Plexxikon Inc. v. Novartis Pharmaceuticals Corporation

Filing 476

ORDER by Judge Haywood S. Gilliam, Jr. GRANTING IN PART AND DENYING IN PART PLAINTIFFS 264 MOTION IN LIMINE NO. 4 AND DENYING PLAINTIFFS 266 MOTION IN LIMINE NO. 5.(ndrS, COURT STAFF) (Filed on 6/3/2021)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 PLEXXIKON INC., Plaintiff, 8 v. 9 10 NOVARTIS PHARMACEUTICALS CORPORATION, 11 United States District Court Northern District of California Defendant. Case No. 17-cv-04405-HSG ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF’S MOTION IN LIMINE NO. 4 AND DENYING PLAINTIFF’S MOTION IN LIMINE NO. 5 Re: Dkt. Nos. 264, 266 12 The Court rules on the pending motions in limine (“MIL”) as detailed below. 13 14 I. PLAINTIFF’S MIL NO. 4 Plaintiff Plexxikon Inc. moves to preclude Defendant Novartis Pharmaceuticals 15 16 Corporation from offering certain evidence at trial regarding: (1) Defendant’s claim that it did not 17 willfully infringe the asserted patents; (2) the development and commercialization of Mekinist, a 18 drug that is prescribed and sold in combination with Tafinlar (the accused product); and 19 (3) Defendant’s due diligence in purchasing GSK’s oncology portfolio (which included Tafinlar). 20 See Dkt. No. 264. Plaintiff urges that Defendant withheld information during discovery about 21 these topics and cannot now rely on undisclosed evidence at trial. See id. Given the complexity of 22 the case and her detailed knowledge of the parties’ discovery disputes, the Court appointed Judge 23 Elizabeth D. Laporte (Ret.) as a special master to address Plaintiff’s MIL No. 4.1 See Dkt. No. 24 350. Judge Laporte served her report and recommendation on March 5, 2021. See Dkt. No. 25 26 388. Her recommendation is as follows: 27 28 1 Judge Laporte was the discovery Magistrate Judge on the case before she retired from the bench. 1 (A) Exclude any testimony by [Defendant’s 30(b)(6) witness, inhouse attorney Peter Waibel] about the basis for Novartis’s willfulness defense, including reliance on the opinion of counsel, e.g., as well reasoned, other than stating without elaboration that when he received notice of this litigation, he looked at the patent in suit, observed the breadth of the claims and set in motion obtaining an opinion of counsel on invalidity; (B) Not allow Novartis to introduce any evidence of Mekinist’s commercialization not already provided, recognizing, however, that it did provide considerable evidence on this topic in documents and testimony as to its sales and projections done in combination with Tafinlar; (C) 2 Plexxikon be permitted to bring to the jury’s attention through the [proposed] instruction to the jury by the court during trial when the topic of GSK’s lack of knowledge of infringement by its portfolio and (to the extent evidence is permitted to be introduced by Novartis on this issue) the lack of GSK’s identification of any freedom-to-operate issues with Tafinlar, as well as oral argument, and if appropriate as the trial proceeds, testimony. 3 4 5 6 7 8 9 10 United States District Court Northern District of California 11 12 13 14 See id. at 7. Defendant filed objections to each of these three recommendations. See Dkt. No. 15 389. 16 A. 17 Plaintiff first argues that Defendant withheld information relevant to Defendant’s Defense to Willful Infringement 18 contention that it did not willfully infringe the asserted patents. See Dkt. No. 264 at 1–5. Plaintiff 19 notes that when asked to identify the factual bases for this contention, Defendant responded that it 20 would rely on the opinion of counsel. See Dkt. No. 264-3, Ex. 2 at 14; Dkt. No. 264-5, Ex. 4 at 21 11. Plaintiff argues that during Mr. Waibel’s 30(b)(6) deposition, he obfuscated and did not fully 22 explain Defendant’s assertion that it had not willfully infringed the patents-in-suit. See Dkt. No. 23 264 at 2–3. Mr. Waibel acknowledged that he believed that Defendant did not infringe any valid 24 claim of the asserted patents based on the opinion of counsel. See Dkt. No. 264-6, Ex. 5 at 24:5– 25 27:3. But he said that the opinion “speaks for itself,” and did not go into further detail Id. 26 Plaintiff contends that Defendant should therefore be limited to the opinion of counsel in support 27 of its willfulness defense. See Dkt. No. 264 at 2–4. 