United Therapeutics Corporation v. Watson Laboratories Inc.
Magistrate Judge Donald L. Cabell: ORDER entered. ORDER ON UNITED THERAPEUTICS CORP.'S MOTION TO COMPEL PAREXEL INTERNATIONAL CORP.'S COMPLIANCE WITH SUBPOENA denying 1 Motion to Compel. (Russo, Noreen)
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
UNITED THERAPEUTICS CORP.
Civil Action No. 16-mc-91176
WATSON LABORATORIES, INC.
ORDER ON UNITED THERAPEUTICS CORP.’S MOTION TO COMPEL PAREXEL
INTERNATIONAL CORP.’S COMPLIANCE WITH SUBPOENA
(Dkt. No. 1)
The present motion arises from a patent infringement lawsuit pending in the District of
New Jersey. United Therapeutics Corp. (UTC) has sued Watson Laboratories, Inc. (Watson) for
allegedly infringing three patents related to one of UTC’s products, the Tyvaso Inhalation
Solution. (United Therapeutics Corp. v. Watson Laboratories, Inc., No. 15-cv-05723 (D.N.J.
filed Jul. 22, 2015)). Paraxel International Corporation (Paraxel) is not a party to the lawsuit but
it acquired some Tyvaso Inhalation System Starter Kits from the Glendale Adventist Medical
Center (Glendale Adventist) and subsequently conducted some research on the product. UTC
initially believed that Parexel used the Starter Kits to assist Watson in developing a generic
version of Tyvaso, but apparently now accepts Parexel’s representation that it was not Watson
for whom it performed its work. Still, UTC seeks documents from Parexel relating to the work it
did do and has served Parexel with a subpoena demanding such information. Parexel objects on
the grounds that the subpoena is overbroad and seeks documents that are wholly irrelevant to the
lawsuit between UTC and Watson.
Having reviewed the parties’ submissions and heard argument on UTC’s motion, the
Court agrees that UTC has not met its burden of establishing that the documents it seeks are
relevant to the claims and defenses in the UTC/Watson litigation. For that reason, UTC’s motion
to compel is denied.
The action pending before this court was filed solely to compel compliance with a
subpoena served upon Parexel, a life sciences consulting firm located in this district. UTC
served the subpoena in a District of New Jersey patent infringement suit, United Therapeutics
Corp. v. Watson Laboratories, Inc., No. 15-cv-05723.
A. Hatch-Waxman Act
UTC sued Watson pursuant to the Drug Price Competition and Patent Term Restoration
Act of 1984, Pub. L. No. 98–417, 98 Stat. 1585, more commonly known as the Hatch-Waxman
Act. The Hatch-Waxman Act creates an expedited process by which the manufacturers of
generic drugs can obtain approval of generic drugs. See 21 U.S.C. § 355(j).
Where a generic drug contains the same active ingredients and is administered in the
same way and with the same dosage as the branded drug, the generic drug manufacturer may file
an Abbreviated New Drug Application (ANDA). The ANDA filing process requires that the
applicant certify that the name brand drug is not patented, that the patent has or will expire
before the generic is put on the market, or that the patent is invalid. A certification that the name
brand drug patent is invalid is known as a “Paragraph IV” certification. 21 U.S.C. §
Paragraph IV certifications must be served on the patent holder. Under the HatchWaxman Act, the patent holder is entitled to file a patent infringement suit immediately upon
receiving the notice letter from the generic manufacturer. 35 U.S.C. § 271(e)(2). UTC’s patent
infringement suit against Watson is one such section 271(e)(2) suit.
B. District of New Jersey Litigation
UTC holds three patents related to Tyvaso, an inhaled drug that treats pulmonary arterial
hypertension. Pulmonary arterial hypertension is high blood pressure in the pulmonary arteries,
which carry blood from your heart to your lungs. This type of high blood pressure places a strain
on the heart, potentially leading to heart failure or death.
On July 22, 2015, UTC filed a six count patent infringement complaint against Watson in
the District of New Jersey. The complaint alleges that Watson submitted an ANDA seeking to
manufacture, market and sell a generic version of Tyvaso. The ANDA contained a paragraph IV
certification claiming that all three of UTC’s Tyvaso patents are invalid. UTC alleges that its
patents are valid and that Watson’s plan to manufacture and sell a generic version of Tyvaso
before the patents’ expiration constitutes willful patent infringement.
