Eli Lilly and Co. v. Roussel Corp.
| Decision Date | 07 July 1998 |
| Docket Number | Civil Action No. 97-2009(JAG). |
| Parties | ELI LILLY AND COMPANY, Plaintiff, v. ROUSSEL CORP., Roussel-Uclaf Holdings Corp., Roussel-Uclaf, S.A., Hoechst Marion Roussel North America, Biochimica Opos, S.P.A., The Rugby Group, Inc., Rugby Laboratories, Inc., American Home Products Corporation, American Cyanamid Company, Zenith Goldline Pharmaceuticals, Inc., and Zenith Laboratories, Inc., Defendants. |
| Court | U.S. District Court — District of New Jersey |
Michael R. Griffinger, Gibbons, Del Deo, Dolan, Griffinger & Vecchione, Newark, NJ, Paul F. Ware, Jr., J. Anthony Downs, Goodwin, Procter & Hoar, Boston, MA, for Plaintiff.
Liza M. Walsh, Connell, Foley & Geiser, Roseland, NJ, Steven F. Molo, Louise R. Radin, Winston & Strawn, New York, NY, for Defendants, Roussel Corp., Roussel Uclaf Holdings Corp., Roussel Uclaf S.A., Hoechst Marion, Roussel, Inc., The Rugby Group, Inc. and Rugby Laboratories, Inc.
James M. Andrews, Friedman Siegelbaum, Roseland, NJ, Peter O. Safir, Stacy L. Ehrlich, Kleinfeld, Kaplan & Becker, Washington, DC, for Defendant, Biochimica Opos, S.P.A.
William L. Mentlik, Roy H. Wepner, Lerner, David, Littenberg, Krumholz & Mentlik, Westfield, NJ, for Defendants, Zenith Goldline Pharmaceuticals, Inc. and Zenith Laboratories, Inc.
Donald A. Robinson, Robinson, Lapidus & Livelli, Newark, NJ, Peter L. Zimroth, Arnold & Porter, New York, NY, William J. Ruane, American Home Products Corporation, Madison, NJ, Steven G. Reade, Arnold & Porter, Washington, DC, for Defendants, American Home Products Corporation and American Cyanamid Company.
This matter comes before the Court on the motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) and Fed.R.Civ.P. 9(b) of defendants Roussel Corporation ("Roussel Corp.").; Roussel-Uclaf Holdings Corporation ("RU Holdings"); Hoechst Marion Roussel, Inc. (erroneously named in the Complaint as Hoechst Marion Roussel North America); and The Rugby Group, Inc. and Rugby Laboratories, Inc. (collectively "Rugby"). Defendants Roussel-Uclaf, S.A. ("Roussel-France") and Biochimica Opos, S.P.A. ("Opos")1 have moved to dismiss for insufficiency of service of process or, in the alternative, for failure to state a claim. Defendants American Home Products Corporation and its subsidiary, American Cyanamid Company (collectively "AHP"), and defendants Zenith Goldline Pharmaceuticals, Inc. and its subsidiary, Zenith Laboratories, Inc. (collectively "Zenith"), have moved to dismiss the counts against them (counts III, IV, X and XI) pursuant to Fed.R.Civ.P. 12(b)(6).
Plaintiff Eli Lilly ("Lilly"), a pharmaceutical company, filed the instant action on April 18, 1997 against its competitors, Opos and the Roussel Defendants.2 Lilly alleges that Opos and the Roussel Defendants fraudulently obtained approval from the Federal Drug Administration ("FDA") to sell bulk cefaclor3 (an antibiotic) to drug manufacturers in the United States. Lilly has also named as defendants other pharmaceutical companies (AHP, Zenith and Rugby) that purchased bulk cefaclor from Opos and manufactured retail dosage units. Lilly alleges that Opos and the Roussel Defendants violated the Lanham Act, 15 U.S.C. § 1126(b), (h) and (i); the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962; and the New Jersey Anti-Racketeering Act, N.J. Stat. Ann. § 2C:41-1, et seq. Lilly also alleges that Opos and Roussel Defendants committed common law fraud; negligent misrepresentation; common law conspiracy; and tortious interference with business relationships. Lilly also alleges violations of the Lanham Act, 15 U.S.C. § 1125(a), the New Jersey Unfair Competition Act, N.J. Stat. Ann. § 56:4-1; common law unfair competition; and unjust enrichment against all the defendants.
This Court has federal question jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1338(a) and (b), as well as supplemental jurisdiction over the state law claims pursuant to 28 U.S.C. § 1367. This Court also has diversity jurisdiction pursuant to 28 U.S.C. § 1332(a)(3).