28 Defendant urges that Plaintiff was improperly seeking the bases for Defendant’s 2 1 contentions through a 30(b)(6) witness. See Dkt. No. 288 at 1–2. However, as Judge Laporte 2 noted in her report and recommendation, “[w]illfulness in particular includes a subjective 3 component as to the party’s reliance on an attorney opinion and the factual basis for the party’s 4 conduct, which is not the exclusive province of experts.” See Dkt. No. 388 at 3. Moreover, as the 5 Federal Circuit has recognized, “[w]illfulness is not an all-or-nothing trait, but one of degree.” See 6 Acumed LLC v. Stryker Corp., 483 F.3d 800, 811 (Fed. Cir. 2007) (quotation omitted). Yet Mr. 7 Waibel did not substantively respond to Plaintiff’s questions regarding the factual bases for 8 Defendant’s willfulness defense as a 30(b)(6) witness. See id. at 2–3. The following exchange is 9 illustrative: 10 Q. Do you hold the opinion that Novartis does not infringe any valid claim of either of the two Plexxikon patents at issue in this lawsuit? ... A. Yes. United States District Court Northern District of California 11 12 13 Q. What is your basis for that opinion? 14 MR. STEINDLER: Objection. Calls for a legal opinion. 15 A. As I mentioned, the – the legal opinion – I did not review the legal opinion in preparation for the deposition. The opinion I believe was already produced and it speaks for itself. 16 17 18 See Dkt. No. 389-8, Ex. C-4 at 24:5–22. Although Mr. Waibel answered some questions 19 regarding the timing and process of Defendant’s determination that it did not infringe any valid 20 claims of the asserted patents, see, e.g., id. at 34:11–36:1, Defense counsel had earlier stated that 21 they were turning to “the personal deposition of the witness,” id. at 29:8–10. As Judge Laporte 22 found, therefore, many of the questions that Mr. Waibel responded to were answered solely in his 23 personal capacity, and not as a corporate representative whose testimony would bind Defendant. 24 See Dkt. No. 388 at 2. And significantly, he did not offer any explanation why he—and 25 Defendant—relied on the opinion of counsel. Having reviewed the parties’ arguments and the deposition in detail, the Court agrees with 26 27 Judge Laporte’s findings. The Court therefore GRANTS Plaintiff’s MIL No. 4 on this basis and 28 will: 3 1 Exclude any testimony by Mr. Waibel about the basis for Novartis’s willfulness defense, including reliance on the opinion of counsel, e.g., as well reasoned, other than stating without elaboration that when he received notice of this litigation, he looked at the patent in suit, observed the breadth of the claims and set in motion obtaining an opinion of counsel on invalidity. 2 3 4 5 See Dkt. No. 388 at 7. 6 B. 7 Plaintiff next contends that Defendant should be precluded from providing evidence Development and Commercialization of Mekinist 8 regarding the development and commercialization of Mekinist at trial. See Dkt. No. 3–5. As 9 Defendant acknowledges, “Tafinlar and Mekinist are almost exclusively prescribed together for use by patients in combination,” and Defendant accordingly “markets the two products in 11 United States District Court Northern District of California 10 combination.” See Dkt. No. 389-3, Ex. B at 3 (emphasis in original). Plaintiff requested 12 information regarding Mekinist to challenge Defendant’s theory that Tafinlar’s success was due to 13 its pairing with Mekinist, and not the patented features. See Dkt. No. 388 at 3. 14 As Plaintiff points out, Defendant at least initially refused to designate a witness to testify 15 about Mekinist or produce documents or respond to interrogatories about Mekinist because it was 16 not an accused product. See, e.g., Dkt. No. 264-5, Ex. 4 at 3, 5–6; Dkt. No. 364-8, Ex. 7 at 8–13; 17 Dkt. No. 364-9, Ex. 8 at 7–9. However, Judge Laporte found that Defendant ultimately “provided 18 substantial documents about [Tafinlar and Mekinist’s] combination marketing and sales . . . and 19 considerable testimony regarding the sales in combination.” See Dkt. No. 388 at 4; see also Dkt. 20 No. 288-3, Ex. B at 9:24-10:7; Dkt. No. 288-4, Ex. C at 17:1–3. She thus concluded that 21 Defendant “appears to have complied with its discovery obligations as to Mekinist’s 22 commercialization.” Id. As for information about the development of Mekinist, Defendant notes 23 that it “does not intend to put on evidence regarding its development.” See Dkt. No. 288 at 4. 