Novartis Pharma AG v. Regeneron Pharm., Inc.

• Decision Date: 31 January 2022
• Docket Number: 1:20-CV-690 ’631 Patent case, 1:21-CV-1066 Antitrust case
• Citation: 582 F.Supp.3d 26
• Parties: NOVARTIS PHARMA AG; Novartis Pharmaceuticals Corporation; and Novartis Technology LLC, Plaintiffs, v. REGENERON PHARMACEUTICALS, INC., Defendant, Regeneron Pharmaceuticals, Inc., Counter Claimant, v. Novartis Pharma AG; Novartis Pharmaceuticals Corporation; and Novartis Technology LLC, Counter Defendants, Regeneron Pharmaceuticals, Inc., Plaintiff, v. Novartis Pharma AG; Novartis Technology LLC; Novartis Pharmaceuticals Corporation; and Vetter Pharma International GMBH, Defendants.
• Court: U.S. District Court — Northern District of New York

582 F.Supp.3d 26

NOVARTIS PHARMA AG; Novartis Pharmaceuticals Corporation; and Novartis Technology LLC, Plaintiffs,

v.REGENERON PHARMACEUTICALS, INC., Defendant,Regeneron Pharmaceuticals, Inc., Counter Claimant,

v.Novartis Pharma AG; Novartis Pharmaceuticals Corporation; and Novartis Technology LLC, Counter Defendants,Regeneron Pharmaceuticals, Inc., Plaintiff,

v.Novartis Pharma AG; Novartis Technology LLC; Novartis Pharmaceuticals Corporation; and Vetter Pharma International GMBH, Defendants.

1:20-CV-690 ’631 Patent case, 1:21-CV-1066 Antitrust case

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

Signed January 31, 2022

OF COUNSEL: GEORGE R. McGUIRE, ESQ., LOUIS ORBACH, ESQ., BOND SCHOENECK & KING, PLLC SYRACUSE, Attorneys for Novartis Pharma AG, Novartis Pharmaceuticals Corporation, and Novartis Technology LLC, One Lincoln Center, Syracuse, New York 13202.

OF COUNSEL: CALVIN E. WINGFIELD, ESQ., GOODWIN, PROCTER LAW FIRM NEW YORK OFFICE, Attorneys for Novartis Pharma AG, Novartis Pharmaceuticals Corporation, and Novartis Technology LLC, The New York Times Building, 620 Eighth Avenue, New York, New York 10018.

OF COUNSEL: MOLLY GRAMMEL, ESQ., GOODWIN, PROCTER LLP, Attorneys for Novartis Pharma AG, Novartis Pharmaceuticals Corporation, and Novartis Technology LLC, Exchange Place, 100 Northern Avenue, Boston, Massachusetts 02210.

OF COUNSEL: ANISH R. DESAI, ESQ., ELIZABETH WEISWASSER, ESQ., ERIC SHAUN HOCHSTADT, ESQ., JESSICA L. FALK, ESQ., JOHN REN, ESQ., WEIL GOTSHAL & MANGES LLP, Attorneys for Regeneron Pharmaceuticals, Inc., 767 Fifth Avenue, New York, New York 10153.

OF COUNSEL: DOUGLAS J. NASH, ESQ., JOHN D. COOK, ESQ., BARCLAY DAMON LLP-SYRACUSE, Attorneys for Regeneron Pharmaceuticals, Inc., Barclay Damon Tower, 125 East Jefferson Street, Syracuse, New York 13202.

OF COUNSEL: CHRISTOPHER PEPE, ESQ., MATTHEW SIEGER, ESQ., ROBERT T. VLASIS, III, ESQ., WEIL GOTSHAL & MANGES LLP, Attorneys for Regeneron Pharmaceuticals, Inc., 2001 M Street, Northwest-Suite 600, Washington, DC 20036.

OF COUNSEL: SUSAN E. FARLEY, ESQ., TEIGE P. SHEEHAN, ESQ., HESLIN, ROTHENBERG LAW FIRM, Attorneys for Vetter Pharma International GMBH, 5 Columbia Circle, Albany, New York 12203.