Defendants Opos and Roussel-France have moved to dismiss for insufficiency of service of process or, in the alternative, for failure to state a claim. The remaining defendants have moved to dismiss pursuant to Fed.R.Civ.P. 12(b)(6). For the following reasons, the Court shall deny Opos' and Roussel-France's motion to dismiss for insufficiency of service of process but shall grant the motion to dismiss the Complaint for failure to state a claim as to Counts I through XIII. Defendants' motion to dismiss Count XIV is denied. Defendants' motion to dismiss Count XV is granted based on the Court's ruling on Count XIV.
Since 1979, Lilly has manufactured and sold the antibiotic drug cefaclor under the brand name "CECLOR". For many years Lilly was the only manufacturer of cefaclor approved by the FDA. Lilly holds a number of process patents that relate to methods of manufacturing cefaclor. Lilly also owned a patent on the cefaclor compound which expired in 1992.
In 1990 or 1991, the Roussel Defendants, through Roussel Corp., Roussel-France and RU Holdings, solicited Lilly to purchase bulk cefaclor from Opos. Opos is an Italian chemical company that manufactures bulk pharmaceutical chemicals for generic drug companies. Lilly visited the Opos manufacturing facility in Milan, Italy, where the Roussel Defendants represented that Opos would be producing the bulk cefaclor. The Roussel Defendants represented to Lilly that their manufacturing process would not infringe upon Lilly's patents. However, Lilly declined to purchase bulk cefaclor from the Roussel Defendants.
In March 1991, Roussel Corp. and Opos requested that Lilly identify all process patents it owned which might be infringed if the Roussel Defendants imported or sold cefaclor in the United States.4 By letter dated May 15, 1991, Lilly identified its process patents that covered its cefaclor manufacturing process. On August 26, 1991, Roussel Corp. represented to Lilly that it had reviewed Lilly's process patents and that the manufacturing process of cefaclor that Opos planned to use would not infringe upon any of Lilly's patents.
In 1992, defendant Opos sought FDA approval to sell bulk cefaclor in the United States.5 Opos submitted the required Abbreviated Antibiotic Drug Application ("AADA") to the FDA's offices in Maryland by mail or wire. The FDA approved Opos' AADA in April 1995. On April 27, 1995, Lilly commenced a patent infringement action against Opos, AHP and Zenith in the United States District Court for the Southern District of Indiana ("Indiana Action") which is still pending.6 From April 1995 until late 1996, Opos manufactured and sold bulk cefaclor monohydrate, the active ingredient in cefaclor finished products, in the United States.
In 1994 or early 1995, AHP and Zenith entered into agreements with Opos and the Roussel Defendants pursuant to which Opos and the Roussel Defendants would provide AHP's and Zenith's anticipated commercial requirements for bulk cefaclor. On April 27, 1995, defendants AHP and Zenith obtained authorization from the FDA to manufacture and sell retail dosage units of generic cefaclor made from Opos' cefaclor.7 Zenith entered into an agreement with Rugby to provide it with retail dosage units of cefaclor. AHP, Zenith and Rugby marketed, distributed and sold generic cefaclor in competition with Lilly's cefaclor products.
In April 1995, as part of a proceeding initiated in Italy to challenge Opos' manufacturing of cefaclor ("Italian Action"), Lilly inspected Opos' manufacturing facility in Milan, Italy and obtained copies of two manufacturing tickets.8 However, when Lilly attempted to reproduce the cefaclor manufacturing process reflected in the Opos manufacturing tickets, it discovered that "the purported cefaclor manufacturing process reflected in the Opos documents was not used to manufacture Opos Cefaclor." Complaint ¶ 59. The manufacturing process reflected in Opos' documents "was not capable of producing sufficient quantities of certain necessary intermediate compounds to constitute a viable production process for cefaclor." Id.
In 1995, the FDA received several complaints about generic cefaclor formulated from Opos' bulk cefaclor including reports of adverse reactions to the drug. As a result thereof, in 1996, the FDA investigated Opos' AADA and its facility in Milan, Italy. The FDA discovered that the Opos cefaclor marketed and sold in the United States was not manufactured by Opos, was not manufactured in commercial quantities at the Opos plant in Milan and was not manufactured according to the process represented in the AADA.
On December 12, 1996, the FDA informed Opos that it had found that its AADA contained false and misleading information. In a letter to Mr. E. Fontana, the President of Opos, the FDA stated:
The Center for Drug Evaluation and Research has found that your firm submitted false and misleading information in applications filed with this Agency. This finding is based upon information provided to us by officials of your parent firm regarding the manufacturing process of the bulk drug Cefaclor USP in approved Abbreviated Antibiotic Drug Application 64-072 and in the Drug Master File9 for this product and in two other Abbreviated Antibiotic Drug Applications. Evidence of manufacturing discrepancies was found in the May 1996 FDA inspection of your facility. Such a finding poses a significant question with regard to the reliability of the data and information contained in the applications that your firm has filed with this Agency.
See Complaint, Ex. A.
On October 7, 1996, prior to the FDA's announcement that it had found false and misleading statements in the Opos AADA, defendant Roussel Corp. wrote a letter to its customers of...
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