HELSINN HEALTHCARE S.A. et al v. DR. REDDY'S LABORATORIES, LTD. et al

Filing 164

OPINION AND ORDER setting a Telephone Status Conference, which counsel for Pltfs shall initiate, for 7/10/2013 at 10:00 AM before Magistrate Judge Douglas E. Arpert; that 119 DRL's MOTION to Amend/Correct Invalidity Contentions, is G RANTED in part and DENIED in part; that 124 Teva's MOTION to Amend/Correct Invalidity Contentions, is GRANTED; that 120 Sandoz's MOTION to Amend/Correct Motion for Leave to Serve its Second Amended Invalidity Contentions; is GRANTED; that Defts shall serve their Amended Invalidity Contentions within 7 days from the date of this Order. Signed by Magistrate Judge Douglas E. Arpert on 7/2/2013. (gxh)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
HELSINN HEALTHCARE S.A. and
ROCHE PALO ALTO LLC,

:
:
:
Plaintiffs,
:
:
v.
:
:
DR. REDDY’S LABORATORIES
:
LTD, et al.,
:
:
Defendants.
:
___________________________________ :

Civil Action No. 11-3962 (MLC)
(consolidated)

OPINION AND ORDER

This matter comes before the Court on separate Motions to Amend Invalidity Contentions
by Defendants Sandoz Inc. (“Sandoz”), Teva Pharmaceuticals USA, Inc. and Teva
Pharmaceutical Industries Ltd. (collectively, “Teva”), and Dr. Reddy’s Laboratories, Ltd. and Dr.
Reddy’s Laboratories, Inc. (collectively, “DRL”) (collectively, “Defendants”) [dkt. nos. 119, 120,
124]. Plaintiffs Helsinn Healthcare S.A. (“Helsinn”) and Roche Palo Alto LLC (“Roche”)
(collectively, “Plaintiffs”) opposed the Motions [dkt. no. 130]. The Court has considered the
Parties’ submissions pursuant to FED. R. CIV. P. 78 and, for the reasons set forth below,
Defendants’ Motions are GRANTED, in part, and DENIED, in part.
I.

BACKGROUND
Plaintiffs sued Defendants for infringement of two patents relating to liquid formulations

of palonosetron on July 8, 2011. Plaintiffs filed suit on a third patent on September 23, 2011.
Collectively, the patents relate to Plaintiffs’ Aloxi ® product (“Aloxi” or “the accused product”).

The facts relevant to the instant Motions are as follows. Pursuant to the Court’s
December 2, 2011 Scheduling Order [dkt. no. 75]1, Defendants served their initial Invalidity
Contentions on December 1, 2011. Prior to serving its initial Invalidity Contentions or
conducting any discovery, Sandoz also provided Plaintiffs with notice of an on-sale bar defense
relating to a transaction with a company called Oread Laboratories, Inc. (“Oread”) that appeared
in the public prosecution history for the patents-in-suit. After receiving that notice, Plaintiffs and
Sandoz engaged in settlement discussions, which continued through Summer 2012.
The Parties completed claim construction briefing and U.S. District Judge Mary L.
Cooper conducted a Markman hearing on September 7, 2012. Judge Cooper has reserved claim
construction rulings until trial. See dkt. nos. 103, 104.
Between January 2012 and November 2012, the Parties exchanged a substantial number
of documents to meet the discovery deadlines in this case. In September 2012, it became clear
that the settlement discussions between Plaintiffs and Sandoz would not resolve the matter.
Therefore, pursuant to a stipulation between Plaintiffs and Sandoz, the Court permitted Sandoz
to (a) amend its contentions to assert the “on-sale” defense; and (b) conduct discovery relating to
those newly added defenses. See dkt. no. 102 (September 12, 2012 Stipulation and Order) (the
“September 12 Order”).
Pursuant to the Court’s September 12 Order, Sandoz served its First Amended Invalidity
Contentions on September 25, 2012. Sandoz alleged, based on documents submitted by the
patentees during prosecution of the patents-in-suit, that the claimed invention was “ready for
patenting” by March 24, 1999, and that Helsinn appeared to have purchased a substantial

