Reckitt Benckiser LLC v. Aurobindo Pharma Limited et al

Filing 222

MEMORANDUM ORDER re 184 MOTION for Attorneys' Fees and Expenses pursuant to 35 U.S.C. § 285 filed by Aurobindo Pharma Limited, Aurobindo Pharma USA Inc. is DENIED. Signed by Judge Leonard P. Stark on 10/16/17. (ntl)

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IN THE UNITED STATES !DISTRICT COURT FOR THE DISTRICT OF DELAWARE RECKITT BENCKISER LLC, Plaintiff, v. C.A. No. 14-1203-LPS AUROBINDO PHARMA LIMITED and AUROBINDO PHARMA USA, INC., Defendants. MEMORANDU~ ORDER I At Wilmington this 16th day of October, 20i 7: I . . i Having reviewed the parties' briefing and oth~r materials (D.I. 185-86, 191-93, 197, 2081 . I 213) related to Defendants Aurobindo Pharma Limited and Aurobindo Pharma USA, Inc.' s (collectively, "Aurobindo") motion for attorneys' fees and expenses, IT IS HEREBY I ORDERED. that the motion (D.I. 184) is DENIED for the reasons stated below. I . 1. I I Plaintiff Reckitt Benckiser sued Auropindo for infringement of U.S. Patent Nos. . i 1 6,955,821 and 7,838,032, which claim controlled-release formulations of the drug guaifenesin . I . containing both immediate-release and sustained-release portions or quantities. Following claim construction, the Court allowed Aurobindo to file a motion for summary judgment of noninfringement. (D.1. 138) After full briefing and a h9aring, the Court granted summary judgment I I in favor of Aurobindo, determining that no reasonable factfinder could find that Aurobindo's I . proposed ANDA product contains two distinct formulations, as required by the asserted claims. I : . . 1 Reckitt initially asserted U.S. Patent No. 6,3172,252 as well. (See D.I. 1) 1 (See D.I. 174) Aurobindo now seeks attorneys' fees Under 35 U.S.C. § 285, contending that this .I case is exceptional on the basis of Reckitt' s claim cohstruction and infringement theories and in . . . . I . light of the need to deter abusive ANDA litigation. (See D.l. 185 at 11) 2. In "exceptional" patent cases, a Col may award "reasonable attorney fees" to the "prevailing party." 35 U.S.C. § 285. Federal Circui, law applies when interprefa~g and applying § 285. See Highway Equip. Co. v. FECO, Ltd., 469 F.3d 1027, 1032 (Fed. Cir. 2006). "An exceptional case under§ 285 is 'simply one that stfil\~S out from others with respect to the substantive· strength of a party's litigating position· (considering both the governing law and the I . I facts of the case) or the unreasonable manner in which the case was litigated."' Nova Chems . . Corp. (Canada) v. Dow Chem. Co., 856 F.3d 1012, 1016 (Fed. Cir. 2017) (quoting Octane · Fitness, LLC v. ICON Health & Fitness, Inc., 134 S.iCt. 1749, 1756 (2014)). Ultimately, the I Court must make a discretionary decision based on tµe totality of circumstances, which may I include factors such as "frivolousness, motivation, objective unreasonableness (both in the I factual and legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence." odtane Fitness, 134 S. Ct. at 1756 & n.6. A party moving for attorneys' fees must demonstrate, Jy a preponderance of the evidence, that a I case is "exceptional." Id. at 1758. . i / 3. As a preliminary matter, there is no dispute that Aurobindo is a prevailing party. . I . I The Court granted Aurobindo's motion for summa!Y[judgment and entered final judgment in . I I favor of Aurobindo and against Reckitt. (See D.l. 174, 181) Aurobindo undisputedly "receive[d] at least some relief on the merits, which alters the le~al relationship of the parties." Inland Steel Co. v. LTV Steel Co., 364 F.3d 1318, 1320 (Fed. Cirl 2004) (internal quotation marks and . ! 2 · 1 I I . original alterations omitted). Therefore, the focus he~e is whether . this case is exceptional. I 4. . l In one way, this case stands out from ©thers: it is an ANDA case that was resolved I on summary judgment, a rare occurrence in this Couift, which often does not allow summary judgment motions to be filed in an ANDA case. But this fact alone does .not make this case per I se "exceptional." That the nature of the narrow displilte presented by the parties turned out to be I I amenable to summary judgment does not inevitably correlate to an exceptionally weak substantive position or an unreasonable manner 5. ofli~gation. Nonetheless, there are other circumslces here that could support a finding of I I exceptionality. In particular, one patent (the '252 patent) initially asserted in this case - but ultimately dropped - was the subject of an appeal at Le Federal Circuit. See Reckitt Benckiser I I Inc. v. Watson Labs., 430 F. App'x 871 (Fed. Cir. 2011) ("Watson"). Watson concerned the construction of the term "portion" - a term also app,aring in some of the asserted claimsofthe related patents here - and infringement. See id. at 814-75. There the Federal Circuit affirmed the district court's construction of "portion" and made c~ear that the proper construction requires two distinct formulations. See id. at 876-77. The Court then affirmed the district court's finding of . ! I non-infringement, agreeing that "Watson's products '.do not have two structural portions" and that bioequivalence was insufficient to demonstrate infringement. Id. at 877-88. 