Mylan Inc. v. Smithkline Beecham Corp.

• Decision Date: 16 July 2014
• Docket Number: Civil Action No. 10-cv-4809
• Parties: MYLAN INC. and MYLAN PHARMACEUTICALS INC., Plaintiffs, v. SMITHKLINE BEECHAM CORPORATION d/b/a GLAXOSMITHKLINE, SMITHKLINE BEECHAM P.L.C., and SMITHKLINE BEECHAM (CORK) LIMITED, Defendants.
• Court: U.S. District Court — District of New Jersey

MYLAN INC. and MYLAN

PHARMACEUTICALS INC., Plaintiffs, v. SMITHKLINE BEECHAM CORPORATION d/b/a

GLAXOSMITHKLINE, SMITHKLINE

BEECHAM P.L.C., and SMITHKLINE

BEECHAM (CORK) LIMITED, Defendants.

Civil Action No. 10-cv-4809

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY

Dated: July 16, 2014

NOT FOR PUBLICATION

OPINION

PISANO, District Judge

Presently before the Court are three (3) post-trial motions: (1) Plaintiffs', Mylan Inc. and Mylan Pharmaceuticals, Inc. (collectively "Plaintiff" or "Mylan") motion for permanent injunctive relief and an accounting by Defendants, Smithkline Beecham Corporation d/b/a Glaxosmithkline, Smithkline Beecham P.L.C., and Smithkline Beecham (Cork) Limited (collectively "Defendants" or "GSK") [docket #384]; (2) Plaintiffs' motion for prejudgment interest pursuant to Federal Rule of Civil Procedure 59(e) [docket #394]; and (3) Defendants' motion for judgment as a matter of law ("JMOL"), new trial, and/or remittitur [docket #399]. The parties have each opposed the respective motions. The Court considered the papers filed by the parties and rules on the written submissions without oral argument pursuant to Federal Rule of Civil Procedure 78. For the reasons set forth below, this Court grants Plaintiffs' motion for permanent injunctive relief and an accounting; grants in part and denies in part Plaintiffs' motion for prejudgment interest; and denies Defendants' motion for judgment as a matter of law, new trial, and/or remittitur.

I. BACKGROUND AND PROCEDURAL HISTORY

In June 2007, GSK sued Mylan for infringing U.S. Patent No. 7,229,640 ("the '640 patent"), which relates to the antidepressant drug Paxil CR. Mylan Inc. v. SmithKline Beecham Corp., CIV.A. 10-4809 JAP, 2012 WL 603804 (D.N.J. Feb. 23, 2012) aff'd in part, vacated in part, rev'd in part, 723 F.3d 413 (3d Cir. 2013). To settle the '640 patent litigation, GSK and Mylan entered into a Patent License and Settlement Agreement ("the License Agreement") on August 10, 2007. Id. The original License Agreement granted Mylan an exclusive license (even as to GSK) under the '640 patent to sell generic Paxil CR for the remaining life (approximately nine (9) years) of the '640 patent in exchange for a royalty. Id. In light of Federal Trade Commission ("FTC") concerns surrounding the exclusivity of the agreement, the parties had further negotiations and subsequently executed a Second Amendment to the License Agreement in September 2007. See Declaration of Gary D. Adamson ("Adamson Dec.") at Ex. A., Trial Tr. 267:7-24 (Ondos), 269:6-13 (Ondos), 503:20-504:19 (Parker). The Second Amendment provided two (2) limited exceptions to Mylan's exclusivity under the License Agreement: (1) where GSK was notified that a Third Party generic pharmaceutical company had filed an Abbreviated New Drug Application ("ANDA") for Paroxetine CR, and GSK initiated a patent infringement action, GSK could settle that litigation by entering into a license agreement; or (2) GSK or its Affiliate could commence marketing and selling its own AG Paxil CR no less than two (2) years after Mylan launched its generic Paroxetine CR products. Adamson Dec. at Ex. A, Trial Tr. 270:7-272:7 (Ondos); 513:3-515:11 (Parker).

On July 1, 2010, GSK settled a litigation with Apotex and as part of this settlement, GSK agreed to enter into a supply and distribution agreement whereby GSK would supply Apotex with paroxetine CR, which Apotex would then market and sell to downstream customers as AG PaxilCR. Adamson Dec. at Ex. A, Trial Tr. 1127:12-1128:13 (Siek). After learning that Apotex was attempting to take orders from generic paroxetine CR customers, Mylan filed a Complaint against GSK and Apotex on September 20, 2010, alleging four (4) causes of action: (1) breach of contract by GSK; (2) breach of the implied covenant of good faith and fair dealing by GSK; (3) inducement to breach a contract by Apotex; and (4) tortious interference with a contract by Apotex. See Mylan, 2012 WL 603804, at *3. Mylan also sought a preliminary injunction against GSK and Apotex seeking to prohibit GSK's manufacturing, distributing, and selling of authorized generic Paxil CR and to prevent the launch of Apotex's authorized generic Paxil CR. Id. This Court denied Mylan's preliminary injunction¹ and on October 28, 2010, Apotex commenced marketing and selling AG Paxil CR manufactured and supplied by GSK in competition with Mylan. Adamson Dec. at Ex. A, Trial Tr. 914:25-915:4 (Gleason).

