Antitrust Law Daily Alleged sham litigation counterclaims over Prevacid go forward
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Friday, December 21, 2018

Alleged sham litigation counterclaims over Prevacid go forward

By Nicole D. Prysby, J.D.

Antitrust counterclaims brought by Zydus Pharmaceuticals, Inc. after being sued by Takeda Pharmaceutical Company Limited for patent infringement were not dismissed by a federal district court in New Jersey despite Takeda’s assertion of Noerr-Pennington immunity. Takeda sued Zydus, alleging that Zydus directly infringed a Takeda patent for Prevacid® SoluTab™. Zydus asserted antitrust counterclaims, alleging that Takeda’s patent infringement lawsuit was a sham. Takeda moved to dismiss the counterclaims on the basis of Noerr-Pennington immunity. But the court held that the antitrust claims should go forward, because parties generally may not invoke the protections of Noerr-Pennington at the dismissal stage of a case in the context of patent suits, at which time the factual record remains undeveloped and insufficient for the purpose of determining whether a sham litigation has been filed. The court also found that Zydus sufficiently alleged facts to show that Takeda’s infringement lawsuit constitutes sham litigation. Finally, the court concluded that Zydus adequately alleged causation, by alleging that but-for Takeda’s sham lawsuit, the Food and Drug Administration would have approved the generic product earlier (Takeda Pharmaceutical Co. Ltd. v. Zydus Pharmaceuticals [USA] Inc., December 19, 2018, Wolfson, F.).

Background. In 2002, the Food & Drug Administration (FDA) approved a New Drug Application (NDA) lansoprazole orally digestible tablets that Takeda Pharmaceutical Company Limited sells under the name Prevacid® SoluTab™. In February 2010, Zydus Pharmaceuticals, Inc. filed an Abbreviated New Drug Application (ANDA) with the FDA, seeking to obtain regulatory approval for a generic version of lansoprazole orally digestible tablets. Zydus submitted a letter to Takeda providing notice of the ANDA, at which point Takeda filed suit, alleging infringement of two of its patents for Prevacid® SoluTab™. Takeda eventually dismissed all of the infringement claims, except for those related to U.S. Patent No. 6,328,994, (the ‘994 Patent). Zydus was ultimately found not to have infringed the Takeda ‘994 patent.

Subsequently, Zydus filed an amended ANDA with the FDA, which allegedly contains only one minor difference from the previously submitted ANDA. In 2018, Takeda sued Zydus, alleging that Zydus directly infringed the ‘994 Patent and four other patents by filing the amended ANDA. Zydus asserted antitrust counterclaims, alleging that Takeda’s patent infringement lawsuit was a sham. Takeda moved to dismiss the counterclaims on the basis of Noerr-Pennington immunity.

No immunity under Noerr-Pennington. Takeda asserted that its decision to bring the lawsuit was per se reasonable because it was filed in response to Zydus’ assertion of noninfringement in its ANDA Paragraph IV Certification. But the court disagreed, given the early stage of the litigation. Courts routinely prohibit parties from invoking the protections of Noerr-Pennington at the dismissal stage of a case in the context of patent suits, at which time the factual record remains undeveloped and insufficient for the purpose of determining whether a sham litigation has been filed. At this stage, Zydus’ certifications with respect to the non-infringement of its ANDA product are sufficient for the purpose of alleging the sham litigation exception. Therefore, Zydus adequately pleaded facts to state a claim for sham litigation.

The court also found that Zydus sufficiently alleged facts to show that Takeda’s petitioning activity constitutes sham litigation. Zydus’ Paragraph IV Certification provided Takeda with a detailed statement explaining why its product did not infringe Takeda’s patents. These allegations alone would have been sufficient to demonstrate that Takeda is not entitled to invoke Noerr-Pennington immunity at this stage of the litigation.

Zydus’ argument was strengthened because it also relied on the parties’ prior litigation history, in which the issue of infringement turned on the construction of the term "fine granules," as defined in the ‘994 patent. The Federal Circuit ruled that the disputed claim term is "fine granules having an average particle diameter of precisely 400 μm or less." Under that patent construction, it was determined that Zydus’ ANDA product could not literally infringe, because its fine granules had an average particular diameter of greater than 400 μm. Zydus asserted that the contents of the amended ANDA support the allegation of a sham litigation as its generic drug does not literally infringe on Takeda’s product, because the Federal Circuit already determined a “hard cut-off” of precisely 400 μm above which there can be no infringement, and Zydus alleges that its amended ANDA pertains only to "inactive substances" which do not relate to granule size because the generic product was previously determined to have an average particle size of 412.28 μm.

Causation. Takeda also asserted that that the requirement of but-for causation was not satisfied, because Zydus has been free of the patents-in-suit since 2014 but never received FDA approval. Therefore Zydus could not have launched the new drug even in the absence of the 30-month stay. Again, the court disagreed with Takeda. Zydus alleged that in January 2018, the FDA indicated that it was prepared to approve Zydus’ ANDA, which would have occurred promptly after the 45-day notice period had concluded, but for Takeda’s filing the patent infringement action. Therefore, the court found, the allegations adequately demonstrate a causal link between the alleged anticompetitive purpose of Takeda’s lawsuit and the resulting antitrust injury.

The case is No. 3:18-cv-01994-FLW-TJB.

Attorneys: Peter Hwichan Noh (Celgene Corp.) and Ravin R. Patel (McCarter & English LLP) for Takeda Pharmaceutical Co. Ltd. and Takeda Pharmaceuticals America, Inc. Marc D. Youngelson (Cosner Youngelson Counsellors at Law) for Zydus Pharmaceuticals [USA] Inc. and Cadila Healthcare Ltd.

Companies: Takeda Pharmaceutical Co. Ltd.; Takeda Pharmaceuticals America, Inc.; Zydus Pharmaceuticals [USA] Inc.; Cadila Healthcare Ltd.

MainStory: TopStory Antitrust NewJerseyNews

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