Waxman Act context because the statute was designed to enable the sale of drugs for non-
patented uses even though this would result in some off-label infringing uses.”291 The Federal
Circuit agreed with the district court that Takeda had no likelihood of success on the merits of
its suit.292
Takeda is left to making the argument that, no matter how wildly unlikely it would
have been for a court to enjoin every one of the generics’ ACTOS launches (and not just their
arguable inducing conduct), that remote chance is enough to bar recovery because courts never
predict the outcome of lawsuits. Not true.
The Supreme Court recently acknowledged the common need to prove a “case within a
case.” In Gunn v. Minton,293 the Court stated:
In cases like this one, in which the attorney’s alleged error came
in failing to make a particular argument, the causation element
requires a ‘case within a case’ analysis of whether, had the
argument been made, the outcome of the earlier litigation would
have been different . . . . To prevail on his legal malpractice claim,
therefore, Minton must show that he would have prevailed in his
federal patent infringement case if only petitioners had timely
made an experimental-use argument on his behalf.294
289 Id. at 630 (quoting Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 936 (2005)).
290 Id. at 631. In Mitigare, Takeda conceded that “mere knowledge of off-label infringing uses of [a] product
would not establish inducement.” Id. at 632.
291 Id. at 631.
292 Id. at 632-34.
293 133 S. Ct. 1059 (2013).
294 Id. at 1065 (internal citations omitted).
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 75 of 86
62
The need to evaluate what would have happened is especially salient in the antitrust
context. “Every [antitrust] case involves a comparison of a challenged agreement against a
prediction about – a probabilistic assessment of – the expected competition that would have
arisen in its absence.”295 A defendant cannot “complain of an uncertainty created by his own
wrongdoing,”296 and “may not object to the plaintiff’s reasonable estimate of the cause of injury”
by arguing that it is “not based on more accurate data which the wrongdoer’s misconduct has
rendered unavailable.”297 “Any other rule would enable the wrongdoer to profit by his
wrongdoing at the expense of his victim.”298
Under the Supreme Court’s decision in Professional Real Estate Investors, Inc. v. Columbia
Pictures Industries, Inc.,299 antitrust cases involving sham litigation as the anticompetitive act
require a plaintiff to prove that the patentee’s infringement claims were “objectively baseless in
the sense that no reasonable litigant could realistically expect success on the merits.”300 By
definition, the plaintiff must postulate and prove the results of the litigation – that the patentee
would have lost and the challenger would have won. Plaintiffs may not simply guess, of course;
rather, a plaintiff must “present sufficient evidence to support a finding”301 that, absent the
unlawful conduct, a different and more competitive outcome was “feasible.”302
295 In re Cipro Cases I &II, 348 P.3d 845, 864 (Cal. 2015).
296 Jay Edwards, Inc. v. New England Toyota Distrib., Inc., 708 F.2d 814, 821 (1st Cir. 1983) (quoting Randy’s
Studebaker Sales, Inc. v. Nissan Motor Corp., 533 F.3d 510, 517 (10th Cir. 1976)).
297 Bigelow, 327 U.S. at 265
298 Id. at 264.
299 508 U.S. 49, 60 (1993).
300 Id. at 60.
301 Sullivan, 34 F.3d at 1103.
302 Id. at 1104.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 76 of 86
63
Takeda argues, in effect, that all antitrust claims based on patent settlements must fail,
as there will never in those cases be a final adjudication of the patent litigation. This is not the
law.303
“No government seriously concerned about the evil of monopoly” would permit an
antitrust violator to escape liability merely by arguing that proving what would have happened
is too speculative.304 “Doubts should be resolved against the person whose behavior created the
problem.”305 Takeda makes no showing, under either the law or the allegations, that an
injunction enjoining wholesale launch of every one of the proposed generic products was such a
feasible possibility that the purchasers will need to disprove it.
6. The FDA’s two month delay in approving the Actavis ANDA does not
warrant dismissing Actavis.
Actavis argues that it could not have launched its generic product any earlier than
October, 2012 because it was not until that time that the FDA granted it final approval.306
Although an antitrust plaintiff need only prove that a defendant’s antitrust violation is a
“material cause” of its injury, “[o]n occasion . . . an independent cause [that] fully accounts for
the plaintiff’s alleged injury . . . breaks the causal connection.”307 But it is the defendant’s burden
to establish “the existence of an independent cause” that destroys antitrust causation,308 as
303 See In re DDAVP Direct Purchaser Antitrust Litig., 585 F.3d 677, 691 (2d Cir. 2009) (rejecting the argument
that “direct purchasers would be able to recover antitrust damages from a fraudulent patentee only after that
patentee first loses on a fraudulent procurement claim”).