1

The December 2, 2011 Scheduling Order memorialized dates by which Defendants were
required to serve their Invalidity Contentions based on the Parties’ previously approved Joint
Discovery Plan.
2

quantity of palonosetron from a third party supplier, Oread, under circumstances that constituted
a commercial sale or offer for sale. Sandoz’s Br. at 4 (citing First Amended Invalidity
Contentions).
On December 27, 2012, the Court granted pro hac vice motions admitting counsel from
the law firm of Morrison & Foerster, who thereafter became co-lead counsel for Sandoz, along
with Cozen O’Connor and Hill Wallack LLP. On January 7, 2013, Hui Liu, Esq., of Morrison &
Foerster began reviewing Plaintiffs’ document production. One of Ms. Liu’s primary objectives
was to identify Plaintiffs’ internal documents that related to Sandoz’s on-sale bar defense.
Through her review, Ms. Liu identified a number of Plaintiffs’ internal documents that provided
additional and stronger support for Sandoz’s on-sale bar defense. In addition, according to
Sandoz, in December 2012, Plaintiffs substantially changed the identities of the named inventors
in this action indicating a potentially invalidating defect in their inventorship claims. Sandoz
claims this fact, coupled with its review of certain of Plaintiffs’ documents, support its new
inventorship defense.
On January 16, 2013, Sandoz notified Plaintiffs of its intention to move to amend its
invalidity contentions based on counsel’s review of Plaintiffs’ document production. The Court
held a status conference with the Parties on January 17, 2013. At that time, DRL and Teva also
informed the Court of their intention to move to amend their Invalidity Contentions. 2 The
Defendants unsuccessfully attempted to obtain Plaintiffs’ consent to amend their Invalidity
Contentions. Thereafter, pursuant to a briefing schedule set by the Court, Defendants filed the
instant Motions on February 15, 2013.

2

It is unclear when either DRL or Teva first notified Plaintiffs of their respective intentions to
move to amend their Invalidity Contentions.
3

II.

LEGAL STANDARD
The District’s Local Patent Rules “exist to further the goal of full, timely discovery and

