Orexo AB v. Actavis Elizabeth LLC

• Decision Date: 12 March 2019
• Docket Number: Civil Action No. 17-205-CFC
• Citation: 371 F.Supp.3d 175
• Court: U.S. District Court — District of Delaware
• Parties: OREXO AB and Orexo US, Inc., Plaintiffs, v. ACTAVIS ELIZABETH LLC, Actavis Pharma, Inc., Teva Pharmaceuticals USA, Inc., and Teva Pharmaceutical Industries, Ltd., Defendants.

371 F.Supp.3d 175

OREXO AB and Orexo US, Inc., Plaintiffs,

v.ACTAVIS ELIZABETH LLC, Actavis Pharma, Inc., Teva Pharmaceuticals USA, Inc., and Teva Pharmaceutical Industries, Ltd., Defendants.

Civil Action No. 17-205-CFC

United States District Court, D. Delaware.

Signed March 12, 2019

Jack B. Blumenfeld, Derek J. Fahnestock, MORRIS, NICHOLS, ARSHT & TUNNELL LLP, Wilmington, Delaware; Errol B. Taylor, Fredrick M. Zullow, Anna Brook, Jordan P. Markham, Kyanna Lewis, Nathaniel T. Brow and, Venus Allahyarzadeh, MILBANK, TWEED, HADLEY & MCCLOY LLP, New York, New York, Counsel for Plaintiffs.

John C. Phillips, Jr., David A. Bilson, PHILLIPS, GOLDMAN, MCLAUGHLIN, & HALL, P.A., Wilmington, Delaware; George C. Lombardi, Michael K. Nutter, Ivan M. Poullaos, John R. McNair, WINSTON & STRAWN LLP, Chicago, Illinois; Nimalka R. Wickramasekera, WINSTON & STRAWN LLP, Los Angeles, California, Counsel for Defendants.

MEMORANDUM OPINION

CONNOLLY, UNITED STATES DISTRICT JUDGE

This patent suit was filed by Plaintiffs Orexo AB and Orexo US, Inc. (collectively, "Orexo") against Defendants Actavis Elizabeth LLC, Actavis Pharma, Inc., Teva Pharmaceuticals USA, Inc., and Teva Pharmaceutical Industries, Ltd. (collectively, "Defendants"). Presently before me is Orexo's motion for summary judgment that issue preclusion bars Defendants from relitigating the validity of U.S. Patent No. 8,454,996 (the "# 996 patent").¹ D.I. 172. The matter is fully briefed. D.I. 173, 174, 203, 205, 210, 216, 218. For the reasons discussed below, I will deny Orexo's motion.

I. BACKGROUND

Orexo alleges in its complaint that Actavis Elizabeth LLC's generic versions of Suboxone® and Subutex® infringe the # 996 patent. D.I. 1. In an earlier case filed in this court, Orexo sued Actavis Elizabeth and its parent company, Actavis, Inc., alleging, among other things, that Actavis Elizabeth's generic versions of Zubsolv® infringe the # 996 patent. Orexo AB v. Actavis Elizabeth LLC , 217 F.Supp.3d 756 (D. Del. 2016) [the "Zubsolv litigation"], rev'd on other grounds , 903 F.3d 1265 (Fed. Cir. 2018). In response to Orexo's complaint in the Zubsolv litigation, Actavis Elizabeth and Actavis, Inc. asserted as an affirmative defense and in a counterclaim that claims of the # 996 patent are "invalid under one or more provisions of 35 U.S.C. §§ 101, 102, 103, and/or 112." D.I. 173, Ex. A at 16; see also id. at 11, 17.

In September 2014, the parties in the Zubsolv litigation filed, and the court approved, a stipulation to dismiss Actavis, Inc. from the Zubsolv litigation. D.I. 203 at ¶ 12. Under the terms of the stipulation, "Actavis, Inc. including all affiliates and subsidiaries thereof ... agree[d] to be bound by any judgment ... rendered as to Actavis Elizabeth LLC in the Action (including appeals) as if they were named defendants." Id. (quoting D.I. 173, Ex. C at ¶¶ 1, 5). At the time the stipulation was entered by the court, Defendant Actavis Pharma, Inc., like Actavis Elizabeth, was a wholly-owned subsidiary of Actavis, Inc. Id. at ¶ 13. It is undisputed that Actavis Elizabeth and Actavis Pharma (collectively, "Actavis" or the "Actavis entities") are bound by the stipulation and the judgment ultimately issued in the Zubsolv litigation. Id. at ¶¶ 12–14.

In July 2015, Defendants Teva Pharmaceuticals USA, Inc. and Teva Pharmaceutical Industries, Ltd. (collectively "Teva") announced that Teva had agreed to purchase certain Actavis, Inc. assets, including Actavis Elizabeth and Actavis Pharma (the "Actavis transaction"). D.I. 203 at ¶¶ 19, 21.

In June 2016, before the Actavis transaction was consummated, the Zubsolv litigation proceeded to a bench trial before the now retired Honorable Sue L. Robinson. Orexo AB , 217 F.Supp.3d at 759. In the proposed pre-trial order filed jointly by the parties in the Zubsolv litigation, Actavis Elizabeth identified as one of three "substantive issues remaining to be litigated ... whether the Asserted Claims [of the # 996 patent ] are invalid as obvious under 35 U.S.C. § 103." Joint Proposed Pretrial Order, Orexo AB v. Actavis Elizabeth LLC , No. 14-cv-829-SLR (D. Del. May 4, 2016), D.I. 164-1, Ex. 5 at 1. Actavis Elizabeth did not identify any other theories of invalidity in the pre-trial order that remained to be litigated, and the only theory of invalidity it presented at trial was obviousness. See Orexo AB , 217 F.Supp.3d at 762–69.