304 III Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law ¶ 651(c) (2d ed. 2000).
305 Id.
306 Teva/Actavis Br. 19-22.
307 In re Wellbutrin SR/Zyban Antitrust Litig., 281 F. Supp. 2d 751, 756 (E.D. Pa. 2003).
308 Id.; see also Carlson v. Chisholm-Moore Hoist Corp., 281 F.2d 766, 770 (2d Cir. 1960) (A plaintiff is not
required to “‘offer evidence which positively exclude[s] every other possible cause of the accident.’” (quoting
Rosenberg v. Schwartz, 183 N.E. 282, 283 (N.Y. 1932))).
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 77 of 86
64
numerous federal circuits have indicated.309 This concept flows naturally from basic tort-law
principles: “a ‘superseding cause’ (something that intervenes between the defendant’s wrongful
act and the plaintiff's injury, ‘snap[ping] the causal chain’ that links the act to the injury) can
‘wip[e] out the defendant’s liability’ – but the burden of proving this ‘is on the defendant.’”310
And whether the occurrence – or non-occurrence – of some FDA regulatory action “constitutes
intervening conduct that breaks the chain of causation and whether intervening conduct is a
foreseeable consequence of a defendant’s actions are questions of fact to be submitted to the
jury.”311 We do not have to plead the absence of Actavis’s affirmative defenses.
And the argument falls flat on the facts. Under the March 2010 pact, Actavis and
Mylan agreed to amend their ANDAs to add paragraph IV certifications for all use patent
claims. Mylan did so promptly; Actavis waited two years to do so. As a result, on the eve of
the eventual August 2012 generic ACTOS entry, Actavis found itself in a bit of a tussle with
the FDA over whether Actavis had lost its shared first-to-file status with Mylan. After a brief
court proceeding, Actavis got the preferred status reinstated, and launched two months late (in
October 2012).
309 See, e.g., Hill v. Reederei F. Laeisz G.M.B.H., 435 F.3d 404, 421 (3d Cir. 2006) (As to “superseding cause, the
defendant has the burden of proof by a preponderance of the evidence.”); Hasbrouck v. Texaco, Inc., 842 F.2d 1034,
1042 (9th Cir. 1987); Carlson, 281 F.2d at 770.
310 In re Goguen, 691 F.3d 62, 68 (1st Cir. 2012) (quoting BCS Servs., Inc. v. Heartwood 88, LLC, 637 F.3d 750,
757 (7th Cir. 2011) (Posner, J.)); see also In re Neurontin Mktg. & Sales Practices Litig., 712 F.3d 21, 45 (1st Cir.
2013) (“[T]he burden of proving an ‘intervening cause’ . . . is on the defendant.”); In re Aggrenox Antitrust Litig.,
No. 14-md-2516, 2015 WL 4459607, at *10 (D. Conn. July 21, 2015) (“The defendants can certainly defend
themselves in this case by arguing that generic entry for one reason or another would have been impossible at any
particular time even in the absence of the agreement.”).
311 In re Flonase Antitrust Litig., 798 F. Supp. 2d 619 (E.D. Pa. 2011) (denying summary judgment where
defendants argued that the FDA’s arguments, and not the drug companies’ conduct, caused generic delay); see
Exxon Co., USA v. Sofec, Inc., 517 U.S. 830, 840-41 (1996) (“The issues of proximate causation and superseding
cause involve application of law to fact, which is left to the factfinder, subject to limited review.”); see also Spear
Pharm., Inc. v. William Blair & Co., 610 F. Supp. 2d 278, 280-81 (D. Del. 2009) (FDA delay in approving an ANDA
due to petition did not break chain of causation); Dr. Reddy’s Labs, Ltd. v. aaiPharma, Inc., No. 01-cv-10102, 2002
WL 31059289, at *10-11 (S.D.N.Y. Sept. 13, 2002) (same).
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 78 of 86
65
Actavis argues that, even if it had not entered into a conspiracy with Takeda to
perpetuate the 180-day exclusivity, the FDA would inevitably have approved its ANDA no
earlier than October 2012. But this makes no sense. If Actavis had not entered the March
2010 pact, there would be no amendment, let alone a late one. And if Actavis were trying to
gain market entry earlier but had to file some amendment to do so, a reasonable company in its
shoes would make that filing earlier. And even if it were late, the tussle would have arisen all
that much sooner, and reached the same quick (two month) resolution.