C. UTC’s Subpoena to Parexel
Patients who have been prescribed Tyvaso receive the Tyvaso Inhalation System Starter
Kit. The kit contains an inhaler device, accessories, a case, a power supply, the Tyvaso itself and
various literature. In December 2015, UTC learned that Parexel obtained several Tyvaso Starter
Kits from Glendale Adventist. UTC initially believed that Parexel obtained the kits “to assist
Watson in developing the ANDA Product [i.e., the generic version of Tyvaso].” (Dkt. No. 2 at p.
On February 23, 2016, UTC served a subpoena on Parexel seeking 28 categories of
documents. Parexel responding with a letter in which it objected to the subpoena in its entirety,
and refused to produce any documents. UTC subsequently agreed to narrow the subpoena to five
requests (request nos. 2-6) seeking information about the relationship between Parexel and
Glendale Adventist, and Parexel’s use of the Tyvaso starter kits it obtained from Glendale
Adventist. Parexel still did not produce any documents in response to the subpoena.
D. UTC’s Motion and Motion Hearing
On June 1, 2016, UTC moved for an order compelling Parexel to respond to request
numbers 2 through 6. UTC argues that Parexel waived any objection to the subpoena because it
did not object to each request individually. UTC argues that even if Parexel’s objections were
preserved, they are not well-taken. UTC contends that the documents sought are relevant to the
NJ litigation either because Parexel obtained the Tyvaso Starter Kits to assist Watson in
developing its generic version of Tyvaso, or because the documents sought “could tend to prove
or disprove objective indicia of nonobviousness . . . [including] commercial success, long felt
and unresolved needs, failure of others, industry praise, copying, and unexpected results . . . .”
(Dkt. No. 2 at p. 11).
After UTC filed its motion, Parexel clarified that it had not obtained the Tyvaso Starter
Kits to assist Watson. Instead, Parexel obtained the starter kits in connection with a study
performed under an Investigational New Drug Application comparing Tyvaso to its (unnamed)
client’s own investigational product, which Parexel’s in-house counsel initially represented was a
reformulation of Tyvaso. (Dkt. No. 14). Parexel has since clarified that its customer’s product
“includes a single active pharmaceutical ingredient that differs structurally from Tyvaso and has
its own patents.” (Dkt. No. 28).
At the July 12, 2016 oral argument on UTC’s motion, the Court found that Parexel had
not waived its objections to UTC’s subpoena. In light of Parexel’s explanation regarding its
work with the Tyvaso Starter Kits, the Court directed the parties to file supplemental briefing
discussing: 1) whether the scope of UTC’s requests had narrowed; and 2) the relevance of the
documents sought. In response, UTC narrowed the scope of its motion to compel to request
numbers 3 and 4.
Request No. 3 (as narrowed) seeks:
All documents, communications, agreements, and things
concerning any study, research, development or experimentation
done on TYV ASO®, any TYV ASO® Starter Kit, or any TYV
ASO® Refill Kit provided or attempted to be provided to Parexel
by Glendale Adventist, including but not limited to:
communications with Glendale Adventist, Accredo Health Group,
Inc., or any third party; in relation to any TYV ASO®, TYV
ASO® Starter Kit, or TYV ASO® Refill Kit.
Request No. 4 (as narrowed) seeks:
All documents, communications, and things concerning Parexel's
use of any TYV ASO®, TYV ASO® Starter Kit, or TYV ASO®
Refill Kit provided to Parexel by Glendale Adventist, including
without limitation any study, research, development or
experimentation done with the TYV ASO®, TYV ASO® Starter
Kit, or TYV ASO® Refill Kit, and any communications with
Holopack, Watson, or any third party concerning the TYV ASO®,
TYV ASO® Starter Kit, or TYV ASO® Refill Kit.
(Dkt. No. 27). UTC argues that these requests seek documents relevant to Watson’s defense,
which is that UTC’s patents are invalid because the patented invention was obvious in light of
the prior art. Specifically, UTC argues that the documents are relevant to the secondary
considerations of failure of others, copying, industry praise and commercial success. (Id.)
Parexel argues that UTC’s relevance argument is too speculative and attenuated to satisfy
its burden of proving relevance. Parexel also argues that responding to UTC’s subpoena would
be unduly burdensome because producing documents would violate its contractual obligation to
protect the confidentiality of the not-yet-public research it is conducting for its customer. (Dkt.
