Novartis Pharmaceuticals Corporation et al v. Par Pharmaceutical Inc.

Filing 198

MEMORANDUM ORDER: Plaintiff's Motion for Estoppel (C.A. No. 14-1289, D.I. 193; C.A. No. 14-1494, D.I. 120 ; C.A. No. 15-78, D.I. 120) is GRANTED as to claims 1-3 and 8-10 of the '772 patent, and the parties are to submit a joint status report concerning the covenant not to sue and a joint proposed form of order and judgment within two weeks of this order. Signed by Judge Richard G. Andrews on 4/11/2019. Associated Cases: 1:14-cv-01289-RGA, 1:14-cv-01494-RGA, 1:15-cv-00078-RGA(nms)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
NOVARTIS PHARMACEUTICALS CORP.,
Plaintiff,
Civil Action No. 14-1289-RGA

V.

PAR PHARMACEUTICAL INC.,
Defendant.

NOVARTIS PHARMACEUTICALS CORP.,
Plaintiff,
Civil Action No . 14-1494-RGA

V.

PAR PHARMACEUTICAL INC. ,
Defendant.

NOVARTIS PHARMACEUTICALS CORP.,
Plaintiff,
Civil Action No. 15-0078-RGA

V.

PAR PHARMACEUTICAL INC.,
Defendant.

MEMORANDUM ORDER
Currently pending before the Court is Plaintiff's Motion for Estoppel under 35 U. S.C.
§ 315(e)(2). (C.A. No. 14-1289, D.I. 193 ; C.A. No. 14-1494, D.I. 120; C.A. No. 15-0078, D.I.

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120). 1 Defendant Par Pharmaceutical has indicated that it "takes no position" on the estoppel issue.
(D.I. 195). Thus, Plaintiff's motion for estoppel is unopposed. However, as Plaintiff bears the
burden of demonstrating that estoppel applies under 35 U.S.C. § 315(e)(2), I have reviewed
Plaintiff's brief and the record to ensure that Plaintiff has met its burden.
I.

BACKGROUND
Plaintiff Novartis Pharmaceuticals filed three suits against Defendant Par Pharmaceutical

on October 10, 2014 (C.A. No. 14-1289, D.I. 1), December 18, 2014 (C.A. No. 14-1494, D.I. 1),
and January 23 , 2015 , (C.A. No. 15-78, D.I. 1), respectively. Plaintiff also filed related suits
against Defendants Breckenridge and West-Ward. (D .I. 193 at 5 n.4 ). The parties agreed that the
validity of U.S . Patent No. 5,665 ,772 ("the ' 772 patent") would be tried only once. (D.I. 139 at 34). Before trial, Defendants conceded that their proposed products meet all limitations of the ' 772
patent. (D.I. 152 at 34). At trial, Defendants challenged the validity of claims 1-3 , 7, and 10 of
the ' 772 patent on obviousness grounds, citing twenty-seven pieces of prior art. (D.I. 139 at 6).
While litigation was pending, Defendant Par challenged claims 1-3 and 8-10 of the ' 772
patent in an inter partes review ("IPR") proceeding. (IPR2016-00084, "the Par I IPR"). The Patent
Trial and Appeal Board ("PTAB") instituted the Par I IPR on April 29, 2016. After institution of
the Par I IPR, Defendants filed four additional IPR petitions challenging the '772 patent along with
motions to join the Par I IPR. (IPR2016-01059, IPR2016-01023 , IPR 2016-01103 , IPR201601102). On October 27, 2016, the PTAB instituted the two IPRs which challenged claims 1-3 and
8-10 and joined them with the Par I IPR. (D.I. 139 at 6-7). The PTAB declined to institute and
join IPRs challenging claim 7 of the ' 772 patent because Defendant Par, failed to explain why
claim 7 was omitted from the Par I petition. (Id. ).

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All docket item references in this order refer to C.A. No. I4-1 289 unless otherwise specified.

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On March 28, 2017, I issued a trial opinion, determining that the asserted claims of the
'772 patent were invalid for obviousness-type double patenting. (D.I. 169 at 32). I did not address
Defendants' obviousness defenses or counterclaims. (Id.) . Defendants appealed. On January 11,
2018, while the appeal was pending on the obviousness-type double patenting decision, the PTAB
issued a final written decision in the Par I IPR upholding the patentability of claims 1-3 and 8-10
of the ' 772 patent. Par Pharm. Inc. v. Novartis AG, 2018 WL 389192, at *1 (P.T.A.B. Jan. 11 ,
2018).

The Federal Circuit later reversed the obviousness-type double patenting decision.

