In re Buspirone Patent Litigation

• Citation: 185 F.Supp.2d 363
• Decision Date: 14 February 2002
• Docket Number: MDL Docket No. 1410.
• Parties: In re BUSPIRONE PATENT LITIGATION. In re Buspirone Antitrust Litigation.
• Court: United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York

185 F.Supp.2d 363

In re BUSPIRONE PATENT LITIGATION.

In re Buspirone Antitrust Litigation.

MDL Docket No. 1410.

United States District Court, S.D. New York.

February 14, 2002.

COPYRIGHT MATERIAL OMITTED

Richard J. Stark, Evan R. Chesler, David Russell Marriot, Cravath, Swaine & Moore, New York City, Joshua Ross Diamond, Diamond & Robinson, Montpelier, VT, Matthew J. Becker, Day, Berry & Howard, Hartford, CT, Steven Lieberman, E. Anthony Figg, Elizabeth A. Leff, Mark I. Bowditch, Rothwell, Figg, Ernst & Manbeck, Washington, DC, Gordon H. Copeland, Michael T. Smith, Megan D. Dortenzo, Steptoe & Johnson, Clarksburg, WV, for Plaintiff.

Charles Platto, Norwich, VT, Edgar H. Haug, Barry S. White, Daniel G. Brown, Terri L. Nataline, Frommer, Lawrence & Haug, L.L.P., New York City, Steven David Ecker, Thomas J. Murphy, Cowdery, Ecker & Murphy, Hartford, CT, Walter M. Jones, III, Martin & Seibert, Martinsburg, WV, Elisabeth H. Rose, Rose, Padden & Petty, L.C., Fairmont, WV, Thomas H. Newbraugh, Morgantown, WV, for Defendant.

Opinion and Order No. 19

KOELTL, District Judge.

(Motion to Dismiss Antitrust and Related State Law Claims)

On August 15, 2001, the Judicial Panel on Multidistrict Litigation consolidated for pre-trial purposes before this Court four patent disputes, which had been consolidated under MDL-1410, and twenty-two antitrust actions, which had been consolidated under MDL-1413, all of which involve disputes among the various parties over the propriety of the manufacture, use, sale or allegedly anticompetitive conduct related to the use and sale of buspirone,¹ a drug used to treat anxiety. The Panel has also transferred twelve tag-along cases to this Court.

The defendant in the antitrust actions is Bristol-Myers Squibb Company ("Bristol-Myers" or "BMS"), a company that obtained a patent covering the use of buspirone for the treatment of anxiety in 1980 (the "`763 Patent") and that has been selling the product since 1986, when the Food and Drug Administration (the "FDA") approved the drug for human use. The plaintiffs are, variously, generic drug makers who seek or have sought to enter the buspirone market, direct purchasers of buspirone products, end-payors who have purchased buspirone, consumer protection organizations, or their representatives, and thirty States. These plaintiffs (the "antitrust plaintiffs") have consolidated their claims into six Amended Complaints or Pleadings (the "Complaints").

The Complaints assert a number of claims, all of which arise out of two separate sets of circumstances. First, some of the plaintiffs allege that Bristol-Myers attempted to extend and/or extended an unlawful monopoly over buspirone products for use in the treatment of anxiety, and also entered into a conspiracy to restrain trade in this market, thereby violating Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 & 2, by settling a patent infringement suit with Danbury Pharmacal, Inc. and its affiliate Schein Pharmaceuticals, Inc. ("Schein") in 1994. In that litigation, Bristol-Myers had argued that Schein would infringe the '763 Patent by manufacturing and selling generic buspirone tablets before the '763 Patent expired. The plaintiffs who raise these claims allege that Bristol-Myers's settlement was a sham used to cover up an unlawful anticompetitive arrangement under which Schein agreed to stay out of the buspirone market and help maintain a public perception that the '763 Patent was valid in return for $72.5 million, even though both parties knew that the '763 Patent was not valid (the "Schein Settlement activities").²

Second, all of the Complaints allege that Bristol-Myers attempted to extend and/or extended an unlawful monopoly over the market in buspirone tablets in violation of Section 2 of the Sherman Act, 15 U.S.C. § 2, by abusing a number of provisions of the Hatch-Waxman Amendments, also known as the Drug Price Competition and Patent Term Restoration Act, Pub.L. No. 98-417, 98 Stat. 1585 (1984) (codified as amended at 21 U.S.C. § 355 and 35 U.S.C. § 271(e)), which amended the Federal Food, Drug, and Cosmetic Act ("FDCA"), Pub.L. No. 52-675, 52 Stat. 1040 (1938) (codified as amended at 21 U.S.C. §§ 301-397). The antitrust plaintiffs argue that Bristol-Myers thereby prevented the FDA from approving generic buspirone products that competitors sought to market after the '763 Patent expired. The Complaints allege, in particular, that Bristol-Myers (i) listed a newly-obtained patent (the "`365 Patent") in an FDA publication entitled the "Approved Drug Products with Therapeutic Equivalence Evaluations," or the "Orange Book," on November 21, 2000, less than one day before the `763 Patent expired; (ii) fraudulently represented to the FDA in these listing submissions that the new '365 Patent covered uses of buspirone and that a reasonable claim of patent infringement could be asserted against generic producers of the drug, when Bristol-Myers knew these uses of buspirone clearly would be in the public domain after the '763 Patent expired; and then (iii) immediately brought patent infringement suits against generic competitors who were seeking to enter the buspirone market, thereby triggering an automatic stay of the FDA's approval of these generic products for up to thirty months under the Hatch-Waxman Amendments, specifically, 21 U.S.C. § 355(j)(5)(B)(iii). The End-Payor plaintiffs Mylan, Watson and the thirty States raise analogous state law causes of action for antitrust, unfair competition or unfair or deceptive trade practices, and/or unjust enrichment arising out of those same facts and circumstances (the "`365 Patent activities").

