Mission Pharmacal Co. v. Virtus Pharm., LLC, Cause No. 5:13–CA–176–OLG.

• Citation: 23 F.Supp.3d 748
• Decision Date: 28 April 2014
• Docket Number: Cause No. 5:13–CA–176–OLG.
• Parties: MISSION PHARMACAL COMPANY, Plaintiff, v. VIRTUS PHARMACEUTICALS, LLC, Defendant.
• Court: U.S. District Court — Western District of Texas

23 F.Supp.3d 748

MISSION PHARMACAL COMPANY, Plaintiff,

v.VIRTUS PHARMACEUTICALS, LLC, Defendant.

Cause No. 5:13–CA–176–OLG.

United States District Court, W.D. Texas, San Antonio Division.

Signed April 28, 2014

Motion denied. Daniel A. Prati, Charles B. Walker, Jr., Fulbright & Jaworski LLP, Houston, TX, for Plaintiff.

Amanda Hyland, Brett Bartel, Jeffrey R. Kuester, W. Scott Creasman, Taylor English Duma, Atlanta, GA, Daniel A. Rogers, Tuggey, Rosenthal, Pauerstein, Sandoloski & Agather, LLP, Jonathan D. Pauerstein, Rosenthal Pauerstein Sandoloski Agather LLP, San Antonio, TX, for Defendant.

ORDER ADOPTING REPORT AND RECOMMENDATION

ORLANDO L. GARCIA, District Judge.

On this date came to be considered the Report and Recommendation (docket no. 99) of United States Magistrate Judge Pamela Mathy, in which she recommends the Court DENY Defendant's Motion for Partial Summary Judgment Regarding Plaintiff's False Advertising and Unfair Competition Claims Under the Lanham Act and Common Law Unfair Competition Claim (docket no. 79).

Defendant filed objections thereto (docket no. 101). When a party objects to a Magistrate Judge's Report and Recommendation, the Court must make a de novo determination of those portions of the report or proposed findings or recommendations to which objection is made. Kreimerman v. Casa Veerkamp, S.A. de C.V., 22 F.3d 634, 646 (5th Cir.1994); 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b). After conducting an independent review of the entire record, a de novo review of the matters raised by Defendant's objections, and the applicable law, this Court concludes the Magistrate Judge's Report and Recommendations should be fully accepted.

Therefore, having considered all of the papers filed in this case, the Magistrate Judge's Report and Recommendation, and the Parties' objections to the report, it is ORDERED the United States Magistrate Judge's Report and Recommendation is ACCEPTED pursuant to 28 U.S.C. § 636(b)(1). Therefore, it is ORDERED that Defendant's Motion for Partial Summary Judgment on Plaintiff's False Advertising and Unfair Competition Claims (docket no. 79) is DENIED.

It is so ORDERED.

REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE

¹

PAMELA A. MATHY, United States Magistrate Judge.

Pursuant to the order of referral in the above-styled and numbered cause of action to the undersigned United States Magistrate Judge ² and consistent with the authority vested in United States Magistrate Judges under the provisions of 28 U.S.C. § 636(b)(1)(B) and Rule 1(d) of the Local Rules for the Assignment of Duties to United States Magistrate Judges in the Western District of Texas, the following report is submitted for your review and consideration regarding defendant's motion for partial summary judgment as to plaintiff's false advertising and unfair competition claims, filed on February 7, 2014,³ and related submissions.

I. JURISDICTION

Plaintiff asserts claims for patent infringement under the laws of the United States, false advertising and unfair competition under the Lanham Act, and common law unfair competition, invoking jurisdiction under 15 U.S.C. §§ 1116 and 1121, and 28 U.S.C. §§ 1331, 1338 and 1367.

II. SUMMARY OF PROCEDURAL HISTORY and CLAIMS

Plaintiff Mission Pharmacal Company (“Mission”) initiated this suit on March 7, 2013, when it filed its four-page original complaint asserting a single claim of patent infringement under the laws of the United States against defendant Virtus Pharmaceuticals, LLC (“Virtus”).⁴ More specifically, Mission's original complaint alleged that Mission is the owner as assignee of United States Patent No. 6,521,247 (“the '247 patent”), that issued on February 18, 2003, which

claims, among other things, a nutritional supplement containing both a slowly dissolving and a rapidly dissolving iron compound, a method of alleviating iron deficiency with the dual iron nutritional supplement, and a method of making the dual iron nutritional supplement.⁵

Mission alleged that it sells CitraNatal® prescription prenatal supplements covered by the '247 patent and it understands Virtus manufactures, imports, sells, offers to sell, and induces others to sell, offer to sell, and use certain prenatal supplements including Natalvirt CA and Natalvirt 90 DHA whose formulation, use, and method of making are covered by claims of the '247 patent.⁶ As relief, Mission sought the award of a permanent injunction, actual damages not less than a reasonable royalty, pre- and post-judgment interest, attorneys' fees, and such other relief as may be appropriate.⁷ Mission demanded a trial by jury.⁸