Novartis Pharms. Corp. v. Breckenridge Pharm. Inc., 909 F.3d 1355, 1367 (Fed. Cir. 2018). After

the Federal Circuit issued its mandate in the appeal, I asked the parties in these cases to file a status
report summarizing the issues that still needed to be addressed in the suits relating to the ' 772
patent. (D.I. 187).
At that time, Plaintiff raised the possibility that 35 U.S.C. § 315(e)(2) would estop
Defendants' obviousness defenses and counterclaims based upon the final written decision of the
Par I IPR. (D.I. 191 at 2-3). Defendant Breckenridge raised several objections to the application
ofIPR estoppel and asserted that the Court should resolve the obviousness defenses/counterclaims
at the same time as estoppel. (Id. at 3-4). On March 1, 2019, I issued an order requesting briefing
by Plaintiff on estoppel and joint briefing from Defendants on obviousness. (D.I. 192). After that
order, the suits including Defendants Breckenridge and West-Ward were dismissed by joint
stipulation. (C.A. No. 14-1196, D.I. 221 ; C.A. No. 16-0431 , D.I. 99; C.A. No. 14-1043, D.I. 212).
Plaintiff has filed an opening brief moving for estoppel of Defendant Par' s obviousness
counterclaims. (D.I. 193). Defendant Par has indicated that it "takes no position" on the estoppel
issue. (D .I. 195). Defendant Par also has not filed any briefing on the obviousness issue in

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response to my March 1 order, stating instead that it believes that a decision can be rendered based
upon the briefing and testimony submitted to date. 2 (Id.) .

II.

Standard for IPR Estoppel Under 35 U.S.C. § 315(e)(2)
35 U.S.C. § 315(e)(2) provides,
The petitioner in an inter partes review of a claim in a patent under this chapter that
results in a final written decision under section 318(a) ... may not assert in either
a civil action arising in whole or in part under section 1338 of title 28 ... that the
claim is invalid on any ground that the petitioner raised or reasonably could have
raised during that inter parties review.

The Federal Circuit has not directly addressed the issue of whether estoppel applies to prior art
references that were not raised in the IPR proceeding. However, the majority of District Courts
have determined that IPR estoppel applies to any prior art that reasonably could have been raised,
even if not actually raised in the IPR proceeding. See, e.g. , Bio-Rad Labs., Inc. v. I OX Genomics,
Inc., 322 F. Supp. 3d 537,541 (D. Del. 2018) (citing Bio-Rad Labs., Inc. v. I0XGenomics, Inc.,
C.A. No. 15-152, D.I. 228 at 28: 17-29: 14 (D. Del. Sept. 26, 2017)); Parallel Networks Licensing,
LLC v. IBM Corp., 2017 WL 1045912, at *11-12, (D. Del. Feb. 22, 2017) ; Am Tech. Ceramics
Corp. v. Presidio Components, Inc., 2019 WL 365709, at *2, 4-5 (E.D.N.Y. Jan. 30, 2019);
Milwaukee Electric Tool Corp. v. Snap-On Inc. , 271 F. Supp. 3d 990, 1029-30 (E.D. Wisc. 2017);
Network-I Techs., Inc. v. Alcatel-Lucent USA , Inc., No. 6:11-cv-00492-RWS, 2017 U.S. Dist.
LEXIS 178857, at *6-7 (E.D. Tex. Oct. 27, 2017).
As I have stated previously, the general purpose of the statute as well as the statutory
language indicate that the most plausible interpretation is that any prior art that the IPR petitioner
could have raised in the proceeding is estopped if there is a final written decision from the PTAB

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I do note that Defendant Breckenridge was the party who requested further briefing on the obviousness issue, and
that Defendant Par has maintained this position since the case was remanded from the Federal Circuit. (D.I. 191 at
3-4).

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that the challenged claims are valid. See Bio-Rad, C.A. No. 15-152, D.I. 228 at 28:17-29:14. Prior
art "reasonably could have been raised" when "a skilled searcher conducting a diligent search
reasonably could have been expected to discover" the prior art. See, e.g., Cong. Rec. S 1375 (daily
ed. Mar. 8, 2011) (statement of Sen. Kyl). Moreover, one of the policy objectives behind the
introduction of IPR proceedings was an intention to conserve judicial resources . Am Tech. , 2019
WL 365709, at *2. Allowing an IPR petitioner to have two bites at the apple by holding back
certain obviousness combinations runs counter to both the clear language and purpose behind

