OTSUKA PHARMACEUTICAL CO., LTD. v. TORRENT PHARMACEUTICALS LIMITED et al
Filing
246
MEMORANDUM OPINION. Signed by Chief Judge Jerome B. Simandle on 5/4/2016. (tf, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
OTSUKA PHARMACEUTICAL CO.,
LTD.,
Plaintiff,
v.
TORRENT PHARMACEUTICALS
LIMITED, INC., TORRENT PHARMA
INC., and HETERO LABS LIMITED,
HONORABLE JEROME B. SIMANDLE
Civil Action No.
14-4671 (JBS/KMW)
MEMORANDUM OPINION
Defendants.
SIMANDLE, Chief Judge:
In this Hatch Waxman Act case, see 35 U.S.C. §§ 271, 281,
Plaintiff Otsuka Pharmaceutical Co, Ltd. (hereinafter, “Otsuka”)
advances its position that the abbreviated new drug application
(hereinafter, “ANDAs”) of Defendants Torrent Pharmaceuticals
Limited, Inc. and Torrent Pharma Inc. (collectively, “Torrent”)
infringe the various patents covering Otsuka’s aripiprazole
product, Abilify®.1
In the aftermath of various amendments to the parties’
pleadings, Otsuka now moves to dismiss Torrent’s Third
Counterclaim for “Unlawful Monopolization in Violation of the
Sherman Act: Sham Litigation,” on the grounds that its current
1
The patents asserted by Otsuka in this infringement action
specifically include U.S. Patent Nos. 8,642,760 (“the ’760
patent”) and 8,759,350 (hereinafter, “the ’350 patent”). (See
generally Third Am. Compl. at ¶ 5.)
presence on the newly-formed generic aripiprazole market
precludes Torrent from demonstrating the antitrust injury
necessary for antitrust standing.2
Otsuka’s Reply at 1-3.)
(See Otsuka’s Br. at 1-4;
Torrent, in opposition, concedes that
it launched a generic aripiprazole product in April 2015,
following this Court’s decision denying Otsuka’s motion for
injunctive relief, see Otsuka Pharm. Co. v. Torrent Pharm. Ltd.,
Inc., 99 F. Supp. 3d 461 (D.N.J. 2015), and impliedly
acknowledges that its allegations of “exclusionary” conduct no
longer fairly buttress its antitrust Counterclaim.
Torrent’s Opp’n at 1-6.)
(See
For that reason, Torrent turns its
attention to the defense costs incurred in this action as the
source of its ongoing antitrust injury.
(See id. at 4-6.)
The Court has addressed the viability of similar
counterclaims in Otsuka Pharm. Co. v. Torrent Pharm. Ltd., Inc.,
118 F. Supp. 3d 646, 649 (D.N.J. 2015)3 and Otsuka Pharm. Co. v.
Apotex Corp., ___ F. Supp. 3d ____, No. 14-8074, 2015 WL 4756636
(D.N.J. Aug. 11, 2015), and tracks the discussion in Torrent and
2
In the alternative, Otsuka requests that the Court bifurcate
and stay Torrent’s Counterclaim pending resolution of the
primary infringement issues. (See Otsuka’s Br. at 5; Otsuka’s
Reply at 4.)
3 Torrent differs from this action (which also involves Torrent)
in terms of the patents asserted by Otsuka. More specifically,
in this action, as recounted above, Otsuka asserts the ’760 and
’350 patents. (See generally Third Am. Compl. at ¶ 5.) In
Torrent, by contrast, Otsuka asserts U.S. Patent Nos. 8,017,615
and 8,580,796. (See Second Am. Compl. in 14-1078 at ¶ 5.)
2
Apotex.
Torrent’s commercial launch, coupled with its reliance
upon costs of defense as an antitrust injury, however, places
the pending action in a contextually different posture from the
circumstances addressed in Torrent and Apotex.
For the reasons that follow, Otsuka’s motion will be
granted to the extent it seeks dismissal, and Torrent’s
antitrust Counterclaim will be dismissed without prejudice.
The
Court finds as follows:
1.
Factual and Procedural Background.4
For purposes of
the pending motions, the Court need not retrace the lengthy
factual and procedural background of this infringement action.
Rather, it suffices to note that, on November 15, 2002, Otsuka
obtained Food and Drug Administration (hereinafter, the “FDA”)
approval to market its aripiprazole product, Abilify®, under New
Drug Application (hereinafter, “NDA”) No. 21-436.
4
(See
For purposes of the pending motion, the Court accepts as true
the version of events set forth in Torrent’s Counterclaim,
together with matters of public record. See Schmidt v. Skolas,
770 F.3d 241, 249 (3d Cir. 2014); see also ACR Energy Partners,
LLC v. Polo N. Country Club, Inc., ___ F. Supp. 3d ____, Nos.
