In re Ddavp Direct Purchaser Antitrust Litigation

• Decision Date: 16 October 2009
• Docket Number: Docket No. 06-5525-cv.
• Citation: 585 F.3d 677
• Parties: In re DDAVP DIRECT PURCHASER ANTITRUST LITIGATION. Meijer, Inc., Meijer Distribution, Inc., on behalf of themselves and all others similarly situated, Plaintiffs-Appellants, Rochester Drug Co-Operative, Inc., Louisiana Wholesale Drug Co., Inc., Consolidated-Plaintiffs-Appellants, v. Ferring B.V., Ferring Pharmaceuticals, Inc., Aventis Pharmaceuticals, Inc., Defendants-Appellees, v. Vista Healthplan, Inc., on behalf of itself and all others, Pennsylvania Employees Benefit Trust Fund, on behalf of itself and all others, Painters District Council No. 30 Health and Welfare Fund, Philadelphia Federation of Teachers Health and Welfare Fund, Consolidated Plaintiffs.
• Court: U.S. Court of Appeals — Second Circuit

585 F.3d 677

In re DDAVP DIRECT PURCHASER ANTITRUST LITIGATION.

Meijer, Inc., Meijer Distribution, Inc., on behalf of themselves and all others similarly situated, Plaintiffs-Appellants, Rochester Drug Co-Operative, Inc., Louisiana Wholesale Drug Co., Inc., Consolidated-Plaintiffs-Appellants, v. Ferring B.V., Ferring Pharmaceuticals, Inc., Aventis Pharmaceuticals, Inc., Defendants-Appellees, v. Vista Healthplan, Inc., on behalf of itself and all others, Pennsylvania Employees Benefit Trust Fund, on behalf of itself and all others, Painters District Council No. 30 Health and Welfare Fund, Philadelphia Federation of Teachers Health and Welfare Fund, Consolidated Plaintiffs.

Docket No. 06-5525-cv.

United States Court of Appeals, Second Circuit.

Argued: September 15, 2008.

Decided: October 16, 2009.

David F. Sorensen, (Daniel Berger, Daniel C. Simons, on the brief), Berger & Montague, P.C., Philadelphia, PA, Bruce Gerstein, Adam Steinfeld, Garwin Gerstein & Fisher, LLP, New York, NY, Linda P. Nussbaum, Kaplan Fox & Kilsheimer, LLP, New York, NY, for Plaintiffs-Appellants.

Douglas L. Wald, (William J. Baer, Barbara H. Wootton, Jon J. Nathan, on the brief), Arnold & Porter LLP, Washington, DC, for Defendants-Appellees Ferring B.V. and Ferring Pharmaceuticals, Inc.

Julia E. McEvoy, (Donald B. Ayer, John M. Majoras, Donald Earl Childress III, Christopher R. Farrell, on the brief), Jones Day, Washington, DC, for Defendant-Appellee Aventis Pharmaceuticals, Inc.

James J. Fredericks, (Thomas O. Barnett, Assistant Attorney General, Gerald F. Masoudi, Deputy Assistant Attorney General, Robert B. Nicholson, Attorney, on the brief), U.S. Department of Justice, Washington, DC, William Blumental, General Counsel, Federal Trade Commission, Washington, DC, for Amici Curiae United States and Federal Trade Commission.

J. Douglas Richards, Pomerantz Haudek Block Grossman & Gross LLP, New York, NY, for Amici Curiae the American Antitrust Institute, AARP, the Consumer Federation of America, Consumers Union, and Families USA.

Andrew W. Cuomo, Attorney General of the State of New York, Barbara D. Underwood, Solicitor General, Benjamin N. Gutman, Deputy Solicitor General, Jay L. Himes, Chief, Antitrust Bureau, Robert L. Hubbard, Director of Litigation, Antitrust Bureau, of counsel, New York, NY, for Amici Curiae the States of New York, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Montana, New Hampshire, New Jersey, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Vermont, Washington, West Virginia, Wisconsin,

and Wyoming, and the District of Columbia and Puerto Rico.

Margaret M. Zwisler, Charles R. Price, Latham & Watkins LLP, Washington, DC, Diane E. Bieri, Pharmaceutical Research and Manufacturers of America, Washington, DC, Thomas DiLenge, Biotechnology Industry Organization, Washington, DC, for Amici Curiae the Pharmaceutical Research and Manufacturers of America and the Biotechnology Industry Organization.

Before: FEINBERG, WALKER, and LIVINGSTON, Circuit Judges.

JOHN M. WALKER, JR., Circuit Judge:

This case presents a novel question of standing that lies at the junction of antitrust and patent law. The plaintiffs, direct purchasers of desmopressin acetate tablets (sold under the name DDAVP), filed this class action in the Southern District of New York (Charles L. Brieant, Judge) against the defendants Ferring B.V., Ferring Pharmaceuticals (collectively, "Ferring"), and Aventis Pharmaceuticals ("Aventis"), alleging that Ferring and Aventis abused the patent system to unlawfully maintain a monopoly over DDAVP. Ferring developed, patented, and manufactures DDAVP, and Aventis holds FDA approval for DDAVP tablets as well as a license from Ferring to market and sell the drug. The plaintiffs alleged that Ferring and Aventis inflated the price of DDAVP by suppressing generic competition for the tablets in violation of the antitrust laws. The district court dismissed the suit, concluding that the plaintiffs both lacked antitrust standing and had failed to state a claim upon which relief could be granted. This appeal followed.

