Novartis Vaccines and Diagnostics Inc. v. MedImmune LLC et al

Filing 449

MEMORANDUM OPINION. Signed by Judge Sue L. Robinson on 7/22/2013. (nmfn)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

NOVARTIS VACCINES AND
DIAGNOSTICS, INC.; AND
NOVARTIS PHARMA AG,
Plaintiffs,

v.
MEDIMMUNE, LLC, BIOGEN
IDEC, INC.; AND ALEXION
PHARMACEUTICALS, INC.,
Defendants.

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Civ. No. 11-84-SLR

Richard K. Herrmann, Esquire, Mary B. Matterer, Esquire, and Kenneth L. Dorsney,
Esquire of Morris James LLP, Wilmington, Delaware. Counsel for Plaintiff Novartis
Vaccines and Diagnostics, Inc. Of Counsel: George A. Riley, Esquire, John C.
Kappos, Esquire, and Bo K. Moon, Esquire of O'Melveny & Myers LLP.
Steven J. Balick, Esquire, Tiffany Geyer Lydon, Esquire, and Andrew C. Mayo, Esquire
of Ashby & Geddes, Wilmington, Delaware. Counsel for Plaintiff Novartis Pharma AG.
Of Counsel: Thomas P. Steindler, Esquire, Charles J. Hawkins, Esquire, and Raymond
M. Gabriel, Esquire of McDermott, Will & Emery LLP.
Collins J. Seitz, Jr., Esquire, and Benjamin J. Schladweiler, Esquire of Seitz Ross
Aronstam & Moritz LLP, Wilmington, Delaware. Counsel for Defendant Biogen Idee,
Inc. Of Counsel: Donald R. Ware, Esquire, Claire Laporte, Esquire, and Jeremy A.
Younkin, Esquire of Foley Hoag LLP.
Brian E. Farnan, Esquire, and Joseph J. Farnan, Ill, Esquire of Farnan LLP,
Wilmington, Delaware. Counsel for Defendant Alexion Pharmaceuticals, Inc. Of
Counsel: Gerald J. Flattmann, Jr., Esquire, and Christine Willgoos, Esquire of Paul,
Hastings, Janofsky & Walker LLP.

MEMORANDUM OPINION

Dated: July», 2013
Wilmington, Delaware

~~ge
I. INTRODUCTION

On January 26, 2011, Novartis Vaccine and Diagnostics, Inc. ("NVD") filed a
complaint against defendants Medlmmune, LLC ("Medlmmune"), Alexion
Pharmaceuticals, Inc. ("Aiexion"), and Biogen Idee, Inc. ("Biogen") (collectively,
"defendants"), alleging that each defendant infringed U.S. Patent No. 5,688,688 ("the
'688 patent"). (D .I. 1) In their respective answers, each defendant counterclaimed,
seeking a declaratory judgment of non-infringement and invalidity of the '688 patent.
(D.I. 14; D.l. 17; D.l. 19) NVD filed its first amended complaint ("FAC") against all
defendants on July 22, 2011. (D.I. 27) Defendants answered and repeated their
request for a declaratory judgment. (D. I. 37; D. I. 38; D. I. 39) On July 1, 2012, Novartis
Pharma AG ("Pharma") became the exclusive licensee of the '688 patent (see D.l. 161
at 15), and on July 18, 2012, Pharma was added as a co-plaintiff on the first
supplemental complaint ("FSC"). (D.I. 161) On August 1, 2012, defendants answered
with a reiteration of their requests for declaratory judgment. (D. I. 165; D.l. 166; D.l.
169) On November 14, 2012, Medlmmune was dismissed pursuant to a settlement
agreement. (See D. I. 246, 247) Presently before the court is NVD's and Pharma's
(collectively, "plaintiffs") motion for leave to file a second amended complaint ("SAC").
(D. I. 417) The court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1331 and
1338(a).