On August 2, 2016—after trial but before entry of a judgment in the Zubsolv litigation—the Actavis transaction closed and Teva acquired Actavis Elizabeth and Actavis Pharma. D.I. 203 at ¶¶ 19, 21. The terms of the transaction were set forth in a "Master Purchase Agreement." Pursuant to that agreement, Teva assumed Actavis's "Liabilities and Claims." See D.I. 173, Ex. E at 35; Tr. of Feb. 28, 2019 Hr'g at 36:8–39:3.

In an opinion issued on November 15, 2016, Judge Robinson held that the asserted claims of the # 996 patent"are not invalid as obvious" and that Actavis Elizabeth infringed the asserted claims. Orexo AB , 217 F.Supp.3d at 781 ; see also D.I. 203 at ¶ 27. Actavis Elizabeth did not appeal Judge Robinson's rulings with respect to the # 996 patent.²

In February 2017, Orexo filed this action. Orexo alleges in its complaint that Actavis Elizabeth's manufacturing and Actavis Pharma's distribution of generic versions of Suboxone

® and Subutex ® infringe the # 996 patent. D.I. 1 at ¶¶ 47–48, 74–75. Orexo alleges that Teva infringes the # 996 patent by manufacturing, selling, offering for sale and/or importing into the United States generic Suboxone® and Subutex® products "either indirectly through [its] subsidiaries or affiliates or directly." Id. at ¶¶ 49, 76.

In their answer to the complaint, Defendants asserted as an affirmative defense and counterclaim that "one or more claims of the [# ]996 patent are invalid under one or more provisions of 35 U.S.C. §§ 101, 102, 103, and/or 112." D.I. 50 at 51; see also id. at 22. Defendants, however, now seek only to assert that the # 996 patent is invalid under §§ 103 and 112. D.I. 205, Ex. 2 at 23, 41.

II. LEGAL STANDARDS FOR SUMMARY JUDGMENT

"The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "[T]he party moving for summary judgment ... bears the burden of demonstrating the absence of any genuine issues of material fact." Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the moving party has carried its burden, the non-moving party must then "come forward with ‘specific facts showing that there is a genuine issue for trial.’ " Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (quoting Fed. R. Civ. P. 56(e) ).

Material facts are those "that could affect the outcome" of the proceeding. Lamont v. New Jersey , 637 F.3d 177, 181 (3d Cir. 2011). "[A] dispute about a material fact is ‘genuine’ if the evidence is sufficient to permit a reasonable jury to return a verdict for the nonmoving party." Id. A non-moving party asserting that a fact is genuinely disputed must support such an assertion by: "(A) citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations ..., admissions, interrogatory answers, or other materials; or (B) showing that the materials cited [by the opposing party] do not establish the absence ... of a genuine dispute ...." Fed. R. Civ. P. 56(c)(1). The non-moving party's evidence "must amount to more than a scintilla, but may amount to less (in the evaluation of the court) than a preponderance." Williams v. Borough of W. Chester , 891 F.2d 458, 461 (3d Cir. 1989).

The court must view the evidence in the light most favorable to the non-moving party and draw all reasonable inferences in that party's favor. Wishkin v. Potter , 476 F.3d 180, 184 (3d Cir. 2007). "[T]he facts asserted by the nonmoving party, if supported by affidavits or other evidentiary material, must be regarded as true ...." Aman v. Cort Furniture Rental Corp. , 85 F.3d 1074, 1080 (3d Cir. 1996). If "there is any evidence in the record from any source from which a reasonable inference in the [nonmoving party's] favor may be drawn, the moving party simply cannot obtain a summary judgment ...." Id.

III. DISCUSSION

Orexo argues in its summary judgment motion that "validity is a single issue" as a matter of law and that, therefore, the doctrine of issue preclusion bars Defendants from challenging the validity of the # 996 patent in this action. D.I. 172. Defendants disagree that validity is a single issue, but they do not dispute that if validity is deemed to be a single issue then the Actavis entities are precluded from challenging the # 996 patent's validity in this action. D.I. 203 at ¶ 11. Defendants contend that Teva is not bound by any judgment or rulings issued in the Zubsolv litigation regardless of whether validity is a single issue. See D.I. 210 at 3–9.

In their papers filed in opposition to Orexo's motion, Defendants asserted as a factual matter that "[t]he identical issue of the [# ]996 patent's validity was not previously litigated" in the Zubsolv litigation. D.I. 203 at 12; see also id. at 12–14; D.I. 210 at 9–11. In support of this assertion, Defendants stated that § 112 defenses they intend to assert in this action and certain prior art references they intend to offer as part of an obviousness defense under § 103 in this action were not presented in the Zubsolv litigation. D.I. 203 at 12–14. Orexo does not dispute that § 112 and the prior art references cited by Defendants were not presented or adjudicated in the Zubsolv litigation. Orexo simply contends that Defendants are precluded from asserting these invalidity defenses in this action because validity is a single issue and "validity under § 103 was actually litigated, adjudicated, and necessary to...