OF COUNSEL: BENJAMIN T. HORTON, ESQ., JULIANNE M. HARTZELL, ESQ., MARSHALL, GERSTEIN & BORUN, LLP, Attorneys for Vetter Pharma International GMBH, 6300 Willis Tower, 233 S. Wacker Drive, Chicago, Illinois 60606.

MEMORANDUM-DECISION and ORDER

DAVID N. HURD, United States District Judge

I. INTRODUCTION

On June 19, 2020, pharmaceutical companies Novartis Pharma AG, Novartis Pharmaceuticals Corporation, and Novartis Technology LLC (together "Novartis") filed a complaint (the "’631 Patent case") in this district alleging patent infringement against rival Regeneron Pharmaceuticals, Inc. ("Regeneron"). Essentially, Novartis claims that it has a valid patent for syringes which come pre-filled with a certain medication used to treat degenerative eye disease. By extension, Novartis takes issue with Regeneron's introduction of a competing prefilled syringe—designed to treat the same disease—into the market notwithstanding its patent.

On July 17, 2020, Regeneron fired back with a complaint of its own, alleging four antitrust claims and an additional claim for tortious interference with a contract (the "Antitrust case"). In addition to Novartis, Regeneron also directed some of these claims at Vetter Pharma International GMBH, a pharmaceutical supply chain provider whose niche in the medical marketplace includes filling Novartis's—and formerly Regeneron's—syringes.

According to Regeneron, Vetter and Novartis conspired together to circumvent a binding contract giving Regeneron an ownership interest in any of Vetter's innovations. At the same time, Regeneron claims that Vetter and Novartis defrauded the Patent and Trademark Office ("PTO") to secure for Novartis a stranglehold on the market for prefilled syringes designed to treat degenerative eye disease.

There are three separate pending motions in these two cases. First, in the ’631 Patent case, Novartis and Regeneron have submitted their opening claim construction briefs in advance of a potential hearing as contemplated by Markman v. Westview Instruments, Inc. , 517 U.S. 370, 116 S.Ct. 1384, 134 L.Ed.2d 577 (1996). Second, in the Antitrust case, Novartis and Vetter have both moved to dismiss Regeneron's complaint against them in its entirety under Federal Rule of Civil Procedure ("Rule") 12(b)(6). And third, in both cases, Regeneron has moved for a stay in proceedings while the PTO conducts an inter partes review of the validity of Novartis's patent. All three motions, having been fully briefed, will now be decided on the submissions and without oral argument.

II. BACKGROUND

At their core, these two cases are about three different drugs: EYLEA, made by Regeneron, and LUCENTIS and BEOVU, both made by Novartis.¹ Regeneron Pharms., Inc. v. Novartis Pharma AG , 1:21-CV-1066, Dkt. 87 ("Antitrust Compl."), ¶ 5. All three drugs are designed to inhibit the body's production of vascular endothelial growth factor ("VEGF"), a naturally occurring protein that erodes vision if overproduced, and in particularly extreme cases can cause blindness. Id. ¶¶ 5-6.

EYLEA, LUCENTIS, and BEOVU each need to be injected directly into the eye regularly to do their job as "anti-VEGF" agents. Antitrust Compl. ¶ 6. Traditionally, like most injectable liquids, EYLEA, LUCENTIS, and BEOVU were transported in vials. Id. The physician would then have to pierce the vial with a syringe, draw some of the drug out, and inject it into the patient's eye. Id.

A. Developing the Prefilled Syringe

According to Regeneron, though, it came up with a better idea. Regeneron claims that in 2005, it and Vetter began working together to develop a prefilled syringe ("PFS") that contained EYLEA. Antitrust Compl. ¶¶ 2, 152. The theory went that a prefilled syringe would remove the intermediate step of drawing out the drug, reducing the risk of contamination and making the process safer. Id. ¶¶ 76-81. As part of their collaboration, Vetter helped Regeneron by filling its syringes during the testing phase for the EYLEA PFS. Id. ¶ 152.