A. Legal Standard
Federal Rule of Civil Procedure 45 governs the use of subpoenas to obtain discovery
from non-parties. See FED. R. CIV. P. 45. A non-party witness is subject to the same scope of
discovery as a party is under Rule 34. See id. (Advisory Committee's note to the 1970
amendments). Under Rule 34, the rule governing the production of documents between parties,
the proper scope of discovery is as specified in Rule 26(b). FED. R. CIV. P. 34. Rule 26(b), in
turn, permits the discovery of any non-privileged material:
relevant to any party's claim or defense and proportional to the
needs of the case, considering the importance of the issues at stake
in the action, the amount in controversy, the parties’ relative access
to relevant information, the parties’ resources, the importance of
the discovery in resolving the issues, and whether the burden or
expense of the proposed discovery outweighs its likely benefit.
FED. R. CIV. P. 26(b)(1). This definition of relevance reflects amendments made in December
2015 that were intended to “[r]estor[e] proportionality as an express component of the scope of
discovery,” thereby preventing over-discovery and the use of discovery “for delay or
oppression.” FED. R. CIV. P. 26 (Advisory Committee’s note to the 2015 amendments).
As the recent amendments to Rule 26 make clear, the importance of the information
sought to the requesting party’s case and the burden on the producing party must be assessed as
part of the Court’s relevance determination. When it comes to assessing burden, courts are
generally more solicitous of non-parties. As the First Circuit has explained, “parties to a law suit
must accept [the invasiveness of discovery] as natural and concomitant of modern civil
litigation,” but “[n]on-parties have a different set of expectations. Accordingly, concern for the
unwanted burden thrust upon non-parties is a factor entitled to special weight . . . .” Cusumano
v. Microsoft Corp., 162 F.3d 708, 717 (1st Cir. 1998) (finding that district court “balanced the
right array of factors” and acted within its discretion when it determined “that the scales tipped in
favor of preserving confidentiality” and denied Microsoft’s motion to compel a third party to
35 U.S.C. § 103(a) provides that a patent is invalid “if the differences between the subject
matter sought to be patented and the prior art are such that the subject matters as a whole would
have been obvious at the time the invention was made to a person having ordinary skill in the art
to which said subject matter pertains.” 35 U.S.C. § 103(a). Obviousness is a “question of law
based on underlying findings of fact.” Leo Pharmaceutical Products, Ltd., 726 F.3d 1346, 1353
(Fed. Cir. 2013). The obviousness determination must be based upon the characteristics of the
prior art, the differences between prior art and the patented invention, the level of ordinary skill
at the time of invention, and “objective evidence of non-obviousness, if any.” Id. It is this last
inquiry to which UTC argues that its discovery requests are targeted.
In Graham v. John Deere Co., 383 U.S. 1 (1966), the Supreme Court first approved of
the use of “secondary considerations” that could indicate non-obviousness, including long-felt
need, commercial success and failure of others, as part of a Court’s obviousness inquiry.
Graham, 383 U.S. at 17-18 (citing Richard L. Robbins, Subtests of ‘Nonobviousness’: a
Nontechnical Approach to Patent Validity, 112 U. PA. L. REV. 1169 (1964)). The purpose of
using these factors is to promote consistency in obviousness determinations by providing the
court with “nontechnical facts” upon which it may rely instead of tasking the parties with
teaching the court “enough physics or other science in the limited time available to provide it
with a sufficient working knowledge to cope with the more technical facts.” Robbins, supra, at
1170-71. More recently, the Federal Circuit has held that where one party has chosen to
introduce evidence “arising out of the so-called ‘secondary considerations,’” the court must
consider that evidence in reaching its obviousness determination. Transocean Offshore
Deepwater Drilling, Inc. v. Maersk Drilling USA, Inc., 699 F.3d 1340, 1349 (Fed. Cir. 2012)
(citing Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d 1530, 1538 (Fed. Cir. 1983)).
UTC argues, in effect, that because a Court must consider “secondary consideration”
evidence where available, UTC is entitled to discovery from any entity that has analyzed or
studied its patented products, regardless of the nature of that research or analysis. 1 (Dkt. No.
27). However, the secondary consideration evidence that courts consider generally includes the
patent holder’s own documents, the alleged infringer’s documents, expert testimony, and trade
publications. See, e.g. Transocean Offshore Deepwater Drilling, Inc., 699 F.3d at 1349-53; see
also Pfizer, Inc. v. Mylan Pharmaceuticals, Inc., 71 F. Supp. 3d 458, 475-476 (D. Del. 2014).