Finally, at the pleading stage, purchasers are not required to disprove all possible
alternative causes where, as here, they have plausibly alleged that Actavis’s conduct is a
proximate cause of the harm they have suffered.
7. Teva’s lack of first-to-file status does not warrant dismissing Teva.
Teva argues for dismissal because it was not a “first filer” for either ACTOS or
ACTOplus met, and the exclusivity provisions of the Hatch-Waxman Act precluded it from
entering the market for either drug until 180 days after one or more first filers entered the
market.312 This is wrong on the facts and the law.
Absent the false patent information submitted by Takeda, the FDA would not have
required paragraph IV certifications to the ‘584 and ‘404 patents. There would have been no
180-day exclusivity, no need for first-to-file status, and no barrier to Teva’s entry. Teva itself
represented to a court its intent and ability, absent that roadblock, to gain market entry at the
end of January 2011.313 The “first filer” status created by the wrongful conduct cannot itself
constitute an intervening cause resulting in dismissal of the case.
312 Teva Br. 13-16.
313 Compl. ¶ 283.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 79 of 86
66
Teva might be arguing that – given Takeda’s false information and the March 2010
pact entered into by the others – there was nothing it could do to get earlier market entry. But
that too is not true; it had filed its counterclaim to have the Orange Book information
corrected, and could have sought earlier market entry.314 Nor are we required to project the
result of that lawsuit; Teva chose instead to flip-flop, join the conspiracy to enjoy the fruits of
the unlawful 180-day exclusivity, and delay its entry.315 It is responsible for the delay with all
the co-conspirators.
D. Bad faith is not an element of Sherman Act §§ 1 and 2 claims, but is pled here
anyway.
Takeda argues that the false patent information claims must be dismissed because the
complaint does not allege Takeda acted in bad faith. But bad faith is not required by the
Sherman Act.316 “[G]ood motives will not validate an otherwise anticompetitive practice.”317
Lack of allegations of bad faith is immaterial to false patent information claims.
Ignoring this uncontroversial antitrust principle, Takeda cites Kroger Co. v. Sanofi-
Aventis,318 which it claims held “antitrust claims alleging false Orange Book listings cannot be
maintained without allegations of bad faith.”319 But this mischaracterizes Kroeger; in that case,
the brand company’s Orange Book listing was alleged to be wrongful because the patent was
314 Compl. ¶¶ 20, 236-37, 282-85.
315 Compl. ¶¶ 289-94.
316 See Remeron, 335 F. Supp. 2d at 532 (“In considering whether the monopolist’s conduct on balance is exclusionary
for the purposes of Section 2, our focus is upon the effect of that conduct, not upon the intent behind it.” (quoting United States
v. Microsoft Corp., 253 F.3d 34, 58 (D.C. Cir. 2001))).
317 NCAA v. Bd. of Regents, 468 U.S. 85, 101 n.23 (1984); see also Bd. of Trade of Chi. v. United States, 246 U.S.
231, 238 (1918) (“[G]ood intention” cannot “save an otherwise objectionable” restraint of trade.); Clorox Co. v.
Sterling Winthrop, Inc., 117 F.3d 50, 60 (2d Cir. 1997) (“[I]t is settled that a good intention will not relieve a party
from civil antitrust liability.”); Neurontin, 2009 WL 2751029, at *8.
318 701 F. Supp. 2d 938 (S.D. Ohio 2010).
319 Takeda Br. 18.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 80 of 86
67
obtained by fraud – the wrongfulness of the Orange Book listing depended on a finding of
Walker Process fraud.320
To the extent intent is germane, it is part of the defendants’ affirmative defenses.321 In
other words, “[a] plaintiff is not required to plead the absence of such a defense,”322 so the
plaintiffs here need not have any allegations of bad faith.
And the facts here show Takeda acted deliberately and in bad faith. Takeda’s false
submissions were palpably incorrect.323 They were an example of the kind of abusive Orange
Book filings that gave rise to the 2003 amendments.324 Takeda repeated the falsehood,
insisting that the FDA act on them to impose upon generic applicants a duty to file paragraph
IV certifications for patents that should not have been required.325 It did so to delay generic
entry – a fact that one of its later co-conspirators, Teva, concedes.326
In Buspirone, Judge Koeltl found allegations nearly identical to those here “sufficient” to
establish bad faith.327 There, as here, the plaintiffs alleged the defendants listed a patent in the
Orange Book, knowing that the patent did not cover the relevant drug.328 So, even if this Court
were to impose a burden to plead bad faith, the direct purchaser class plaintiffs have done so.
