In re Ciprofloxacin Hydrochloride Antitrust Lit.

• Citation: 363 F.Supp.2d 514
• Decision Date: 31 March 2005
• Docket Number: No. 1:00MDL1383DGT.,1:00MDL1383DGT.
• Parties: In re CIPROFLOXACIN HYDROCHLORIDE ANTITRUST LITIGATION
• Court: United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)

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363 F.Supp.2d 514

In re CIPROFLOXACIN HYDROCHLORIDE ANTITRUST LITIGATION

No. 1:00MDL1383DGT.

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

March 31, 2005.

Bernard Persky, Goodkind Labaton Rudoff & Sucharow, LLP, Bruce E. Gerstein, Garwin, Bronzaft, Gertein & Fisher, LLP, Linda P. Nussbaum, Cohen, Milstein, Hausfeld & Toll, P.L.L.C., Joseph Lipofsky, Joseph S. Tusa, Zwerling, Schachter & Zwerling, LLP, Wallace A. Showman, Law Office of Wallace A. Showman, Richard B. Brualdi, The Brualdi Law Firm, M. Christine Carty, Schnader Harrison Segal & Lewis, LLP, Jules Brody, Stull, Stull & Brody, New York, NY, Marc H. Edelson, Hoffman & Edelson, Doylestown, PA, Peter L. Masnik, Kalikman & Masnik, Haddonfield, NJ, John G. Odom, Odom & Des Roches, New Orleans, LA, Elwood S. Simon, Elwood S. Simon & Associates, P.C., Birminghan, MI, James P. Watts, Zimmerman Reed, PLLC, Frank Verderame, Plattner Verderame, PC Phoenix, AZ Daniel C. Girard, Eric H. Gibbs, Girard & Green, David L. Fiol, Eric B. Fastiff, Joseph R. Saveri, Lieff Cabraser Heimann & Bernstein, LLP, Andrew J. Ogilvie, Mark F. Anderson, Kemnitzer Anderson Barron & Ogilvie, Jennifer S. Abrams, Joseph J. Tabacco Berman Devalerio Pease & Tabacco, Guido Saveri, Saveri & Saveri, Richard Saveri, Saveri Law Group, Inc., Mario N. Alioto, Trump, Alioto, Trump & Prescott, LLP, San Francisco, CA, Michael Hackard, Hackard, Holt & Heller, Gold River, CA, Kenneth A. Wexler, The Wexler Firm, Chicago, IL, Samuel D. Heins, Heins Mills & Olson, P.L.C., Daniel E. Gustafson, Heins Mills & Olson, P.L.C., Karla Marie Gluek, Heins Mills & Olson, P.L.C., Minneapolis, MN, Sharon T. Maier, Ross Dixon & Bell, LLP, Jeffrey R. Krinsk, Finkelstein and Krinsk, San Diego, CA, Kevin I. Goldberg, Goldberg & Finnegan, Robert Keith Jenner, Greenberg & Bederman, Silver Spring, MD, Andrew Bennett Spark, Law Office Of Andrew Bennett Spark, Esq., Ralph L. Friedland, Lawserv, Chartered, Andrew B. Spark, Andrew B. Spark, Esq., Sarasota, FL, Kenneth J. Vianale, Vianale & Vianale, LLP, Boca Raton, FL, David A. Nester, Nester & Constance, Belleville, IL, Joseph P. Danis, Carey & Danis, St. Louis, MO, Dan Drachler, Seattle, WA, Monica L. Rebuck, Hangley Aronchick Segal & Pudlin, Steve D. Shadowen, Harrisburg, PA, Michael Straus, Straus & Boies, Birmingham, AL, B. J. Wade, Glassman Edwards Wade & Wyatt, P.C., Memphis, TN, William M. Audet, The Alexander Law Firm, San Jose, CA, William H. Garvin, III, Law Offices Of William H. Garvin III, P.A., Tallahassee, FL, John C. Cabaniss, Law Offices of John C. Cabaniss, Milwaukee, WI, for Plaintiffs.