II. BACKGROUND
A. Parties
NVD is a corporation organized and existing under the laws of Delaware, having

places of business in Emeryville, California and Cambridge, Massachusetts. (D. I. 1 at~
2) Pharma is a corporation organized and existing under the laws of Switzerland,
having a place of business in Basel, Switzerland. (D. I. 161

at~

3) Biogen is a

corporation organized and existing under the laws of the State of Delaware with its
principal place of business located in Cambridge, Massachusetts. (D.I. 1 at~ 4)
Alexion is a corporation organized and existing under the laws of the State of Delaware
with its principal place of business located in Cheshire, Connecticut. (/d.

at~

5)

B. Facts
On November 18, 2010, NVD approached Biogen through a third party, Lonza
Biologics, notifying them of the '688 patent and requesting NVD and Biogen to enter
into a confidentiality, standstill, and tolling agreement ("the standstill agreement"). (D. I.
424 at 1, exs. 1, 2, 3) On November 19, 2010, the two parties executed the standstill
agreement. (D.I. 424 at 1, ex. 4)
On January 26, 2011, the present suit was filed in the District of Delaware, per
the standstill agreement. (D. I. 424, ex. 4) The proposed scheduling order (D. I. 36) was
confirmed on August 4, 2011, and required any pleading amendments to be filed prior
to July 15, 2012 (id.

at~

3).

On July 13, 2012, plaintiffs filed a motion for leave to file a supplemental
complaint naming Pharma as a co-plaintiff. (D. I. 158) This motion was granted five
days later. (D.I. 161) In defendants' answers and counterclaims filed on August 1,
2012, no issue was raised with respect to Pharma's standing. (D. I. 165; D. I. 166; D. I.
169)
On February 5, 2013, approximately six months after licensee Pharma was

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added as a co-plaintiff, Alexion raised a concern regarding the FSC. (D. I. 418, ex. E)
Specifically, when NVD globally replaced its name with "plaintiffs" in its amended
complaint (D.I. 161), the replacement led to an erroneous assertion that both NVD and
Pharma were alleging infringement by Alexion. (D.I. 418 at 6) NVD sent a proposed
SAC to defendants on February 8, 2013. (Id., ex. E) Changes included clarification
regarding the infringement by Alexion, as well as removing claims against Medlmmune.
(/d.)
On February 22, 2013, Alexion stated it would not oppose the filing of the SAC.

(ld., ex. F) NVD requested a response from Biogen on February 22, 2013; having
received none, it requested again on March 11, 2013. (!d. at 6, ex. Gat 3-4) On March
13, 2013, Biogen replied that "[Biogen] will not oppose the Plaintiffs' motion to file an
amended complaint that removes Pharma's claim against Alexion," and that it reserved
the right to "assert that Pharma lacks standing to make a claim against [Biogen]." (ld.,
ex. Gat 2-3)
On March 25, 2013, Pharma proposed additional revisions to the SAC (id., ex. G
at 2) that Alexion did not object to amending aside from replacing one instance of
"plaintiff' with "V&D" (id., ex. H). On April 1, 2013, Biogen indicated it would not
consent to the motion to amend, stating it "will not consent to any amendment alleging
willfulness and requesting treble damages." 1 (ld., ex. Gat 2) Biogen also requested
that plaintiffs identify the Fed. R. Civ. P. 11 basis for the pleading. (/d.) NVD attempted

1

Allegations of willfulness and requesting treble damages have appeared in all
three of the complaints filed in this action. (See D.l. 1 at~ 23; D.l. 27 at~ 24; D.l. 161
at~ 26)

3

to resolve the dispute on April 2, 2013. (D.I. 418 at 6) Biogen reiterated its opposition
to amend on April 8, 2013 and April 11, 2013. (/d., exs. G at 2, I) On April 22, 2013,
Pharma met and discussed further revisions to the claims of willful infringement
contained in the SAC, providing more detail surrounding the timeframe of the willfulness
allegations, to which Biogen maintained its objection. (/d., ex. J)