In addition to filling the EYLEA PFS systems, though, Regeneron alleges that it and Vetter also worked together to develop and commercialize the EYLEA PFS. Antitrust Compl. ¶ 152. That collaboration was carried out under an agreement styled the EYLEA PFS Development Agreement (the "Development Agreement"). Id.

According to Regeneron, by the terms of the Development Agreement, Regeneron could claim ownership rights to "any inventions, improvements, enhancements, or alike made during the Term [of the agreement] and conceived or reduced to practice or generated by Regeneron and/or Vetter" relating to an anti-VEGF delivered to Vetter by Regeneron. Antitrust Compl. ¶ 153. The Development Agreement apparently bore fruit, because the Australian government approved EYLEA FPS in 2012. Id. ¶ 154.

In the meantime, Regeneron alleges that Novartis and Vetter were also working together to produce a PFS. Antitrust Compl. ¶ 155. That collaboration was similarly successful, and Novartis and Vetter eventually produced LUCENTIS PFS. Id. ¶ 141. According to Regeneron, several Vetter employees made "significant contributions" along the way. Id. Regeneron further alleges that those significant contributions involved the same anti-VEGF drug from which EYLEA is made. Id. ¶ 143.

But Novartis and Vetter's joint efforts did not go off entirely without a hitch. Apparently, on February 27, 2013, Vetter sent Novartis a letter objecting to certain patent applications that Novartis had filed in Germany and Australia. Antitrust Compl. ¶ 142. At bottom, Vetter objected that Novartis claimed credit for inventions and improvements allegedly made by Vetter personnel. Id.

Novartis and Vetter met to discuss the matter, and apparently came to a final agreement signed by both parties by October 2, 2013 (the "2013 Amendment"). Antitrust Compl. ¶¶ 145-46. By the terms of that agreement, Novartis agreed that Vetter significantly contributed to developing its PFS patent family. Id. ¶ 146. It must be said, though, that the 2013 Amendment specifically excludes crediting Vetter with contributing to "any [i]nvention." Id.

On January 25, 2013, Novartis filed a patent for the LUCENTIS PFS ("the ’631 Patent"). Antitrust Compl. ¶ 143. The ’631 Patent relates back to Novartis's German patent, and apparently claims the same subject matter. Id. ¶ 144. What Regeneron claims the ’631 Patent does not do, however, is credit any Vetter employee as an inventor. Id. ¶ 147. To the extent any of them qualify, that poses a problem, because 35 U.S.C. § 116 requires that all inventors jointly file for a patent, unless a joint inventor refuses to join in the patent application or cannot be found.

The PTO issued the ’631 Patent on December 29, 2015. Antitrust Compl. ¶ 147. Apparently, Novartis only planned on marketing LUCENTIS PFS outside the United States. See Id. ¶ 53. For the purposes of serving the United States ("U.S.") market, Novartis licensed the patent for the LUCENTIS PFS to a separate company, Genentech, Inc. ("Genentech"). Id. ¶¶ 53-54. Genentech then launched LUCENTIS PFS in the U.S. in early 2017. Id. ¶ 84. According to Regeneron, Novartis has a 33.3% ownership stake in Genentech's parent company, Roche. Id. And in any case, when BEOVU PFS—another anti-VEGF—is launched, Novartis appears to intend to market it in the U.S. Id. ¶ 2.

Summing up, according to Regeneron, Novartis got the jump on its efforts to market an anti-VEGF PFS. But in doing so, Novartis allegedly recruited Vetter's help. Regeneron claims that Novartis's overture towards Vetter violates its rights because any ideas by Vetter relating to EYLEA PSF were contractually Regeneron's property.

And because one of the drugs used in developing the LUCENTA PSF was functionally identical to EYLEA, Regeneron claims that Vetter's contributions to that patent qualified...