6. Although Watson, in and of itself, does not necessarily make Reckitt's decision to bring the present action unreasonable or exceptional, the fact that the Federal Circuit had already ruled on a patent in this family is relevant to assessitj.g subsequent actions by Reckitt. Reckitt ·the same patentee and plaintiffhere as in Watson -was surely aware of that case and proceeded i here with knowledge of the Federal Circuit's decisidn on the issues presented there. Accepting . I 3 . that Watson did not, at first, provide sufficient reason for Reckitt to abstain from pressing its claims here, after claim construction that calculus should have changed somewhat. By that point, I I Reckitt was (reasonably) no longer asserting the '252 patent (the subject of Watson). Ultimately, this Court's construction of terms found in the related '821 and '032 patents was entirely consistent with the construction of the Federal Circuit in Watson. The Court here, as had occurred in Watson, construed all of the asserted claims to require two distinct formulations: an immediate-release formulation and a sustained-release formulation. (See D.I. 134 at 5-9) 7. Yet Reckitt maintained its suit and continued to assert an infringement theory focused on performance aspects of the ANDA produbts, resting on dissolution data and various phannacokinetic studies without regard to the struJre of the formulation. (See D.l. 174at10) I Despite the two-formulations requirement, Reckitt dtd not have its expert analyze the formulation of the ANDA product or the process by which the product is manufactured (see id. at ! 10-11), and Reckitt's expert admitted that his testing' data did not speak to the product's structure (see D.l. 141 Ex.Eat 179). Further, Reckitt elected bot to depose Defendants pursuant to Rule 30(b)(6) to learn more about the manufacturing prociss; nor did it depose Aurobindo's expert. I · (See Tr. at 39) Reckitt's litigation strategy, thus, 8. wa~ unusual. On the other hand, a number offactof weigh against finding this case to be exceptional within the meaning of§ 285. First, althdugh Watson undoubtedly had to be considered by Reckitt in deciding whether to file this case, Watson was not dispositive of the issues presented here. n was reasonable for Reckitt {o have perceived an opportunity to develop a case on which it might succeed on the merits, no4thstanding Watson. This case involved a different ANDA product and the assertion of additiohal patents, making it possible to reach a I 4 ~ different result (i.e., to find infringement) despite the Watson precedent. At the start of the case, 1 a reasonable litigant viewing the ANDA might have hpected, at minimum, that it would be able I to find an expert of the opinion that the only way to - ~chieve the ANDA product's dissolution . I . profile was by having separate, independent immediate- and sustained-release portions. In fact, I Aurobindo agrees that, had Reckitt' s expert clearly opined that the dissolution profile of the I ANDA product necessitates the presence of two.distinct formulations, Watson would not have been dispositive. (See Tr. at 10) Further, Aurobindq's ANDA is not so clear as to preclude a I . I reasonable litigant from making that argument, leaving Reckitt with an adequate basis to bring I this lawsuit. See, e.g., Tyco Healthcare Grp. LP v. Ntut. Pharm. Co., Inc., 2016 WL 3965201, at . ! . *5 (D.N.J. July 22, 2016); Warner Lambert Co. v. Purepac Pharm. Co., 2003 WL 21698310, at *4 (D.N.J. May 22, 2003). 9. · Furthermore, Reckitt performed a rea$onable investigation on the ANDA product I after filing the case, including by performing testing.f It is notable that the two-formulations limitation was not the only limitation in dispute during this litigation (although it was the sole I focus of the summary judgment motion), meaning th~t Reckitt reasonably devoted resources to I I generate evidence regarding other claim limitations js well. (See Tr. at 44'-45) And when, in the I course of its investigations, Reckitt determined that tt no longer had a good faith basis to assert 2 The parties dispute the importance ofimaJg data that Reckitt cited in some ·infringement contentions, did not produce, and eventually withdrew all reference to in conjunction with dropping the '252 patent from the dase. (See D.I. 185 at 17; D.I. 191 at 14; D.I. 208; D.I. 210-12) The Court does not find Reckitt's[conduct with respect to these "inconclusive" results to support a finding that this case is exceptional. See St. Clair Intellectual Prop. I Consultants, Inc. v. Toshiba Corp., 2015 WL 74511J;8, at *3 (D. Del. Nov. 23, 2015) ("[C]hang[ing] positions in the course of litigation dbes not make this case exceptional. Parties should abandon positions or claims when it appears they are unlikely to prove fruitful."). 