UTC has not cited, and the Court has been unable to locate, any cases compelling discovery from
third parties uninvolved in the alleged patent infringement in order to “prove” objective indicia
of non-obviousness. This, coupled with the principle that third parties should not be burdened
with discovery requests where the same information is available from other sources, suggests
UTC argues that third party secondary consideration discovery becomes an overbroad “fishing expedition” only
when a party approaches “all entities in the industry to determine whether they have analyzed or studied” the
patented product. That UTC has constructed such an extreme scenario to support the reasonableness of its own
requests hurts its position more than it helps it.
that UTC is already treading in an area on the outskirts of permissible discovery. Nonetheless,
the Court considers each of UTC’s four relevance arguments.
1. Failure of Others
UTC argues that Parexel’s research using Tyvaso may be relevant to demonstrate that
others have tried, but failed to develop an inhaled pulmonary arterial hypertension treatment.
“[T]hat others failed to develop a claimed invention may carry significant weight in an
obviousness inquiry.” In re Cyclobenzaprine Hydrochloride Extended Release Capsule Patent
Litig., 676 F.3d 1063, 1081 (Fed. Cir. 2012). However, “[i]n receiving evidence of unsuccessful
research, courts must take care that such research was conducted under the same state of the art
as that which confronted the patentee.” Robins, supra, at 1173 n. 30 (citing Reiner v. I. Leon
Co., 285 F.2d 501, 504 (2nd Cir. 1960)). For example, in In re Cyclobenzaprine, which UTC
cites, the Federal Circuit held that evidence of a third party’s unsuccessful attempt to develop an
extended release muscle relaxant ten years before the patent holder’s success supported a finding
of non-obviousness. In re Cyclobenzaprine Hydrochloride Extended Release Capsule Patent
Litig., 676 F.3d at 1081; see also Pfizer, Inc. v. Mylan Pharmaceuticals, Inc., 71 F. Supp. 3d 458,
475 (D. Del. 2014) (fact that many others had tried to develop treatment for kidney and
pancreatic cancer before patent-holder developed successful angiogenesis blocking treatment
that could be used on these cancers was relevant to non-obviousness inquiry).
In contrast to the evidence considered in In re Cyclobenzaprine, UTC seeks information
about research conducted using Tyvaso, the patented invention. Research conducted using a
patented invention necessarily occurs after the invention has been developed and made available
to the public. The development and release of that invention changes the state of the art because
every artisan working in the field now has the benefit of the patented invention. As such,
evidence of research, successful or otherwise, conducted after Tyvaso’s invention is not relevant
to the question of whether Tyvaso was obvious at the time it was developed. See, e.g.,
Computrol, Inc. v. Lowrance Electronics, Inc., 893 F. Supp. 1440, 1460 (D. Idaho 1994) (noting
that it is the “prior failure of others” to develop a similar invention that is relevant to
obviousness); AstraZeneca LP v. Breth Ltd., 88 F. Supp. 3d 326, 390 (D.N.J. 2015) (describing
secondary consideration as “prior failures of others” and rejecting argument that failures of
patent holder should be taken into account).
UTC argues that documents related to Parexel’s research might demonstrate that Parexel
has copied at least some of the claims in UTC’s patents. The copying of a patented invention
may be evidence that an invention is not obvious where circumstances suggest that the copying
is motivated by the merits of the patented invention. See Crocs, Inc. v. International Trade
Commission, 598 F.3d 1294, 1311 (Fed. Cir. 2010); Apple, Inc. v. Samsung Electronics Co., Ltd.,
816 F.3d 788, 809-810 (Fed. Cir. 2016). Compare Cable Elec. Products, Inc. v. Genmark, Inc.,
770 F.2d 1015, 1028 (Fed. Cir. 1985) (noting that copying may also indicate obviousness such
as, for example, copying motivated by the belief that a particular patent is invalid); Bayer
Healthcare Pharm., Inc. v. Watson Pharm., Inc., 713 F.3d 1369, 1377 (Fed. Cir. 2013) (“copying
in the ANDA context is not probative of nonobviousness because a showing of bioequivalence is
required for FDA approval”). In this case, Parexel has represented that its research involves a
reformulation that is a “new compound that is not a generic equivalent of TYVASO,” (Dkt. No.