24 Judge Laporte also reasoned that “Plexxikon has failed to show how, if at all, Mekinist’s 25 development pertains to its contribution to the success of its sales in combination with Tafinlar.” 26 See Dkt. No. 388 at 4. Rather, “[t]he advantages of the product, rather than how those were 27 achieved, would appear to be what is relevant.” See id. Plaintiff did not object, and the Court 28 agrees and adopts Judge Laporte’s reasoning in this regard. 4 1 The report and recommendation nevertheless goes on to state that if Defendant “tries to 2 introduce evidence on commercialization and marketing that it withheld, through testimony or 3 documents, it should not be permitted to do so.” Id. Judge Laporte therefore recommends that the 4 Court preclude Defendant from introducing “any evidence of Mekinist’s commercialization not 5 already provided . . . .” Id. at 7. It is this specific recommendation to which Defendant objects. 6 See Dkt. No. 389 at 9–10. Defendant argues that because it has fully complied with its discovery 7 obligations, as recognized by Judge Laporte, there is no justification or need to limit Defendant’s 8 presentation of evidence regarding the commercialization of Mekinist. The Court agrees. Of 9 course, neither side may rely on responsive, but unproduced, information at trial. See Fed. R. Civ. P. 37(c). But the Court need not predict in advance whether Defendant will attempt to do so. If 11 United States District Court Northern District of California 10 necessary, Plaintiff may raise objections at trial, and the Court will resolve such issues in context 12 and as they arise. Plaintiff’s MIL No. 4 is therefore DENIED without prejudice on this basis. 13 C. 14 Lastly, Plaintiff contends that Defendant should be precluded from introducing evidence at Due Diligence 15 trial regarding any due diligence related to Novartis AG’s acquisition of the oncology portfolio 16 from third-party GlaxoSmithKline (“GSK”). See Dkt. No. 264 at 3–5. Novartis AG is 17 Defendant’s Swiss parent company. Defendant appears to concede that it intends for Mr. Waibel 18 to testify that GSK did not identify any freedom-to-operate issues associated with Tafinlar as part 19 of Novartis AG’s acquisition of GSK’s oncology portfolio. See Dkt. No. 288-3, Ex. B at 4. But as 20 explained below, Plaintiff has had limited access to information about the due diligence associated 21 with the GSK transaction. 22 Mr. Waibel testified that Defendant was not involved in the GSK acquisition, but rather 23 received a due diligence report for the U.S. products afterward. See Dkt. No. 288-2, Ex. A at 24 43:8–25; 186:12–189:10; 228:23–229:14. Novartis International AG conducted due diligence for 25 the transaction and Novartis AG was the signatory to the agreement (and both are Swiss entities). 26 Id. at 188:18–19; 228:23–229:14. Defendant acknowledged that it received a summary of the 27 “freedom to operate” analysis (“FTO summary”) prepared as part of the GSK transaction. See 28 id. at 43:8–25; 186:12–189:10; 228:23–229:14. However, Defendant stated that this FTO 5 1 summary is privileged, and that it did not have any other responsive, non-privileged documents 2 itself. See Dkt. No. 288 at 4; see also Dkt. No. 264-10, Ex. 9; Dkt. No. 264-11, Ex. 10. It later 3 produced the publicly available Sale and Purchase Agreement (“SAPA”) for the GSK transaction, 4 which was filed with the United States Securities and Exchange Commission. See Dkt. No. 389 at 5 10–11. The SAPA contains a warranty from GSK that the products in its oncology portfolio— 6 including Tafinlar—did not infringe any intellectual property rights of any third party. Id. 7 Plaintiff made some effort to obtain due diligence information from Novartis AG directly. 8 In December 2018, Judge Laporte—then the discovery Magistrate Judge in this case—granted 9 Plaintiff’s request for a letter to obtain the documents from Novartis AG under the Hague Convention. See Dkt. No. 115. Novartis AG opposed the production of these documents, and the 11 United States District Court Northern District of California 10 Swiss court ultimately denied the request in February 2019. See Dkt. No. 264-1 at ¶ 14. 