Peter B. Bensinger, Jr., Paul J. Skiermont, Fred H. Bartlit, Jr., Michael J. Valaik, Jeffrey Hall, Bartlit, Beck, Herman, Palenchar & Scott, LLP Chicago, IL, David E. Everson, Stinson, Mag & Fizzell, P.C., Victoria Lee Smith, Stinson, Morrison, Hecker, LLP,Kansas City, MO, Jonathan L. Greenblatt, Shearman & Sterling, Karen N. Walker, Kirkland & Ellis,Kevin D. McDonald, William V. O'Reilly, Sarah Dryden Mackey,Jones, Day, Reavis & Pogue, Thomas D. Yannucci, Kirkland & Ellis,Washington, DC,Joseph Serino, Jr., Kirkland & Ellis, Lawrence D. Rosenberg, Barbra S. Levy, Jones, Day, Reavis & Pogue, Kimberly S. Penner, McCarter & English, LLP,New York, NY, Patrick Xavier Fowler, Snell & Wilmer, LLP,Phoenix, AZ, Amy A. Stathos, Jeffrey A. Levee, Jones Day Reavis & Pogue, Los Angeles, CA, Christopher J. Healey, Luce Forward Hamilton and Scripps, San Diego, CA, John Kevin Carey, Joseph Ianno, Jr., Carlton Fields, P.A., West Palm Beach, FL,Heather S. Woodson, Stinson, Mag & Frizzell, P.C., Leawood, KS, Mark Alan Jacobson, Lindquist & Vennum, Minneapolis, MN, Karen A. Confoy, Sterns & Weinroth, P.C., Trenton, NJ, Miriam S. Higgins, Heartshare Human Services of New York, Brooklyn, NY, Anna M. Grizzle, Dale R. Grimes,Robert E. Cooper, Jr.,Bass Berry & Sims, Nashville, TN, James D. Wilson, Harris Shelton Dunlap Cobb & Ryder, Memphis, TN, Kristine A. Edwards, Stephen P. Hurley, Hurley Burnish & Milliken, Madison, WI, for Defendants.

MEMORANDUM AND ORDER

TRAGER, District Judge.

This action involves agreements between the brand-name manufacturer of the widely used antibiotic ciprofloxacin hydrochloride ("Cipro") and potential generic manufacturers of Cipro. The brand-name manufacturer, Bayer AG, a German company, and its American subsidiary, Bayer Corporation (collectively, "Bayer") and the generics, Barr Laboratories, Inc. ("Barr"); The Rugby Group, Inc. ("Rugby"); Hoechst Marion Roussel, Inc. ("HMR"); and Watson Pharmaceuticals, Inc. ("Watson") (collectively, "generic defendants")¹ entered into agreements that Direct Purchaser Plaintiffs ("direct plaintiffs") and Indirect Purchaser Class Plaintiffs ("indirect plaintiffs") allege prevented competition in the market for Cipro in violation of federal and state antitrust laws.² Plaintiffs previously filed motions for partial summary judgment seeking a determination that these agreements were per se unlawful under Section 1 of the Sherman Act, 15 U.S.C. § 1 (and various state antitrust and consumer protection laws), which were denied. Subsequently, indirect plaintiffs amended their complaint to add a new count, Count V, alleging Walker Process-type³ and sham litigation antitrust violations under state law.