320 Kroger, 701 F. Supp. 2d at 964.
321 Clorox, 117 F.3d at 61; see Geneva Pharms. Tech. Co. v. Barr Labs. Inc., 386 F.3d 485, 509 (2d Cir. 2004)
(“The burden . . . shifts to the defendants to offer pro-competitive justifications for the arrangement.”).
322 Chen v. Major League Baseball Props., Inc., 798 F.3d 72, 81 (2d Cir. 2015).
323 Compl. ¶¶ 169-70, 175-76.
324 Compl. ¶¶ 121-25.
325 Compl. ¶ 232; see Ex. 9 to Lawton Decl., ECF No. 66-4.
326 Compl. ¶ 237 (quoting Mem. Supp. Teva’s Mot. Add Counterclaim 5-7).
327 185 F. Supp. 2d at 376-77. Judge Koeltl considered whether the plaintiffs had alleged bad faith because the
brand company was seeking “qualified patent immunity,” and that qualified immunity may be lost if the patentee
acts in bad faith.” Id. (citation omitted). Judge Koeltl did not discuss bad faith (or the lack thereof) in considering
the sufficiency of the plaintiffs’ substantive allegations or the defendants’ pleas for Noerr Pennington’s limited
immunity.
328 Id. at 376.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 81 of 86
68
E. The defendants’ “early entry” and “license” labels are not a basis for dismissal.
The defendants argue that the agreements are immune from antitrust scrutiny because
they provide “early-entry licenses.”329 This label affords them no solace.
The Supreme Court explicitly rejected the notion that the existence of an unexpired
patent immunizes a patent settlement from antitrust attack.330 In doing so, the court explained
that looking only at “what the holder of a valid patent could do” cannot “answer the antitrust
question,” because by settling the parties avoid a determination of the actual scope of the
patent.331 And here, the inducement charges on the use claims of the ’584 and ’404 did not
entitle Takeda to bar market entry for generic ACTOS products; it could only bar inducing
conduct.
Nor are patent “licenses” immune from antitrust scrutiny. The Supreme Court has
consistently sought “to accommodate patent and antitrust policies, finding challenged terms
and conditions unlawful unless patent law policy offsets the antitrust law policy strongly
favoring competition.”332 Using licenses to achieve anticompetitive ends carries no immunity
because Supreme Court precedents “make clear that patent-related settlement agreements can
sometimes violate the antitrust laws”;333 “both within the settlement context and without, the
Court has struck down overly restrictive patent licensing agreements – irrespective of whether
those agreements produced supra-patent-permitted revenues.”334 Every post-Actavis case
rejects the defendants’ patent-license-immunity argument, including the Third Circuit’s
329 Joint Br. 10-12.
330 Actavis, 133 S. Ct. at 2231.
331 Id. at 2230-31.
332 Id. at 2232-33.
333 Id. at 2225.
334 Id. at 2232.
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 82 of 86
69
decision addressing Lamictal.335 “Patents give no protection from the prohibitions of the
Sherman Act . . . when the licenses are used, as here, in the scheme to restrain.”336
F. The purchasers should be granted leave to amend.
In the event this Court rules there are any material inadequacies regarding the
allegations, leave to amend should be given. Leave to amend a complaint should be freely
given, particularly in the absence of undue delay, bad faith, dilatory motive, repeated prior
amendments, or undue prejudice to the defendants.337
The first direct purchaser action was commenced in April 2015.338 At the defendants’
request, the deadline for responding was stayed pending a decision on the complaint in the end-
payor action.339 Following that decision, and before any response was filed by the defendants,
the purchasers sought leave to file an amended complaint.340 That amended complaint – the
first substantively amended complaint – is the one being challenged here. Its allegations are
materially different from those contained in the end-payor complaint.341
If this Court finds the current allegations insufficient, there is no basis to deny the direct
335 See King Drug Co. of Florence, Inc. v. SmithKline Beecham Corp., 791 F.3d 388, 406-08 (3d Cir. 2015); In re
Aggrenox Antitrust Litig., 94 F. Supp. 3d 224, 242 (D. Conn. 2015); United Food & Commercial Workers Local 1776 &
Participating Emp’rs Health & Welfare Fund v. Teikoku Pharma USA, Inc., 74 F. Supp. 3d 1052, 1070 (N.D. Cal.