12 Defendant nevertheless offered Mr. Waibel to testify about the due diligence associated with the 13 acquisition of GSK’s oncology portfolio. See Dkt. No. 288-2, Ex. A. And although Novartis AG 14 did not produce any documents to Plaintiff, it allowed Mr. Waibel to speak with a number of 15 individuals who were involved in the GSK transaction and the due diligence associated with the 16 transaction. See id. at 114:15–118:10; 230:2–13. Mr. Waibel then testified during his deposition 17 about what he had learned of the due diligence from these discussions. Id. at 39:15–46:17; 18 126:21–131:12; 141:8–154:14; 186:12–191:24. He said—consistent with the SAPA—that GSK 19 represented that there were no known FTO issues associated with Tafinlar. Id. at 129:14–131:12. 20 As Judge Laporte explained in her report and recommendation, however, Plaintiff “was unable to 21 verify or effectively probe this issue for consistency (or lack thereof) with the contemporary 22 documentation.” See Dkt. No. 388 at 5. 23 Judge Laporte did not conclude that Defendant failed to meet its discovery obligations with 24 regard to this information. Nor did she recommend that the Court exclude any evidence on this 25 issue. However, she noted “[t]he unfairness of allowing selective disclosure on this topic” in light 26 of Plaintiff’s limited access to information about the GSK transaction and the related due 27 diligence. See id. Rather than recommend exclusion of all evidence regarding the due diligence 28 analysis and GSK’s representation that there was no known infringement by the portfolio it was 6 1 selling, Judge Laporte suggested a limiting instruction if the Court allows in such evidence: 2 In this case, you have heard evidence that GSK made a contractual representation to Novartis’s Swiss parent company that certain products transferred as part of Novartis’s acquisition of GSK’s oncology drug portfolio did not, to GSK’s knowledge, infringe or misappropriate any intellectual property rights of any third party [and that GSK told Novartis’s Swiss parent that it did not identify and freedom-to-operate issues with Tafinlar during the course of the transaction]. During discovery in this case, Plexxikon sought the due diligence documents underlying that acquisition from Novartis and from Novartis’s Swiss parent company, including what information GSK provided as part of the due diligence investigation. Novartis through its counsel represented that it asked its Swiss parent, which is not a party to this case, to provide these documents to Novartis so that they could be produced, and the Swiss parent refused to do so. A Swiss court subsequently denied Plexxikon’s formal request to obtain these documents directly from the parent company through the judicial process. It is up to you to decide how much weight, if any, to give these facts in your consideration of the evidence. 3 4 5 6 7 8 9 10 United States District Court Northern District of California 11 12 13 Id. at 6–7. Defendant describes this as an adverse inference instruction, and contends that “it would 14 invite the jury to infer that Novartis and its Swiss parent improperly withheld documents that 15 might be damaging to Novartis’s case.” See Dkt. No. 389 at 12. Defendant urges that this is 16 unwarranted where Defendant and Novartis AG have acted in accordance with their legal 17 obligations. See Dkt. No. 389 at 11–12. Defendant suggests that the jury should therefore have no 18 insight into how the record was developed during discovery. See id. at 13. 19 The Court recognizes the novelty of the circumstances presented here, but disagrees with 20 Defendant’s interpretation of the instruction and suggestion to one-sidedly keep the jury in the 21 dark. Both the Federal Rules of Civil Procedure and the Federal Rules of Evidence are intended to 22 ensure the fairness of proceedings. See, e.g., Shoen v. Shoen, 5 F.3d 1289, 1292 (9th Cir. 1993) 23 (noting that the Federal Rules of Civil Procedure create a “broad right of discovery” because 24 “wide access to relevant facts serves the integrity and fairness of the judicial process by promoting 25 the search for the truth”); Fed. R. Evid. 102 (“These rules should be construed so as to administer 26 every proceeding fairly . . . .”). Allowing Defendant to introduce evidence that it obtained from its 27 Swiss parent company when Plaintiff was unable to probe the veracity or scope of this evidence is 28 unfair. The jury should know about Plaintiff’s limitations when weighing this evidence. 