Fresenius Kabi United States, LLC v. Fera Pharms., LLC

• Decision Date: 19 May 2017
• Docket Number: Civ. No. 15-3654 (KM) (MAH)
• Parties: FRESENIUS KABI USA, LLC Plaintiff, v. FERA PHARMACEUTICALS, LLC, and OAKWOOD LABORATORIES, LLC Defendants.
• Court: U.S. District Court — District of New Jersey

FRESENIUS KABI USA, LLC Plaintiff, v. FERA PHARMACEUTICALS, LLC,and OAKWOOD LABORATORIES, LLC Defendants.

Civ. No. 15-3654 (KM) (MAH)

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY

May 19, 2017

OPINION

KEVIN MCNULTY, U.S.D.J.

This is a patent infringement case brought by Fresenius Kabi USA, LLC ("Fresenius") against the defendants, Fera Pharmaceuticals and Oakwood Laboratories (together, "Fera"). Fresenius claims that Fera, if it is allowed to sell certain generic drugs, will infringe three of its patents: Patent Nos. 9,006,289 ("the '289 patent"), 9,168,238 ("the '238 patent"), and the 9,168,239 ("the '239 patent"). All three patents describe formulations of levothyroxine, a hormone produced by the thyroid. I earlier construed a number of those patents' key terms (ECF No. 327, the "Markman Opinion"), denied Fresenius's motion to dismiss Fera's inequitable conduct counterclaims, and preliminarily enjoined Fera from launching a generic version of Fresenius's levothyroxine formulation. (ECF No. 328 (the "PI Opinion", cited as "PI Op."), ECF No. 329 (the "PI Order").

Now before the Court is Fresenius's motion to dismiss Fera's antitrust counterclaims (ECF No. 330) and Fresenius's motion to stay this case pending Fera's appeal of the preliminary injunction to the Federal Circuit. (ECF No. 386). For the reasons stated herein, I will deny the motion to dismiss as presented. I will, however, sever and stay Fera's antitrust counterclaims pending further order of the Court. I will also deny Fresenius's motion to stay the entire case pending Fera's appeal of my PI Opinion and Order to the Federal Circuit.

I. BACKGROUND

Familiarity with my previous Opinions and Orders in this case is assumed. I canvass here only the facts and procedural history pertinent to my decision on these motions.

On May 29, 2015, Fresenius filed its original complaint alleging infringement of the '289 patent. (ECF No. 1) Fera answered in July 2015 and asserted counterclaims for invalidity and non-infringement. (ECF No. 13) Fresenius amended its complaint on September 3, 2015. Fera answered and alleged additional inequitable conduct counterclaims later that month. (ECF No. 43, 56, 57). Two months later, in December 2015, Fresenius filed a second amended complaint that added infringement claims for the '238 and '239 patents. (ECF No. 83) Fera answered, and asserted essentially the same inequitable conduct counterclaims as to those two patents. (ECF No. 84).

In January 2016, Fresenius moved to dismiss Fera's inequitable conduct counterclaims for failure to state a claim. (ECF No. 89) Five months later, in May 2016, Fresenius moved for a preliminary injunction to enjoin Fera from launching its generic products at-risk. (ECF No. 187) A week later, Fera moved to amend its answer to include two antitrust counterclaims. Fresenius, Fera claimed, had delayed Fera's entry into the "the market for levothyroxine sodium power for injection, 100 meg/vial and 500 meg/vial" by fraudulently obtaining the patents-in-suit and bringing sham patent litigation against it and other competitors. (ECF No. 199-4, ¶¶ 284-521) Magistrate Judge Hammer granted Fera's motion to amend in August 15, 2016. (ECF No. 293) Fera filed its amended answer and counterclaims two days later. (ECF Nos. 295-96)

On September 20, 2016, I denied Fresenius's motion to dismiss Fera's inequitable conduct counterclaims but granted Fresenius's motion for a preliminary injunction. (ECF Nos. 328-29) I found Fera's allegation thatFresenius had deceptively obtained the '289 patent sufficient to meet "the relatively low threshold" necessary to state a claim. For purposes of a preliminary injunction, however, the paper record revealed "no substantial evidence of misrepresentation, or intentional withholding of material information from the patent examiner." (PI Op. 19-23)¹ Fresenius, moreover, had demonstrated irreparable harm, that the balance of harms tipped in its favor, and that an injunction was in the public interest. (Id. 24-27) I therefore preliminary enjoined Fera from launching a generic version of Fresenius's levothyroxine formulation.

Also on September 20, 2016, Fresenius moved to dismiss Fera's antitrust counterclaims. (ECF No. 330) Shortly thereafter Fera took an interlocutory appeal of the preliminary injunction to the Federal Circuit. (ECF No. 361). Fresenius then moved to stay this case pending Fera's appeal to the Federal Circuit. (ECF No. 386).