Ill. STANDARD OF REVIEW
The Federal Rules of Civil Procedure require courts to "freely give" leave to
amend "when justice so requires." Fed. R. Civ. P. 15(a)(2). Nevertheless, courts
"ha[ve] discretion to deny a motion to amend for reasons of 'undue delay, bad faith or
dilatory motive on the part of the movant, repeated failure to cure deficiencies by
amendments previously allowed, undue prejudice to the opposing party by virtue of
allowance of the amendment, futility of amendment, etc."' Merck & Co., Inc. v. Apotex,
Inc., 287 Fed. App'x 884, 888 (Fed. Cir. 2008) (quoting Foman v. Davis, 371 U.S. 178,

182 (1962)). After a pleading deadline has passed, courts have required the movant to
also satisfy the more rigorous "good cause" standard of Fed. R. Civ. P. 16(b)(4). 2 See,
e.g., E. Minerals & Chems. Co. v. Mahan, 225 F.3d 330, 340 (3d Cir. 2000); ICU Med.
Inc. v. RyMed Techs., Inc., 674 F. Supp. 2d 574, 578 (D. Del. 2009); Cordance Corp. v.
Amazon. com, Inc., 255 F.R.D. 366, 371 (D. Del. 2009). "Under this provision, '[g]ood

cause' exists when the [s]chedule cannot reasonably be met despite the diligence of
the party seeking the extension," ICU Med, 674 F. Supp. 2d at 577 (citing Fed.R.Civ.P.
16(b)(4), Advisory Committee's Notes (1983 amendments)). "In contrast to Rule 15(a),
2

Rule 16(b)(4) provides that a scheduling order "may be modified only for good
cause and with the judge's consent."

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the good cause standard under Rule 16(b) hinges on diligence of the movant, and not
on prejudice to the non-moving party." /d. at 577-78 (quoting Raquette Freres v. SPI
Pharma, Inc., 2009 WL 1444835, at *4 (D. Del. May 21, 2009)).
IV. DISCUSSION
A. Good Cause
As plaintiffs' motion was filed nine months after the deadline to amend pleadings,
they must show good cause under Rule 16(b) for the delay. After reviewing the
relevant documents, the court concludes that plaintiffs have shown good cause.
Despite having reviewed the FSC prior to filing on July 13, 2012, defendants did not
raise the FSC interpretation issue until February 5, 2013, approximately six and a half
months after the deadline. When the delay is not of the plaintiff's making, the courts
have found good cause. See Raquette Freres, 2009 WL 1444835, at *5-6 (amendment
permitted when inventors' depositions did not occur until six months after cut-off date
for amendment, and movant filed motion a month and a half after deposition); lntervet
Inc. v. Boehringer lngelheim Vetmedica, Inc., 2012 WL 4808427, at *1 (D. Del. Oct. 9,
2012) (amendment permitted when movant informed non-movant of intention to amend
one week following a deposition that occurred four months after the cut-off date for
amendment). Here, NVD's first proposed revision was sent to defendants three days
after NVD was notified of the interpretation issue. (D.I. 418, ex. E) Further, plaintiffs
continued to be diligent throughout the revision process. In the two and a half months
between February 5, 2013 and April 24, 2013, plaintiffs made three separate proposed

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revisions (id., exs. E, G at 2, J}, engaged in at least two "meet and confer" sessions (id.,
exs. E, J), and regularly corresponded with defendants (id., exs. F, G, H).

B. Leave To Amend
The factors to consider in weighing a motion for leave to amend are well-settled:
(1) whether the amendment has been unduly delayed; (2) whether the amendment
would unfairly prejudice the non-moving party; (3) whether the amendment is brought
for some improper purpose; and (4) whether the amendment is futile. See Foman v.
Davis, 371 U.S. 178, 182 (1962). The only question before the court is Biogen's

assertion that the amendment contains a futile claim for willful infringement and treble
damages. 3 (D. I. 424 at 3).
An amendment is futile when it "fails to state a claim upon which relief can be
granted, or 'advances a claim or defense that is legally insufficient on its face."'
Bigband Networks, Inc. v. Imagine Commc'ns, Inc., 2010 WL 2898286, at *1 (D. Del.