7 1 Accordingly, the Court GRANTS Plaintiff’s MIL No. 4 on this basis, and adopts Judge Laporte’s 2 recommendation and proposed instruction. If Defendant wants to propose alternative language 3 that will still accomplish the same goal, it may file a proposal for the Court’s consideration by 4 June 7, 2021, for discussion during the pretrial conference. * 5 * * The Court extends its sincere thanks to Judge Laporte for her thorough work in preparing 6 7 the report and recommendation. Given the nature of the Court’s ruling on this MIL, the Court 8 finds that the parties shall continue to split the fees for Judge Laporte evenly. 9 10 II. PLAINTIFF’S MIL NO. 5 Plaintiff also moves to preclude Defendant from offering or soliciting hearsay evidence at United States District Court Northern District of California 11 trial. See Dkt. No. 266. Although Plaintiff does not identify specific testimony, Plaintiff points 12 out that during discovery GSK’s corporate witness Dr. Tara Rheault testified to information she 13 learned from talking to another GSK employee about the development of Tafinlar. See id. GSK 14 also produced lab notebooks from a senior biologist, Dr. Olivia Rossanese, on the development 15 team. Rather than produce Dr. Rossanese to testify about the work reflected in the notebooks as 16 the author, GSK produced Dr. Rheault as a Rule 30(b)(6) witness. Plaintiff urges that Dr. Rheault, 17 and any other 30(b)(6) witness, may not offer hearsay evidence at trial. 18 Defendant responds that it does not intend to elicit hearsay testimony from Dr. Rheault or 19 any other witness at trial unless an exception to the hearsay rules applies. See Dkt. No. 290 at 2. 20 Rather, Defendant states that it only “expects to call Dr. Rheault at trial to testify about matters 21 within her personal knowledge.” Id. at 3. Defendant also suggests that Dr. Rheault developed her 22 own personal knowledge about the lab notebooks when preparing for the Rule 30(b)(6) deposition. 23 See id. at 3–4. 24 During a deposition, a Rule 30(b)(6) witness may testify outside his or her personal 25 knowledge, and “must testify about information known or reasonably available to the 26 organization.” Fed. R. Civ. P. 30(b)(6) (emphasis added). This procedure is intended to “curb the 27 ‘bandying’ by which officers or managing agents of a corporation are deposed in turn but each 28 disclaims knowledge of facts that are clearly known to persons in the organization and thereby to 8 it.” See id., Notes of Advisory Committee on 1970 Amendments to Rules. The parties do not 2 appear to dispute, however, that at trial, a lay witness “may testify to a matter only if evidence is 3 introduced sufficient to support a finding that the witness has personal knowledge of the matter.” 4 See Fed. R. Evid. 602. Accordingly, courts have generally concluded that “a corporate 5 representative may not testify to matters outside his own personal knowledge to the extent that 6 information [is] hearsay not falling within one of the authorized exceptions.” See Union Pump 7 Co. v. Centrifugal Tech. Inc., 404 F. App’x 899, 907–08 (5th Cir. 2010); see also Stryker Corp. v. 8 Ridgeway, No. 1:13-CV-1066, 2016 WL 6585007, at *2–3 (W.D. Mich. Feb. 1, 2016) (collecting 9 cases); cf. Sara Lee Corp. v. Kraft Foods Inc., 276 F.R.D. 500, 502–04 (N.D. Ill. 2011) (admitting 10 30(b)(6) witness deposition testimony regarding corporate policies). But without yet knowing the 11 United States District Court Northern District of California 1 specific evidence and context in which it will be offered at trial, the Court cannot conclusively rule 12 on issues regarding the foundation for admitting Dr. Rheault’s testimony—or any other witness’s 13 testimony. The Court therefore DENIES Plaintiff’s MIL No. 5 without prejudice. The Court will 14 address any objections to Dr. Rheault’s testimony—or any other evidence—at trial as they arise, 15 and in the context of each witness’s proffered testimony and personal knowledge. 16 17 18 19 IT IS SO ORDERED. Dated: 6/3/2021 ______________________________________ HAYWOOD S. GILLIAM, JR. United States District Judge 20 21 22 23 24 25 26 27 28 9

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