The crux of this litigation has focused on whether GSK breached the second exception of the Second Amendment to the License Agreement. Apotex did not file an ANDA; therefore, the parties have not disputed that the first exception (which permits GSK to license Paroxetine CR by way of a settlement with an ANDA filer) does not apply. Further, the parties agree that Apotex is not an affiliate of GSK. Thus, the central issue in this case has been whether the parties intended the second exception (which permits GSK or its Affiliate to market and sell AG Paxil CR after two (2) years subsequent to Mylan's launch) to mean that GSK may market and sell through a third party generic manufacturer such as Apotex. Mylan alleged that the parties intended the second exception to mean that only GSK could market and sell to downstream customers and that GSK breached the License Agreement because the supply and distribution agreement with Apotexdid not constitute marketing and selling. GSK on the other hand, contended that its supply and distribution agreement with Apotex was in fact GSK marketing and selling as intended by the parties, and because the second exception did not limit to whom GSK could market and sell, it was not in breach of the License Agreement.

To this effect, on November 4, 2011, GSK filed a motion for summary judgment [docket #183] arguing that the plain language of the License Agreement was clear and unambiguous in that it permitted GSK to enter into its supply and distribution agreement with Apotex.² On February 23, 2012, this Court agreed with GSK and granted its motion for summary judgment, holding that the License Agreement between Mylan and GSK was clear and unambiguous and therefore, the terms therein should be given their plain and ordinary meaning. See Mylan, 2012 WL 603804, at *5 (". . . [T]he Court concludes that the language of the License Agreement is clear and permits GSK to market and sell to whomever it wants, including Apotex."). Mylan appealed this ruling, and on July 22, 2013, the Third Circuit reversed on the breach of contract claim, holding that a genuine issue of material fact existed regarding whether the License Agreement limited to whom GSK could market and sell after Mylan's two (2) year period of generic exclusivity, precluding summary judgment on Mylan's breach of contract claim against GSK under New Jersey law.³ Mylan Inc. v. SmithKline Beecham Corp., 723 F.3d 413, 420 (3d Cir. 2013). As such, the Third Circuit remanded the case to this Court to proceed to trial on Mylan's breach of contract claim.

The parties proceeded to trial on the breach of contract claim on March 13, 2014. After nearly two (2) weeks, the trial concluded on March 25, 2014, and the jury returned a verdict infavor of Mylan finding that GSK's agreement with Apotex breached the License Agreement and entitled Mylan to $106,700,000 in damages.⁴ The instant motions followed.

II. DISCUSSION

A. Motion for Permanent Injunctive Relief and an Accounting

a. Legal Standard

"According to well-established principles of equity, a plaintiff seeking a permanent injunction must satisfy a four-factor test before a court may grant such relief. A plaintiff must demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction." eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391, 126 S. Ct. 1837, 1839, 164 L. Ed. 2d 641 (2006) (citing Weinberger v. Romero—Barcelo, 456 U.S. 305, 311-313, 102 S.Ct. 1798, 72 L.Ed.2d 91 (1982); Amoco Production Co. v. Gambell, 480 U.S. 531, 542, 107 S.Ct. 1396, 94 L.Ed.2d 542 (1987)). "The decision to grant or deny permanent injunctive relief is an act of equitable discretion by the district court . . ." and is based on traditional equitable considerations surrounding the unique set of circumstances in each case. Id. at 391-94.

Further, where a defendant continues to engage in the precise conduct that was found by the jury to constitute a breach, it is within a courts discretion to order an accounting to calculate supplemental damages for the continued harm incurred after the return of a jury verdict. See Sanofi-Aventis Deutschland GmbH v. Glenmark Pharm. Inc., 821 F. Supp. 2d 681, 697 (D.N.J.2011) aff'd and remanded sub nom. Sanofi-Aventis Deutschland GmbH v. Glenmark Pharm. Inc., USA, 748 F.3d 1354 (Fed. Cir. 2014) (where jury returned a verdict in favor of Plaintiff and Defendant continued to sell generic product, the Court ordered an accounting to calculate Plaintiff's supplemental damages.).

b. Analysis

"The first two prongs of the permanent injunction test are often considered together. Although irreparable injury and inadequacy of legal remedy are not always the same, demonstrating that plaintiff will suffer irreparable injury is a "common method" of showing there is no adequate legal remedy." Port Drivers Fed'n 18, Inc. v. All Saints Exp., Inc., 757 F. Supp. 2d 443, 460 (D.N.J. 2010) (citation omitted). Here, Mylan has demonstrated that it suffered an irreparable injury and that monetary damages are inadequate to compensate for such injury. Specifically, GSK has continued to engage in the precise conduct that the jury found to be a breach. Stated differently, until such time that GSK ceases supplying Apotex with Paroxetine...