§ 315. Parallel Networks, 2017 WL 1045912, at *12.
Defendant Breckenridge also raised an objection to the application of IPR estoppel after
the district court has held trial. (D.I. 191 at 3-4). I do not think the application of IPR estoppel is
dependent on the order in which certain events occur. This is a matter of first impression. While
previously raised in Senju Pharmaceutical Co. v. Lupin Ltd. , C.A. No. 14-667 (D.N.J.), the parties
settled before the Court could determine the issue. Senju Pharm., C.A. No. 14-667, D.I. 301
(D.N.J. Aug. 1, 2016), D.I. 302 (D.N.J. Aug. 2, 2016), D.I. 314 (D.N.J. Aug. 29, 2016).
The plain language of the statute does not indicate that Congress intended for there to be a
time limitation upon the estoppel effect of a final written decision of an IPR. The parties in Senju
focused upon the use of the terms "request" and "maintain" in § 315(e)(1) and the term "assert" in

§ 315(e)(2). Senju Pharm., C.A. No. 14-667, D.I. 302 at 1-3. It appears to me that the differences
in statutory language is a result of the forum in which the estoppel occurs, rather than evidence
that Congress intended IPR estoppel to be limited to time before trial is completed. Section (e)(l)
describes the estoppel effect of a final written decision on other PT AB proceedings. As this section
deals with administrative proceedings, the language is appropriately directed to that context. Thus,

§ 315(e)(l) states that after a final written decision is issued, the petitioner may not "request or
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maintain a proceeding." (emphasis added). In contrast, § 315(e)(2) is directed at claims or
defenses that could be raised in a judicial proceeding and not the proceeding itself. Therefore,
§ 315(e)(2) uses the term "assert," which does not indicate a time limitation. Moreover, in the

context of judicial proceedings, the term "assert" is often used in a manner consistent with
"maintaining." For example, while a party may assert a multitude of patent claims at the beginning
of suit, by summary judgment, there may be only a few "Asserted Claims" left. Thus, the plain
language of the statute, along with the previously discussed policy objectives of judicial economy,
indicates that IPR estoppel will still apply post-trial where the Court has not entered a final
judgment on the relevant ground.

III.

DISCUSSION

As I have determined that estoppel may apply post-trial, I now turn to whether estoppel
should apply to the twenty-seven references put forward by Defendants at trial. Plaintiff argues
that the twenty-seven trial references all "could reasonably have been raised" in the IPR proceeding
because they were used in the September 2016 trial which occurred before the reply due date in
the Par I IPR. Defendant does not contest Plaintiffs argument. (D.I. 195). Given their use at
trial, it is apparent that a diligent search would have revealed these references and therefore they
"could have been raised" at the IPR proceeding. Thus, Defendants are precluded from pursuing a
§ 103 invalidity argument as to the ' 772 patent claims 1-3 and 8-10.

However, no IPR was instituted as to the remaining '772 patent claim addressed at trial :
claim 7. Thus, IPR estoppel cannot apply. Plaintiff represents that a finding of infringement and
validity on claim 10 of the ' 772 patent is sufficient to prevent Defendant Par from launching its
generic products. (D.I. 193 at 13). Defendant does not contest this representation. (D.I. 195).
Plaintiff has therefore represented that "it has withdrawn its infringement contentions as to claim
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7 of the '772 patent and is willing to provide Defendant[] a covenant not to sue on that claim."

(D.1. 193 at 13).
As Defendant is estopped from pursuing an invalidity defense under§ 103 on claims 1-3
and 8-10, and Plaintiff has represented that it is no longer pursuing infringement as to claim 7, the
determination of validity of claim 7 will have no effect on Defendant Par' s ability to launch its
generic product. Thus, there is no "real and substantial" dispute of "sufficient immediacy and
reality to warrant issuance of a declaratory judgment" as to claim 7. Medimmune, Inc. v.

Genentech, Inc. , 549 U.S. 118, 128 (2007). Therefore, given Plaintiffs representations, I intend
to dismiss Plaintiffs infringement contentions as to claim 7 and to dismiss without prejudice
Defendant Par's counterclaim for declaratory judgment as to claim 7. But first, Plaintiff needs to
actually provide a satisfactory covenant not to sue on claim 7.

IV.

CONCLUSION
Thus, IT IS HEREBY ORDERED that (1) Plaintiffs Motion for Estoppel (C.A. No. 14-

1289, D.I. 193 ; C.A. No. 14-1494, D.I. 120; C.A. No . 15-0078, D.I. 120) is GRANTED as to
claims 1-3 and 8-10 of the '772 patent, and (2) the parties are to submit a joint status report
concerning the covenant not to sue and a joint proposed form of order and judgment within two
weeks of this order.

Entered this

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.11_ day of April, 2019.