15-2677 & 15-5324, 2015 WL 6757574, at *1 n.2 (D.N.J. 2015)
(same). For that reason, the Court takes note, as a matter of
public record, of Torrent’s FDA approval to market a generic
aripiprazole product, as well as their subsequent commercial
launch. See Gross v. Stryker Corp., 858 F. Supp. 2d 466, 482
n.26 (W.D. Pa. 2012) (taking note of FDA product approval
information); see also Press Release, U.S. Food and Drug
Administration, FDA Approves first generic Abilify to treat
mental illnesses (April 28, 2015), available at
http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm444
862.htm.
3
generally Third Am. Compl. at ¶¶ 5 & 17.)
Despite the
exclusivity associated with Otsuka’s aripiprazole patents, on
June 19, 2015, Torrent filed Abbreviated New Drug Application
(hereinafter, “ANDA”) No. 20-1519 with the FDA, seeking approval
to market generic aripiprazole tablets in the United States,
prior to expiration of Otsuka’s Abilify® patents.
Countercl. at ¶¶ 8-15.)
(See
In connection with that filing, and in
a subsequent notice to Otsuka, Torrent expressed the view that
its generic aripiprazole product would not infringe any valid or
enforceable claim of the ’760 patent.
2.
(See id. at ¶ 14.)
Despite this representation, Otsuka initiated the
pending infringement action, and Torrent’s antitrust
Counterclaim followed.
In the Counterclaim, Torrent alleges,
more specifically, that Otsuka has initiated “meritless
litigation” in an effort to erect barriers to entry to, and
otherwise stifle competition in, the aripiprazole market—a
market long monopolized by Otsuka.
(Id. at ¶¶ 26-50.)
Torrent
alleges, in turn, that these “exclusionary, anticompetitive, and
unlawful activities ... threaten loss or damage to Torrent” by
forestalling, frustrating, and preventing Torrent’s ability to
compete.
(Id. at ¶¶ 49-50.)
Against that backdrop, the Court
turns to whether these allegations plausibly demonstrate an
antitrust injury.
4
3.
Standard of Review Applicable to Otsuka’s Challenge to
Torrent’s Antitrust Standing.5
As explained in Torrent and
Apotex, “[i]n order to plead an antitrust injury, the party must
allege facts showing (1) that it suffered an injury of the type
the antitrust laws seek to prevent, e.g., anticompetitive
behavior, and (2) that the injury resulted from the adversary’s
unlawful or anti-competitive acts.”
Torrent, 118 F. Supp. 3d at
652-53 (footnote omitted); see also Apotex, ___ F. Supp. 3d
____, 2015 WL 4756636, at *3 (citations omitted) (relying upon
Torrent for the same premise).
Against this rubric, the
“‘hallmark’ for evaluating the plausibility of an allegation of
antitrust injury” hinges upon whether the allegedly
anticompetitive conduct “‘bear[s] consequence for the overall
market, rather than only for [the] individual competitor.”
Apotex, ___ F. Supp. 3d ____, 2015 WL 4756636, at *4 (quoting
Torrent, 118 F. Supp. 3d at 653 (quoting TransWeb, LLC v. 3M
5
As explained in Torrent and Apotex, the federal antitrust laws
require an antitrust claimant to meet the “prudential
requirement” of “‘antitrust standing.’” Torrent, 118 F. Supp.
3d at 652 (citation omitted). In Ethypharm S.A. France v.
Abbott Labs., 707 F.3d 223 (3d Cir. 2013), the Court of Appeals
for the Third Circuit outlined a five-factor test relative to
this inquiry, but deemed the second factor, “antitrust injury,”
the essential precondition for antitrust standing. Id. at 232.
Here, the parties focus their analysis only on the issue of
antitrust injury, and so the Court need not address the other
factors.
5
Innovative Props. Co., No. 10-4413, 2011 WL 2181189, at *18
(D.N.J. June 1, 2011))).
4.
Application of these principles here requires
dismissal of Torrent’s antitrust Counterclaim.
Indeed, Torrent
concedes that its claim rests exclusively upon its individual
incurrence of defense costs in this litigation.
Torrent’s Opp’n at 3-6.)
(See generally
Torrent’s newly-minted theory,
however, finds no support in the allegations of Torrent’s
antitrust counterclaim.
(See Counterclaim. at ¶¶ 26-50.)
Indeed, Torrent roots its antitrust Counterclaim solely on
market exclusion, not the defense costs incurred in defending
against this litigation.
(See, e.g., id. at ¶¶ 35-39 (generally
alleging that Otsuka’s “predatory” conduct evidences an
intention to “injure or destroy competition” by prevent new
market entrants), ¶¶ 42-45 (generally alleging that Otsuka’s
“meritless” infringement litigations aim to continue its
“monopoliz[ation] [of] the relevant market”), ¶¶ 46-50
(generally alleging that Otsuka’s “exclusionary, anticompetitive
and unlawful actions” have caused “lost profits and business
opportunities”).)