On March 27, 2013, Virtus filed its answer to the original complaint that included affirmative defenses and a counterclaim seeking a declaratory judgment of noninfringement.⁹ On April 17, 2013, Mission filed its answer to Virtus' counterclaim.¹⁰

On May 14, 2013, the parties submitted a “Discovery Plan with Proposed Scheduling Order.” ¹¹ On June 5, 2013, the Court entered its initial scheduling order that essentially tracked the format of the proposed order submitted by the parties.¹² Among other deadlines, the order established a discovery cut-off date of October 10, 2013, a deadline for dispositive motions of October 24, 2013, a pretrial conference date of January 30, 2014, with jury selection and trial to begin on February 3, 2014. ¹³ On July 8, 2013, the Court entered a “Confidentiality and Protective Order.” ¹⁴

On July 1, 2013, Virtus filed an opposed motion to amend the scheduling order to provide, in sum, for certain “patent-specific deadlines” and a Markman hearing.¹⁵ Mission opposed the request.¹⁶ On September 4, 2013, the Court entered an order denying the motion to amend the scheduling order.¹⁷ On July 29, 2013, Virtus filed an amended answer and counterclaim.¹⁸ In the pleading, Virtus seeks declarations for both noninfringement and invalidity.¹⁹

Also on July 29, 2013, Mission filed its first amended complaint, asserting four claims in four separate counts: patent infringement, false advertising in violation of the Lanham Act, unfair competition in violation of the Lanham Act, and common law unfair competition.²⁰ More specifically, Mission alleges that it “manufactures and sells” prescription prenatal and iron supplements, CitraNatal Assure, CitraNatal 90 DHA, and Ferralet 90, each covered by the ' 247 patent (collectively “Mission Products”),²¹ and Virtus is “engaged in the manufacture, distribution, marketing, sale and/or offer for sale in this district and elsewhere of alleged generic versions of ... [the Mission Products]—which Virtus calls Natalvirt CA, Natalvirt 90 DHA, and Natalvirt FLT” (the “Virtus Products”), each of which “are covered by the claims of the ' 247 Patent.” ²² Mission alleges that “[t]hrough at least their labels, product inserts, and other marketing materials, Virtus has represented that Natalvirt CA, Natalvirt 90 DHA, and Natalvirt FLT use the same ingredients in the same amounts as” the Mission Products ²³ and “contain the same iron blend (carbonyl iron, ferrous gluconate)” as the Mission Products.²⁴ Mission alleges Virtus markets the Virtus Products “as generic equivalents to and substitutes for” the Mission Products,²⁵ “has had these knockoff products linked to” the Mission Products, and “has made no effort to differentiate” the Virtus Products from the Mission Products.²⁶ Mission asserts the Virtus Products are not generic equivalents to, or substitutes for, the Mission Products because they are not bioequivalents.²⁷

Further, Mission alleges Virtus has “falsely told national pharmaceutical databases that” the Virtus Products “use the ingredient ferrous gluconate and are therefore pharmaceutically equivalent.” ²⁸ Mission asserts Virtus' “advertisements and promotional claims” about the Virtus Products “are literally and/or impliedly false and misleading” because the Virtus Products “are not ‘generic,’ equivalent or substitutable for” the Mission Products “unless they have been demonstrated to deliver their active ingredients to patients at the same rate and in the same amount as” the Mission Products.²⁹ Mission alleges Virtus intentionally and knowingly incorporated into the Virtus Products “a ferrous gluconate formulated to delay the absorption of the iron compound” instead of the rapid-release compound found in the Mission Products, which is “likely to cause confusion, mistake or deception about the nature, characteristics and qualities of their knock-off solution in comparison, connection, or association with the Mission Products.” ³⁰ Specifically, Mission asserts the Virtus Products “cannot deliver iron to the patient at the same rate” as Mission Products because “[u]nlike the Mission Products, which contain[ ] a fast dissolving ferrous gluconate that absorbs quickly into the body,” the Virtus Products “use[ ] a ferrous gluconate formulated to delay its absorption.” ³¹

As relief, Mission seeks, in sum, preliminary and permanent injunctive relief to prevent the manufacture, distribution, use, sale or advertising of the Virtus Products or representing the Virtus Products are pharmaceutically equivalent to the Mission Products or can be freely interchanged with or substituted for the Mission Products.³² Mission seeks corrective action to (a) require Virtus to remove information linking the Virtus Products to the Mission Products “in any drug information databases and/or pricing systems in the United States;” (b) include in any advertisement or promotion of the Virtus Products

a notice in location and typeface as prominent as the comparison itself, that ‘[the Virtus Product] is not equivalent to [the Mission Pharmacal product]. Therefore, the substitution of this product for [the Mission Pharmacal product] may violate state law,

and (c) take further “corrective action to correct any erroneous impression persons may have derived concerning the nature, characteristics or qualities” of the Virtus products, “including...