5 . I the '252 patent, Reckitt promptly withdrew that pateLfrom the case. (See D .I. 191 at 14) 10. The Court also finds that Reckitt's claim construction arguments were not wholly : I unreasonable or without merit. While the Court con~trued the patents consistently with Watson, to require two.distinct formulations, the Court did no~ adopt Aurobindo's positions wholesale. I (See D.I. 134) Instead, as is not entirely unusual, the Court considered each parties' proposed 1 constructions and arguments and then crafted its own construction. (See id. at 5) With respect to the term "modified release drug product," the Court 4dopted Reckitt's proposed construction, although it did not fully accept the meaning Reckitt ascribed to that construction. (See id. at 7-9) I This confirms that Reckitt did not stake out an unrea~onable claim construction position. Cf I Astrazeneca AB v. Dr. Reddy's Labs., Ltd., 2010 WI.: 1375176, at *8 (S.D.N.Y. Mar. 30, 2010). 11. Nor is this the unusual case that is entirely devoid of an infringement theory. See I Tyco, 2016 WL 3965201, at *3 (D.N.J. July 22, 2016) ("[W]here a party has set forth some good I - faith argument in favor of its position, it will generally. not be found to have advanced I 'exceptionally meritless' claims."); Astrazeneca, 201f0 WL 1375176, at *5-6. Reckitt performed I I I testing on the ANDA product, retained an expert3 to provide opinions about the testing, and presented a coherent - although ultimately unsucces~ful - theory of infringement. 12. I . I Finally, the Court did not accept all of Aurobindo's arguments at summary judgment. In particular, Aurobindo contended that "kurobindo' s ANDA clearly and unequivocally seeks approval of single-formulation, I'sustained release products." (D.I. 140 at 5) While the Court agreed that the ANDA's reference t1 a "single layer" -without explicitly stating 3 The Court also denied Aurobindo's motion to exclude Reckitt's expert, a further indication that Reckitt's infringement position was npt entirely baseless. (See D.l. 174 at 4-5) 6 . how many portions or formulations ~ould be in the tNDA product - was helpful evidence, the I Court found it was not dispositive; (See D.I. 174 at 10) 13. Aurobindo contends that an exceptio1lity finding is warranted to deter future I litigants from behaving like Reckitt, especially in thd context of the Hatch-Waxman Act, with its purpose (among others) to foster timely entry of generic drugs to the market. Aurobindo suggests that due to the statutory, automatic 30-month stay of FDA approval of an.ANDA that is triggered by the filing of litigation, the Court should be alert td the incentives branded drug companies like I - Reckitt have to file frivolous cases, and should perhJps be more willing to find an ANDA case exceptional within the meaning of§ 285. While thele concerns may merit substantial weight in I some other case, here they do not, as Reckitt' s litiga~ion position was not frivolous, and as the . market here already included generic competitors at le time this suit was filed. The Court finds no basis here to conclude that Reckitt chose to file a ~volous case to delay entry of an additional I generic manufacturer. 14. I On balance and considering the totali~ of the circumstances, the Court concludes I i ' that the factors weighing against finding this case exceptional outweigh those in favor. Reckitt reasonably filed, maintained, and litigated this lawsuit. While the evidence garnered by Reckitt I to support its infringement claims was insufficient td overcome Aurobindo's motion for summary judgment, the Court does not find that this :case - whether compared to the full panoply of patent cases with which the Court has been invol.Jed or with the more narrow category of ANDA cases it has handled- stands out with respec~ to the substantive strength ofReckitt's 7 unsuccessful positions or the manner in which Reckitt litigated the case. See Octane Fitness, 134 S. Ct. at 1756. Accordingly, the Court exercises its discretion to deny Aurobindo's request for attorneys' fees. i~~P~ HON. LEONARD P. STARK UNITED STATES DISTRICT JUDGE 8

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