GlaxoSmithKline LLC et al v. Glenmark Generics Inc. USA

Filing 342

MEMORANDUM ORDER re (383 in 1:14-cv-00878-LPS-CJB) REPORT AND RECOMMENDATION is ADOPTED, and the portion of Defendants' motion for summary judgment related to lost profits and the portion of Defendants' motion to exclude set forth herein (D.I. 248) are DENIED, and GSK's motions to exclude (Glenmark action D.I. 209; D.I. 246) are GRANTED. Signed by Judge Leonard P. Stark on 6/9/17. Associated Cases: 1:14-cv-00877-LPS-CJB, 1:14-cv-00878-LPS-CJB (ntl)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
GLAXOSMITHKLINE LLC and SMITHKLINE
BEECHAM (CORK) LIMITED,
Plaintiffs,
C.A. No. 14-877-LPS-CJB

v.

GLENMARK PHARMACEUTICALS INC., USA, :
Defendant.
GLAXOSMITHKLINE LLC and SMITHKLINE
BEECHAM (CORK) LIMITED,
Plaintiffs,
C.A. No. 14-878-LPS-CJB

v.

TEVA PHARMACEUTICALS USA, INC.,
Defendant.

MEMORANDUM ORDER
WHEREAS, Magistrate Judge Burke issued a 31-page Report and Recommendation (the
"Report") (D.I. 383), 1 dated May 30, 2017, recommending that the Court (i) deny the portion of·
Defendants' motion for summary judgment related to GSK's claim for lost profits (D.I. 248);
(ii) deny Defendants' motion\ to exclude (a) the opinions offered by GSK's damages expert, Dr. ·
Robert S. Maness, concerning lost profits, and (b) the results of the survey of doctors conducted
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by GSK's survey expert, Dr. Brian C. Reisetter (D.I. 248); and (iii) grant GSK's motions to
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All references to the docket index (D.I.) are to the Teva action, C.A. No. 14-878, unless
otherwise noted.

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exclude (a) portions of the opinions offered by Glenmark's damages expert, Dr. DeForest
McDuff, and (b) portions of the opinions offered by Teva's damages expert, Dr. Sumanth
Addanki (Civil Action No. 14-877 (hereinafter, "Glenmark Action") D.I. 209; D.I. 246);
WHEREAS, on June 3, 2017, Defendants objected to the Report (D.1. 394 ("Defendants
Objections" or "Defs Objs"));
WHEREAS, on June 7, 2017, GSK responded to Defendants Objections (D.I. 407 ("GSK
Response" or "GSK Resp"));
WHEREAS, the Court has considered the parties' objections and responses as they relate
to case-dispositive matters de novo, and has considered their objections and responses as they
relate to non-dispositive matters for clear errors of law and clearly erroneous findings of fact, see

St. Clair Intellectual Prop. Consultants, Inc. v. Matsushita Elec. Indus. Co., Ltd., 691 F. Supp.
2d 538, 541-42 (D. Del. 2010); 28 U.S.C. § 636(b)(l); Fed. R. Civ. P. 72(b)(3);
NOW THEREFORE, IT IS HEREBY ORDERED that:
1.

Defendants' Objections (D.I. 394) are OVERRULED, Judge Burke's Report (D.I.

383) is ADOPTED, the portion of Defendants' motion for summary judgment related to lost
profits and the portion of Defendants' motion to exclude related to the above-referenced issues
(D.I. 248) are DENIED, and GSK's motions to exclude related to the above-referenced issues
(Glenmark Action D.I. 209; D.I. 246) are GRANTED. 2
2.

Defendants object to the Report on two grounds: (1) it wrongly permits GSK to

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Defendants' request for oral argument (D.I. 399; Defs Objs at 1) is DENIED. The Court finds
that oral argument is not necessary in order to resolve the parties' disputes. Moreover, Judge
Burke already heard extensive oral argument, briefing on the objections was completed only two
days ago, and trial begins barely three days from today.
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present a lost profits calculation that contemplates a "but-for" world that excludes non-party
manufacturers' generic carvedilol products, and (2) it allows GSK to present its lost profits case
without any showing of causation. (Defs Objs at 1) The Court is persuaded by neither of
Defendants' contentions.
3.

Defendants insist that the but-for world to which comparisons must be made in

order to assess GSK's claim for lost profits damages is a world in which non-party manufacturers
of generic carvedilol would have existed,3 and from which direct infringers (i.e., physicians)
would have obtained carvedilol. It follows, then, that GSK lost no profits due to Defendants',
allegedly infringing conduct, because even absent Defendants' infringement, GSK would still
have lost those same sales - albeit to non-paiiy manufacturers, rather than to Defendants.
4.