BACKGROUND

The facts that follow are either undisputed or, because they are properly pled, presumed true for the purposes of this appeal at the pleading stage. See Diaz v. Paterson, 547 F.3d 88, 91 (2d Cir.2008).

DDAVP is an antidiuretic prescription medication used to manage a form of diabetes, excessive urination, excessive thirst, and bed wetting. Ferring developed and manufactures DDAVP and owns U.S. Patent No. 5,047,398 (the "'398 patent"), which claims the compound in tablet form. Ferring filed its application for the '398 patent on December 17, 1985, and the Patent and Trade Office ("PTO") issued the patent on September 10, 1991. Ferring granted an exclusive license to Aventis to market and sell the patented tablets under the DDAVP name. In addition to its license from Ferring, Aventis also holds an approved New Drug Application ("NDA") from the FDA for the tablets. A manufacturer seeking to market a new drug must file an NDA to demonstrate the drug's safety and efficacy.

In 2002, Ferring filed a patent infringement suit against Barr Laboratories, Inc. ("Barr"), which came before the same district judge who later presided over this action. Earlier that year, Barr had filed an Abbreviated New Drug Application ("ANDA") for a generic version of the compound. An ANDA filing accelerates the approval process for a generic drug by allowing the manufacturer to rely on the safety and efficacy data provided in the NDA for the drug's branded counterpart. As part of the ANDA, Barr filed a certification (called a "paragraph IV certification") stating that the '398 patent was invalid, unenforceable, and/or would not be infringed by Barr's generic product. This filing triggered Ferring's infringement action against Barr pursuant to 35 U.S.C. § 271(e)(2).

Ferring's suit failed. On summary judgment, the district court found that the '398 patent, rather than having been infringed by Barr, was unenforceable due to inequitable conduct before the PTO by Ferring and its agents. Ferring B.V. v. Barr Labs., Inc., No. 7:02-CV-9851, 2005 WL 437981, at *10 (S.D.N.Y. Feb.7, 2005). The Federal Circuit affirmed. See Ferring B.V. v. Barr Labs., Inc. ("Ferring I"), 437 F.3d 1181 (Fed.Cir.2006).

The inequitable conduct that crippled the '398 patent occurred on the patent's troubled path to approval. In November 1986, PTO examiners rejected certain of the '398 patent's claims as anticipated by or obvious from U.S. Patent No. 3,497,491 (the "'491 patent"), a patent exclusively licensed to Ferring that subsequently expired in 1987. See id. at 1183-84. The Board of Patent Appeals and Interferences ("BPAI") affirmed the examiners' rejection in September 1990, but on slightly different grounds: relying only on the '491 patent, the BPAI concluded that the '491 patent rendered the '398 patent "obvious" when considered "in light of" a 1973 article written by Ivan Vavra. Id. at 1184. In November 1990, in an effort to persuade the examiners of the '398 patent's novelty, the applicants, two Ferring employees who assigned their prospective patent rights to Ferring, submitted declarations from several scientists stating that the '491 patent and Vavra article did not suggest the '398 patent. Id. at 1185. It turned out, however, that four of the five declarants previously had either "been employed or had received research funds from Ferring," facts that the submissions failed to disclose to the PTO. See id. On the strength of these declarations, the earlier rejection notwithstanding, the PTO issued the '398 patent in September 1991. See id. at 1185, 1188-89. The district judge found this non-disclosure to be inequitable conduct in the Barr litigation, and determined the patent to be unenforceable. See id. at 1194-95.

Upon de novo review, the Federal Circuit held both that the undisclosed affiliations would have been material to the examiners' decision to issue the '398 patent, see id. at 1187-90, and that the evidence suggested that the affiants' previous relationships with Ferring were "deliberately concealed," id. at 1193. The Federal Circuit therefore concluded that the district court had not abused its discretion in finding inequitable conduct, see id. at 1194-95, rendering the '398 patent unenforceable as against Barr and all other parties.

Less than two months after the Federal Circuit's February 2006 ruling, the direct purchaser plaintiffs filed the instant suit. The plaintiffs argue that the defendants' conduct, in addition to making the '398 patent unenforceable, violated the antitrust laws. They allege that defendants Ferring and Aventis "engaged in an exclusionary scheme" that included (1) "[p]rocuring the '398 patent by committing fraud and/or engaging in inequitable conduct before the PTO," (2) "[i]mproperly listing the fraudulently obtained '398 patent in the [FDA's] Orange Book," thereby enabling patent infringement claims against potential competitors, (3) prosecuting sham infringement litigation against generic competitors, and (4) "filing a sham citizen petition to further delay FDA final approval of Barr's ANDA." Compl. ¶ 144. The plaintiffs claim that the lack of competing, generic versions of DDAVP injured them by forcing them to pay monopolistic prices for the drug.

Ferring and Aventis jointly moved to dismiss the complaint on the basis that, inter alia, the plaintiffs lacked standing to assert their claimed antitrust violations. Aventis separately moved to dismiss the case on the ground that the plaintiffs had not sufficiently alleged misconduct against it. The district court granted both motions and dismissed the antitrust action. See In re DDAVP Direct Purchaser Antitrust Litig., No. 05 Cv. 2237,...