14), and “includes a single active pharmaceutical ingredient that differs structurally from
Tyvaso.” (Dkt. No. 28). In other words, Parexel has represented that the documents that UTC
seeks will not provide evidence of copying because Parexel’s client did not actually copy
Tyvaso. Parexel has also represented that it was hired to test the client’s product many years
after its development, which would make it highly unlikely that any document in Parexel’s
possession would describe the thought process that initially went into developing the product. In
this context, UTC’s argument that the documents sought are relevant to copying is simply too
speculative to justify granting its motion to compel.
3. Industry Praise
“Evidence of . . . acceptance and praise [of an invention] after patenting are probative
factors for evaluating non-obviousness.” Pfizer, Inc., 71 Supp. 3d at 476. For example, evidence
that a drug was “widely praised by researchers and doctors,” id., and positive articles in industry
publications have been admitted to demonstrate that particular inventions were break-throughs in
their industries. Transocean Offshore Deepwater Drilling, Inc., 699 F.3d at 1351. UTC argues
that Parexel may have documents that discuss its client’s positive view of Tyvaso and that such
documents would constitute “industry praise.” Like UTC’s copying argument, UTC’s industry
praise argument is simply too speculative in light of Parexel’s representations to justify the relief
sought. Further, UTC’s requests are extremely overbroad given the argued relevance of the
documents sought. It is difficult to justify ordering Parexel to turn over every single document it
has regarding its experimentation with Tyvaso because UTC believes a few of them might
contain positive statements about Tyvaso.
4. Commercial Success
Evidence that a patented product enjoys commercial success can demonstrate nonobviousness where there is a nexus between the product’s commercial success and the patented
features of the invention. Transocean Offshore Deepwater Drilling, Inc., 699 F.3d at 1349-50.
Despite the fact that commercial success is generally proven by introducing the patent-holders
own sales figures, UTC argues that it needs Parexel’s documents to rebut any argument by
Watson that Tyvaso’s success derived from something other than the patented features. The
reasoning of the court in Eli Lilly and Co. v. Sicor Pharmaceuticals, Inc., 705 F. Supp. 2d 971
(S.D. Ind. 2010), which UTC cites, disposes of this argument. In that case, a district court
rejected a generic drug manufacturer’s argument that a patent on a cancer drug was invalid for
obviousness. Discussing the blockbuster success of the patented drug, the court explained that in
cases where the infringing product “embodies the claimed features, and is coextensive with
them,” a nexus between commercial success and the merits of the patented invention is
presumed. Eli Lilly and Co., 705 F. Supp. 2d at 1008-09 (citing Brown & Williamson Tobacco
Corp. v. Philip Morris, Inc., 229 F. 3d 1120, 1130 (Fed. Cir. 2000)). That is because “[i]f the
patented drug were not a commercial success, generic manufacturers would have little interest in
offering their own versions of the drug.” Eli Lilly & Co. v. Zenith Goldline Pharms., Inc., 2001
WL 1397304, at *12 (S.D. Ind. Oct. 29, 2001). Watson, the alleged infringer in the NJ litigation,
is seeking to market a generic version of Tyvaso and will not be heard to argue that there is not a
nexus between Tyvaso’s success and its patented features. As such, UTC does not need
documents to rebut an argument that will not be raised.
Based upon the foregoing analysis, the Court concludes that UTC at best has established
that the information it seeks from Parexel has minimal relevance to the question of obviousness.
Weighing the burden that production of its client’s confidential documents would impose upon
Parexel against the limited value the documents have to UTC’s case, the Court concludes that it
would be inappropriate to compel Parexel to produce documents in response to the subpoena,
even as narrowed by UTC.
That is not to say that a third party should never have to produce documents that might
support a non-obviousness argument. If, for example, Parexel’s client actually was Watson as
UTC initially suspected, the Court would have no problem concluding that Parexel should be
ordered to produce at least some documents. But, under the facts presented here, granting UTC’s
motion would be tantamount to holding that anyone who conducts research on a patented product
can be ordered to produce all documents pertaining to that research in any subsequently filed
patent litigation. To impose such an obligation on non-parties to patent litigation would have the
effect of chilling invention, which is contrary to the intent of our patent system. See Graham,
383 U.S. at 9 (“The patent monopoly was not designed to secure to the inventor his natural right
in his discoveries. Rather, it was a reward, an inducement, to bring forth new knowledge.”).
Accordingly, UTC’s motion to compel is denied.
/s/ Donald L. Cabell
DONALD L. CABELL, U.S.M.J.
DATED: September 22, 2016
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?