However, as the Report explained, "the law is clear that a lost profits analysis

must be based on a world in which infringement of the asserted patent does not exist, and
therefore it does not allow for infringing alternatives to be available in the hypothetical 'but for'
world." (Report at 13) The undisputed evidence is that Defendants' generic carvedilol is
interchangeable with the generic carvedilol of the non-party manufacturers; therefore, the generic
carvedilol of these non-party manufacturers is an infringing alternative - and not a noninfringing alternative. These non-parties' products, thus, would not exist in the but-for world,
which must be constructed to include "likely outcomes with infringement factored out of the
economic picture." Grain Processing Corp. v. Am. Maize-Prods. Co., 185 F.3d 1341, 1350

(Fed. Cir. 1999) (emphasis added).

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"It is undisputed that, at all times relevant to the lost profits analysis, there were generic
carvedilol tablets available from at least eight different generic manufacturers that were approved
by the United States Food and Drug Administration." (Report at 9)
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5.

That there is no evidence that the non-party generic manufacturers could be held

liable for induced infringement, while Defendants are charged only with induced infringement,
does not alter this conclusion. The issue for the lost profits calculation is whether the product is
non-infringing, not whether the alternative supplier has been, or could be, successfully sued for
infringement. As GSK correctly states: "It doesn't matter whether the sales by other generic
suppliers would be non-infringing, because the ultimate use of those products by doctors would
be infringing and thus not a permissible consideration." (GSK Resp at 7; see also id. at 1 ("The
'but for' world can consider only non-infringing alternatives. Here, doctors could not use generic
carvedilol from other suppliers to perform the patented method without infringing, so this is not a
permissible alternative."))
6.

Accordingly, because the but-for world is one in which no infringing alternatives

exist, other generic carvedilol products that directly infringe the '000 patent must be excluded,
even if the sales of those products are not induced by Defendants. See Chiumznatta Concrete
Concepts, Inc. v. Cardinal Indus., Inc., 1 Fed. App'x. 879, 882-83 (Fed. Cir. 2001) ("[S]ection
271 (b) of title 35 states that 'whoever actively induces infringement of a patent shall be liable as
an infringer.' Thus, appropriate relief against one inducing infringement may be the same as the
relief against a direct infringer."); Alt Ana Pharma AG v. Teva, 2013 WL 12157835, at *8
(D.N.J. May 14, 2013) ("[T]the presence of other infringing generics in the marketplace does not
defeat [plaintiffs] entitlement to lost profit damages on [defendant's] sales.").
7.

As the Report found (at 14 n.6), bec·ause GSK's motions to exclude the opinions

of Drs: McDuff and Addanki are the converse of Defendants' lost profits motion - presenting the
same question of whether other generic carvedilol products should be included in the but-for
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world and arguing that Drs. McDuff and Addanki based their opinions on a misapplication of the
law - these motions are granted, and the opinions at issue are excluded, based on the reasoning of
the Report and that contained in this Order.
8.

Turning to Defendants' attack on the lost-profits opinions of Dr. Maness,

Defendants fault the expert for relying on a survey that fails to address whether Defendants
actually induced the infringing prescriptions of carvedilol. (See Defs Objs at 2-3) Because the

survey fails to ask "whether Defendants' actions caused the doctors' prescribing decisions and, if
so, how many of their carvedilol prescriptions were caused by Defendants," it follows - in
Defendants' view-that the survey "provides no evidence that Teva or Glenmark caused the
infringing use, let alone any evidence of the amount they allegedly caused." (Id. at 2) However,
as the Report explained, Dr. Maness began his lost profits calculation by using the physician
-survey to determine the amount of Defendants' sales that were potentially infringing (Report at
15, 27) and then confined his lost profits calculation to that determined amount (see GSK Resp at
4-5). This method, including reliance on the survey undertaken by GSK expert Dr. Reisetter, is
not so unreliable as to warrant being excluded. Instead, Defendants' criticisms go to the weight
the factfinder should give to the opinion. 4
9.

The Court has considered each of the other arguments raised by Defendants in

their Objections and, applying the appropriate standard of review, finds that each of them lacks
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While Defendants are correct that the survey did not show the amount of potentially infringing
sales that were actually caused by Defendants' inducement, the survey was only meant to
ascertain the number of Defendants' sales that were (allegedly) directly infringing. (See Report
at 28 n.10) GSK will be permitted to present its circumstantial evidence that the sales were
induced by Defendants' conduct and "consequently seek damages ... across the entire category."
(See, id.) (citing Dynacore Holdings Corp. v. US. Philips Corp., 363 F.3d 1263, 1274-75 (Fed.
Cir. 2004))

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merit and requires no further discussion.

June 9, 2017
Wilmington, Delaware

HONO
BLE LEONARD . STARK
UNITED STATES DISTRICT JUDGE

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