2014); Nexium II, 42 F. Supp. 3d at 264 (““[p]atents give no protection from the prohibitions of the Sherman Act .
. . when the licenses are used . . . in [a] scheme to restrain.”); In re Niaspan Antitrust Litigation, 42 F. Supp. 3d 735,
751 (E.D. Pa. 2014).
336 United States v. New Wrinkle, 342 U.S. 371, 378 (1952).
337 Foman v. Davis, 371 U.S. 178, 182 (1962) (outright refusal to grant leave without any justifying reason
appearing for the denial is not an exercise of discretion; but an abuse of that discretion); see also Wight v.
BankAmerica Corp., 219 F.3d 79, 91 (2d Cir. 2000); Fed. R. Civ. P. 15.
338 Class Action Compl. & Jury Demand, Apr. 27, 2015, ECF No. 1. Following consolidation with another
direct purchaser action, a consolidated complaint was filed. See Consol. Class Action Compl. & Jury Demand, June
4, 2015, ECF No. 14.
339 Order, June 4, 2015, ECF No. 37.
340 Mem. Supp. Mot. Leave File Amended Compl., Nov. 16, 2015, ECF No. 50.
341 See, e.g., id. at 3 (listing major differences).
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 83 of 86
70
purchasers a chance to amend.342 The defendants did not provide the settlement agreements –
documents they now maintain are vital to the Court’s assessment of its conduct – until after the
operative complaint was filed. If the defendants intended to limit the direct purchasers to a
single bite at the apple,343 they should not have withheld these documents.
V. CONCLUSION
The motions should be denied and the parties should proceed with discovery.
Dated: March 21, 2016 Respectfully submitted,
/s/ Thomas M. Sobol
Thomas M. Sobol
David S. Nalven
Gregory T. Arnold
Kristen A. Johnson
HAGENS BERMAN SOBOL SHAPIRO LLP
55 Cambridge Parkway, Suite 301
Cambridge, MA 02142
Tel: (617) 482-3700
Fax: (617) 482-3003
tom@hbsslaw.com
davidn@hbsslaw.com
grega@hbsslaw.com
kristenj@hbsslaw.com
Counsel for Plaintiff American Sales Company,
LLC, and Interim Co-Lead Counsel for Proposed
Direct Purchaser Class
Linda P. Nussbaum
Bradley J. Demuth
NUSSBAUM LAW GROUP, P.C.
570 Lexington Avenue, 19th Floor
New York, NY 10022
Tel: (212) 702-7053
lnussbaum@nussbaumpc.com
bdemuth@nussbaumpc.com
342 Williams v. Citigroup Inc., 659 F.3d 208, 213 (2d Cir. 2011); see also Camoia v.City of New York, No. 09-cv-
2545, 2013 WL 867199, at *2 (E.D.N.Y. Mar. 7, 2013) (“Given that the parties are still at the pleadings stage,
defendants are not prejudiced by permitting plaintiff to file a third amended complaint.”).
343 See, e.g., Joint Br. 29 (citing no Rule 15 case law); Takeda Br. 19 (citing only this Court’s opinion in the end-
payor case noting that, in light of three prior amendments, the end-payor class plaintiffs would not be granted
further leave to amend).
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 84 of 86
71
Juan R. Rivera Font
JUAN R. RIVERA FONT LLC
Ave. González Giusti #27, Suite 602
Guaynabo, PR 00968
Tel: (787) 751-5290
Counsel for Plaintiff Cesar Castillo, Inc., and
Interim Co-Lead Counsel for Proposed Direct
Purchaser Class
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 85 of 86
72
CERTIFICATE OF SERVICE
I, Thomas M. Sobol, hereby certify that I caused a copy of the foregoing to be filed
electronically via the Court’s electronic filing system. Those attorneys who are registered with
the Court’s electronic filing system may access these filings through the Court’s system, and
notice of these filings will be sent to these parties by operation of the Court’s electronic filing
system.
Dated: March 21, 2016 /s/ Thomas M. Sobol
Thomas M. Sobol
Case 1:15-cv-03278-RA-RLE Document 75 Filed 03/21/16 Page 86 of 86