Bayer and generic defendants have now each filed motions for summary judgment asserting that these agreements do not violate Section 1 of the Sherman Act because they had no anti-competitive effects beyond the scope of Bayer's patent on ciprofloxacin, while direct plaintiffs have filed a motion for partial summary judgment arguing that the agreements meet the "anti-competitive conduct" requirement of Section 1 of the Sherman Act and the "antitrust injury" requirement of the Section 4 of the Clayton Act. Bayer has also filed two motions relating to Count V of indirect plaintiffs' second amended complaint ("Count V"). The first, a motion to dismiss Count V, is made on the grounds that indirect plaintiffs' state law Walker Process-type claim is preempted by federal patent law and is barred by the statute of limitations. The second, filed in the event Count V is not dismissed, is a motion for summary judgment on Count V on the grounds that indirect plaintiffs have failed to demonstrate that any misrepresentations or omissions made by Bayer in prosecuting its patent were so highly material that the patent would not have issued but for the alleged deceptions and that plaintiffs' sham litigation claim fails as a matter of law. Finally, HMR and Rugby have filed a motion for summary judgment that indirect plaintiffs' claims against them are barred by the doctrine of Illinois Brick⁴ and that any rights assigned to indirect plaintiffs do not include claims against HMR.

Background

The statutory and regulatory background, as well as the circumstances of this case, were fully described in the court's initial opinion, In re Ciprofloxacin Hydrochloride Antitrust Litig., 166 F.Supp.2d 740 (E.D.N.Y.2001) ("Cipro I") (granting certain plaintiffs' motions to remand to state court). The developments in the case were further discussed and analyzed in a second opinion, In re Ciprofloxacin Hydrochloride Antitrust Litig., 261 F.Supp.2d 188 (E.D.N.Y.2003) ("Cipro II") (granting in part and denying in part defendants' motions to dismiss, and denying plaintiffs' motion for partial summary judgment asserting that the agreements constituted per se violations of the antitrust laws). Familiarity with those decisions is presumed, and what follows is a summary of only those facts necessary for the resolution of the pending motions.

Bayer is the assignee of U.S. Patent No. 4,670,444 ("the '444 Patent"), a compound patent which claims the chemical entity that is the active ingredient in Cipro — ciprofloxacin hydrochloride — and all its generic equivalents. See Cipro II, 261 F.Supp.2d at 249 ("A patent on a compound that is the only active ingredient in a drug covers all generic versions of that drug .... regardless of how formulated, processed or delivered...."). The '444 Patent issued on June 2, 1987 from patent application Ser. No. 614,923 ("the '923 application"), which was filed on May 29, 1984. The '923 application was filed as a continuation-in-part⁵ of Ser. No. 292,560 ("the '560 application"), which was filed on August 13, 1981, and Ser. No. 436,112 ("the '112 application"), which was filed on October 22, 1982. See App. to Aff. of Paul J. Skiermont in Support of Bayer's Mot. for Partial Summ. J. on Count V of the Indir. Pls.' Proposed Second Am. Consol. Class Action Compl. ("Bayer Count V App."), Ex. 1.

In October 1987, Bayer's predecessor, Miles, Inc., obtained FDA approval to market Cipro in the United States. Cipro II, 261 F.Supp.2d at 194. From 1987 until 2004, Bayer was the only producer of Cipro in the United States. Id. On October 22, 1991, Barr filed Abbreviated New Drug Application ("ANDA") 74-124 for permission to market a generic version of Cipro, and included a Paragraph IV certification, seeking permission to market its generic drug before expiration of the '444 Patent on the grounds that the patent was invalid and unenforceable. Id. Because the '444 Patent claims the active ingredient in Cipro and because Barr was required in its ANDA to certify that its generic version of Cipro was bioequivalent to Bayer's Cipro, there is no dispute that Barr's product would have infringed Bayer's patent. Cipro II, at 249; see also App. to Aff. of Paul J. Skiermont in Support of Bayer's Mot. for Partial Summ. J. on Pls. Claims Under the Sherman Act and Corr. State Law Claims ("Bayer Sherman Act App."), Tab 5 (Stipulation and Order (Barr's stipulation that it infringed the '444 Patent)).

Pursuant to the Hatch-Waxman Amendments to the Federal Food, Drug and Cosmetic Act, 21 U.S.C. § 355, on December 6, 1991, Barr notified Bayer of its ANDA IV filing, and on January 16, 1992, Bayer sued Barr for patent infringement in the Southern District of New York...