Bristol-Myers moves pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure to dismiss all of the claims raised by the antitrust plaintiffs in the antitrust actions (collectively, the "antitrust claims").

I.

When considering a motion to dismiss, the Court "`must accept the material facts alleged in the complaint[s] as true and construe all reasonable inferences in the plaintiff[s'] favor.'" Gant v. Wallingford Bd. of Educ., 69 F.3d 669, 673 (2d Cir. 1995) (considering a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6)) (quoting Hernandez v. Coughlin, 18 F.3d 133, 136 (2d Cir.1994)). The Court's function on a motion to dismiss is "not to weigh the evidence that might be presented at trial but merely to determine whether the complaint[s] [themselves are] legally sufficient." Goldman v. Belden, 754 F.2d 1059, 1067 (2d Cir.1985). Therefore, Bristol-Myers's present motion should only be granted if it appears that the antitrust plaintiffs can prove no set of facts in support of their respective claims that would entitle them to relief. See Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Grandon v. Merrill Lynch & Co., 147 F.3d 184, 188 (2d Cir. 1998); see also Goldman, 754 F.2d at 1065.

In deciding the motion, the Court may consider documents referenced in the Complaints and documents that are in the relevant antitrust plaintiffs' possession or that they knew of and relied on in bringing suit. See Brass v. American Film Technologies, Inc., 987 F.2d 142, 150 (2d Cir. 1993); Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 47-48 (2d Cir.1991); I. Meyer Pincus & Assoc., P.C. v. Oppenheimer & Co., Inc., 936 F.2d 759, 762 (2d Cir.1991); Skeete v. IVF America, Inc., 972 F.Supp. 206, 208 (S.D.N.Y.1997). The Court may also consider "matters of which judicial notice may be taken." See Leonard F. v. Israel Discount Bank, 199 F.3d 99, 107 (2d Cir.1999) (quotation omitted); see also Kramer v. Time Warner Inc., 937 F.2d 767, 773 (2d Cir.1991). However, "in antitrust cases, where `the proof is largely in the hands of the alleged conspirators,' dismissals prior to giving the plaintiff ample opportunity for discovery should be granted very sparingly." Hospital Bldg. Co. v. Trustees of Rex Hosp., 425 U.S. 738, 746, 96 S.Ct. 1848, 48 L.Ed.2d 338 (1976) (quoting Poller v. Columbia Broad., 368 U.S. 464, 473, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962)).

The Court has already set forth a number of relevant facts that are either undisputed or are matters of public record in a companion Opinion, issued today, which decides the motion for summary judgment filed by Danbury Pharmacal, Inc. and Watson Pharmaceuticals, Inc. (collectively "Watson") and Mylan Pharmaceuticals, Inc., Mylan Laboratories Inc. and Mylan Technologies Inc. (collectively "Mylan") in the patent infringement cases. See In re Buspirone, MDL No. 1410, slip op. at 6-26 (S.D.N.Y. Feb. 14, 2002) (Order No. 18) (Motion for Summary Judgment on Patent Infringement Claims). Familiarity with those factual recitations is assumed.

II.

Bristol-Myers moves to dismiss all of the federal and state antitrust claims based on Bristol-Myers's conduct in listing the '365 Patent in the Orange Book and then bringing its subsequent patent infringement suits against Mylan and Watson. As a basis for this motion, Bristol-Myers cites the Noerr-Pennington doctrine, which was articulated in Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961), and United Mine Workers v. Pennington, 381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965).

In Noerr, the Supreme Court held that "the Sherman Act does not prohibit two or more persons from associating together in an attempt to persuade the legislature or the executive to take particular action with respect to a law that would produce a restraint or a monopoly." Noerr, 365 U.S. at 136, 81 S.Ct. 523. Noting that the First Amendment to the United States Constitution grants citizens the fundamental right to petition the government with their views and wishes, the Court held that the Sherman Act should not be read in a way that might vitiate these rights by allowing for retaliatory antitrust lawsuits in response to the kinds of "political activity" through which "the people ... freely inform the government of their...