July 20, 201 0) (quoting Koken v. GPC lnt'l, Inc., 443 F. Supp. 2d 631, 634 (D. Del.
2006)); see also Butamax Advanced Biofuels LLC v. Gevo, Inc., 2013 WL 571801 (D.
Del. Feb. 13, 2013) (denying motion for leave to amend complaint because amendment
would be futile). However, a "proposed amendment is not futile [where it] would
withstand a motion to dismiss." Free Speech Coal., Inc. v. Attorney Gen. of U.S., 677
F.3d 519, 545 (3d Cir. 2012).

3

Biogen also states plaintiffs have no good-faith basis for pursuing a willful
infringement claim under Fed. R. Civ. P. 11 "in light of paragraph 4(b) of the Tolling
Agreement." (D.I. 424 at 7-8, ex. 4 at 7; D.l. 418, ex. Gat 1) However, this factual
dispute may be determined by summary judgment motions or at trial, but is not properly
considered in determining a motion to amend.

6

Seagate sets forth the two-prong analysis the Federal Circuit has mandated for
establishing willful infringement. See In re Seagate Tech., LLC, 497 F.3d 1360, 1371
(Fed. Cir. 2007). First, plaintiff must provide "clear and convincing evidence that the
infringer acted despite an objectively high likelihood that its actions constituted
infringement of a valid patent." /d. Second, plaintiff must show that the risk "was either
known or so obvious that it should have been known to the accused infringer." /d.
Here, plaintiffs allege that Biogen made and continues to make the product
Tysabri (D. I. 418, ex.

Nat~

17); Tysabri utilizes a third party product, the Lonza GS

Expression System (id.); and the Lonza GS Expression System infringes NVD's patent
(id., ex. N

at~

15). Plaintiffs provided evidence that Biogen knew about the

infringement as early as November of 2010 (id., ex. L at 2), two months prior to the filing
of the suit. Biogen has further stated it does not dispute it was informed of the patent
as of November 18, 2010 (D. I. 424 at 1). 4 Assuming all factual allegations as true,
plaintiffs' claims meet both the objective and subjective prongs of the Seagate analysis.
Biogen argues that because willful infringement claims examine pre-litigation
conduct, and Pharma did not enter into the license agreement until July 1, 2012,
eighteen months after the beginning of the lawsuit, Pharma is barred from making a
willfulness claim. 5 (D. I. 424 at 7) This argument is not persuasive, as courts have
upheld willfulness claims based on conduct occurring before a plaintiff had standing to

4

The parties dispute whether November 18, 2010 was the earliest date Biogen
was aware of the '688 patent and potential infringement. (D.I. 424 at 1; D.l. 426 at 4)
However, this factual dispute is not appropriately considered in a motion to amend.
5

Biogen does not cite any case law other than Seagate to support its position.
(D. I. 424 at 7)

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sue. See Copease Mfg. Co. v. Am. Photocopy Equip. Co., 298 F.2d 772, 783-84 (7th
Cir. 1961) (affirming finding of willful infringement for assignee based in part on
infringer's conduct occurring before patent assignment, even though assignee did not
have right to sue for past infringement); Pentech lnt'l, Inc., v. Hayduchok, 931 F. Supp.
1167, 1178-79 (S.D.N.Y. 1996) (finding willful infringement for exclusive licensee based
in part on infringer's conduct occurring before patentee granted exclusive license). As
Pharma is not barred from making the willfulness claim, 6 it has a good-faith basis for
making the complaint. Therefore, the amendment is not futile.

V. CONCLUSION
For the foregoing reasons, the court grants NVD and Pharma's motion for leave
to file an amended complaint. (D.I. 417) An appropriate order shall issue and plaintiffs
amended complaint is deemed filed and served as of the date of the issued order.

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Even if, as Biogen claims, Pharma's willfulness claims were limited to the
timeframe in which it had standing prior to the original complaint, Pharma's original
complaint occurred on July 18, 2012, 17 days after it gained standing under the license
agreement. Therefore, those 17 days would fall into Biogen's proposed timeframe, and
Pharma would still be entitled to bring a willful infringement claim.

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