This deficiency, standing alone, requires
dismissal of Torrent’s Counterclaim.
See Bell Atl. Corp. v.
Twombly, 550 U.S. 544 (2007) (explaining that a plausible
complaint must contain allegations concerning each “material
elements necessary to sustain recovery”).
6
5.
Beyond this, even if the Court broadly construed
Torrent’s Counterclaim to include allegations directed at costs
of defense and determined that these costs constitute a
qualifying antitrust injury,6 the allegations of Torrent’s
Counterclaim nowhere tether Torrent’s payment of defense costs
in this litigation (and the related Torrent action) to harm
borne by the market-at-large.
See In re Hypodermic Prods.
Antitrust Litig., MDL No. 1730, 2007 WL 1959224, at *5 (D.N.J.
June 29, 2007) (citation omitted) (explaining that that
“antitrust complaints ... should be liberally construed”).
Stated differently, Torrent does not allege that Otsuka’s
anticompetitive conduct has, through these costs of litigation,
somehow harmed the competitive landscape, nor that these costs
have prevented Torrent from pursuing its entry into the
aripiprazole market.
See Eichorn v. AT&T Corp., 248 F.3d 131,
140 (3d Cir. 2001) (explaining that an allegation of an
6
The parties dispute whether costs of defense amount to a
recognized antitrust injury. (Compare Torrent’s Opp’n at 4-6,
with Otsuka’s Reply at 3-4.) In TransWeb, LLC v. 3M Innovative
Properties Co., 812 F.3d 1295 (Fed. Cir. 2016), the Court of
Appeals for the Federal Circuit appears to have recognized, at
least impliedly, that costs incurred in defense of an
infringement action amount to an injury derived from the
antitrust wrong. Id. at 1309-12. Thus, although Transweb, LLC
addressed itself to the issue of recoverable antitrust damages,
its broad discussion of defense costs as an injury traceable to
the claimed antitrust wrong lends obvious credence to Torrent’s
position. See id. Nevertheless, in view of the deficiencies
recounted above, the Court need not definitively resolve this
issue.
7
antitrust injury must reflect that the challenged activity had
an “anti-competitive effect on the [overall] competitive
market”).
Rather, Torrent’s allegations demonstrate little more
than that Otsuka’s claimed conduct had an adverse financial
effect on a particular competitor (namely, Torrent).
These
limited allegations, accepted as true, however, fail to allege a
qualifying antitrust injury.
Id. (reasoning that an antitrust
injury does not lie unless the allegedly anticompetitive conduct
“has a wider impact on the [overall] competitive market”); see
also Irish v. Ferguson, 970 F. Supp. 2d 317, 365 (M.D. Pa. 2013)
(citations omitted) (explaining that the pleaded facts must show
“that ‘the challenged action has had an actual adverse effect on
competition as a whole in the relevant market,’” rather than
just an adverse effect on the particular competitor); Brotech
Corp. v. White Eagle Int’l Techs. Grp., Inc., No. 03-232, 2004
WL 1427136, at *7 (E.D. Pa. June 21, 2004) (finding “payment of
defense costs” insufficient to allege antitrust injury).
6.
Conclusion.
For all of these reasons, Otsuka’s motion
to dismiss will be granted, and Torrent’s antitrust Counterclaim
will be dismissed.7
Nevertheless, because Torrent may be able to
7
As a result, the Court need not reach the parties’ positions on
the bifurcation. In the event Torrent restates its antitrust
Counterclaim, the Court would, however, be inclined to follow
the path charted in Torrent and Apotex by bifurcating and
staying the antitrust Counterclaim, pending resolution of the
primary patent infringement claims. See Torrent, 118 F. Supp.
8
cure the deficiencies identified within this Memorandum Opinion,
the Court will grant Torrent leave to amend with fourteen (14)
days, to the extent such an amendment can be made consistent
with counsel for Torrent’s obligations under Federal Rule of
Civil Procedure 11(b) and the holdings of this Memorandum
Opinion.8
7.
An accompanying Order will be entered.
May 4, 2016
Date
s/ Jerome B. Simandle
JEROME B. SIMANDLE
Chief U.S. District Judge
3d at 659-60 (bifurcating and staying); Apotex, ___ F. Supp. 3d
____, 2015 WL 4756636, at *7 (same).
8 The Court harbors some doubts about whether any amount of
pleading supplementation would add life to Torrent’s antitrust
Counterclaim, particularly given its commercial launch nearly
one year ago. Beyond this, the nature and crux of Torrent’s
allegations appear better aligned with a post-judgment request
for attorneys’ fees under 35 U.S.C. § 285. Nevertheless, the
Court leaves open the possibility that amended allegations may
bring into focus the basis, if any, for Torrent’s post-launch
antitrust theory.
9
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?