The deadline for fact discovery expired on August 31, 2016. (ECF No. 60) Expert discovery closed in February 2017. (ECF No. 356). On the deadlinefor dispositive motions, March 3, 2017, Fresenius filed a motion for summary judgment as to infringement for certain claims. (ECF No. 404) A trial date has not yet been set.

II. DISCUSSION

A. Motion to Dismiss Counterclaims

Fresenius first moves to dismiss Counterclaim Count 10, which alleges Walker Process fraud, and Count 11, which alleges sham litigation, each in violation of Section 2 of the Sherman Act, 15 U.S.C § 2, and the Clayton Act, 15 U.S.C. §§ 15, 26, for failure to state a claim. See Fed. R. Civ. P 12(b)(6). For the purposes of a motion to dismiss, the facts alleged in the counterclaim-complaint are accepted as true and all reasonable inferences are drawn in favor of the plaintiff. New Jersey Carpenters & the Trustees Thereof v. Tishman Const Corp. of New Jersey, 760 F.3d 297, 302 (3d Cir. 2014). The factual allegations must be sufficient to raise a plaintiff's right to relief above a speculative level, such that it is "plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); see also West Run Student Housing Assocs., LLC v. Huntington Nat. Bank, 712 F.3d 165, 169 (3d Cir. 2013). While "[t]he plausibility standard is not akin to a 'probability requirement' . . . it asks for more than a sheer possibility." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

The parties agree as to the legal principles governing such claims. A patentee "who brings an infringement suit may be subject to antitrust liability . . . if the alleged infringer (the antitrust plaintiff) proves (1) that the asserted patent was obtained through knowing and willful fraud within the meaning of Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172, 177 (1965), or (2) that the infringement suit was 'a mere sham to cover what is actually nothing more than an attempt to interfere directly with the business relationships of a competitor,' Eastern R.R. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 144 (1961)." Nobelpharma AB v. Implant Innovations, Inc., 141 F.3d 1059, 1069 (Fed. Cir. 1998) (additional internal citations omitted)).

A plaintiff asserting a Walker Process claim must show (1) "that the defendant procured the relevant patent by knowing and willful fraud on the PTO or (in the case of an assignee) that the defendant maintained and enforced the patent with knowledge of the fraudulent manner in which it was obtained" and (2) "all the elements otherwise necessary to establish a Sherman Act monopolization charge." Ritz Camera & Image, LLC, v. Sandisk Corp., 700 F.3d 503, 506 (Fed. Cir. 2012) (citing Walker Process, 382 U.S. at 174, 176-77)). To prevail on a sham litigation claim, a plaintiff must show that the lawsuit is "objectively baseless in the sense that no reasonable litigant could realistically expect to succeed on the merits" and subjectively is "an attempt to interfere directly with the business relationships of a competitor." Prof'l Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 60-61 (1993) (emphasis in original) (internal citations omitted).

The real question here is whether Fera has alleged sufficient factual matter to elevate the underlying claims of inequitable conduct to the level of monopoly abuse or sham litigation. Fresenius, with some justice, points to a number of potential deficiencies.

One threshold concern with these antitrust claims is that Fera, although it intends to compete with Fresenius, does not factually allege that it is prepared to do so. See Indium Corp. of Am. v. Semi-Alloys, Inc., 781 F.2d 879, 882 (Fed. Cir. 1985) (finding that plaintiff failed to show antitrust injury because it was not prepared to enter the relevant market); but see Bristol Meyer Squibb Co. v. Ben Venue Labs, 90 F. Supp. 2d 540, 544-46 (D.N.J. 2000) (rejecting the same argument for cases brought under the Hatch-Waxman Act). Nor does it factually allege that Fresenius seeks to squelch competition from other participants in the relevant market.² See Brunswick Corp. v. Pueblo Bowl-O-Matic, 429 U.S. 477, 488-89 (1977) ("The antitrust laws . . . were enacted for 'the protection of competition, not competitors . . . . Plaintiffs must prove antitrust injury, which is to say injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants' acts unlawful.")

Fresenius also points to a lack of specificity about the relevant market. Fera alleges, for example, that the relevant product market is the market for "levothyroxine sodium power for injection, 100mcg/vial and 500 meg/vial." There is no factual averment, however, establishing why that might be the case. See, e.g., Queen City Pizza v. Domino's Pizza, 124 F.3d 430, 436 (3d Cir. 1997) ("Where the plaintiff fails to define its proposed relevant market with reference to the rule of reasonable interchangeability and cross-elasticity of demand, . . . the relevant market is legally insufficient and a motion to dismiss may be granted.")

As to Fera's sham litigation counterclaim, there is of course the problem of my PI Opinion. It is difficult to accept Fera's allegation that the underlying infringement suit is objectively baseless (or brought in subjective bad faith) when I have already found that Fresenius is likely to prevail on the merits.

It is possible to debate whether these claims should now be dismissed, and Fera be put to the...