provide all parties with adequate notice and information with which to litigate their cases.”
Computer Accelerations Corp. v. Microsoft Corp., 503 F.Supp.2d 819, 822 (E.D.Tex. 2007). The
rules are designed specifically to “require parties to crystallize their theories of the case early in
litigation and to adhere to those theories once they have been disclosed.” Atmel Corp. v. Info.
Storage Devices, Inc., 1998 WL 775115, at *2 (N.D. Cal. Nov. 5, 1998). This is “to ‘prevent the
‘shifting sands’ approach to claim construction.’” O2 Micro Int'l Ltd. v. Monolithic Power Sys.,
Inc., 467 F.3d 1355, 1364 (Fed. Cir. 2006) (citing Atmel, 1998 WL 775115, at *2). As
distinguished from the liberal standard for amending pleadings, “the philosophy behind
amending claim charts is decidedly conservative.” Atmel, 1998 WL 775115, at *2. However,
Rule 3.7 “is not a straitjacket into which litigants are locked from the moment their contentions
are served”; instead, “a modest degree of flexibility [exists], at least near the outset.” Comcast
Cable Communs. Corp. v. Finisar Corp., 2007 WL716131, at *2 (N.D. Cal. March 2, 2007).
Pursuant to L. Pat. R. 3.7, leave to amend invalidity contentions may be granted “only by
order of the Court upon a timely application and showing of good cause.” Rule 3.7 provides a
nonexhaustive list of circumstances that may, absent undue prejudice to the adverse party,
support a finding of good cause:
(a) a claim construction by the Court different from that proposed
by the party seeking amendment; (b) recent discovery of material
prior art despite earlier diligent search; (c) recent discovery of
nonpublic information about the Accused Instrumentality which
was not discovered, despite diligent efforts, before the service of
the Infringement Contention; (d) disclosure of an infringement
contention by a Hatch- Waxman Act party asserting infringement
under L. Pat. R. 3.6(g) that requires response by the adverse party
because it was not previously presented or reasonably anticipated;
and (e) consent by the parties in interest to the amendment and a
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showing that it will not lead to an enlargement of time or impact
other scheduled deadlines . . . .
L. Pat. R. 3.7. Good cause “considers first whether the moving party was diligent in amending its
contentions and then whether the non-moving party would suffer prejudice if the motion to
amend were granted.” Acer, Inc. v. Tech. Prob. Ltd., 2010 WL 3618687, at *3 (N.D. Cal. Sept.
10, 2010) (citing O2 Micro, 467 F.3d 1355, 1355). Importantly, however, the Court may only
consider prejudice to the non-moving party if the moving party is able to demonstrate diligence.
Apple v. Samsung, 2012 U.S. Dist. LEXIS 83115, at *13 (N.D. Cal. Mar. 27, 2012) (collecting
cases).
Courts have understood diligence to require a “showing that the party seeking leave to
amend acted . . . promptly [in] moving to amend when new evidence is revealed in discovery.”
O2 Micro, 467 F. 3d 1355, 1363, 1366 (collecting cases). This requirement is consistent with L.
Pat. Rule 3.7’s requirement that the Motion be “timely.” As with good cause in general, the
burden “is on the movant to establish diligence rather than on the opposing party to establish lack
of diligence.” O2 Micro, 467 F. 3d 1355, 1366.
In determining whether good cause exists, courts have also considered such other factors
as (1) the reason for the delay, including whether it was within the reasonable control of the party
responsible for it; (2) the importance of what is to be excluded; (3) the danger of unfair
prejudice; and (4) the availability of a continuance and the potential impact of a delay on judicial
proceedings. See Oy Ajat, Ltd. v. Vatech Am., Inc., 2012 WL 1067900, at *20-21 (D.N.J. Mar.
29, 2012) (collecting cases).

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III.

DISCUSSION
A.

Sandoz’s Motion

Sandoz seeks leave to supplement its on-sale bar defense and to add a new inventorship
defense. First, Sandoz has identified three instances which it claims show that the claimed
invention was on sale more than one year prior to the “Critical Date.”3 Specifically, Sandoz
identifies three agreements to manufacture or deliver the claimed invention: (1) Plaintiffs’ 1998
dealings with Oreal; (2) Plaintiffs’ 2000 dealings with SP Pharmaceuticals (“SP”); and (3)
Plaintiffs’ 2000 dealings with MGI Pharma, Inc. (“MGI”).
Sandoz argues its application is timely and is supported by good cause, for (at least) the
following reasons: (1) Sandoz advised Plaintiffs of its proposed amendments within two months
of the completion of document production, and provided Plaintiffs with a copy two weeks before
the first deposition in the case; (2) the proposed amendments represent only further development
of the on-sale bar defense disclosed by Sandoz over one year ago; and (3) the subject matter of
the proposed amendments is extremely important. Sandoz’s Br. at 14.
In opposition, Plaintiffs argue that Sandoz was not diligent in moving to amend.
Specifically, Plaintiffs claim Sandoz’s proposed Amended Invalidity Contentions are based on
long-available information and present new legal and factual theories not previously disclosed.
1.

Diligence & Timeliness

In this case, Sandoz has made a threshold showing that it was diligent in moving to
amend its Invalidity Contentions following discovery of new information. Sandoz cites ten
documents in support of its proposed amendments. Eight of those documents were produced in

3

In this case, as the parent application for all three patents-in-suit was filed on January 30, 2003,
the Critical Date is January 30, 2002.
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June 2012 and two more documents were produced in November 2012. Cert. of H. Liu at ¶ 7.
Plaintiffs claim that they produced documents as early as May 2012 which should have
alerted Sandoz to the defenses it now seeks to raise. Pl.’s Opp. at 5 (referring to document
included in Sandoz’s initial Invalidity Contentions, the “Stacher Reference”). Plaintiffs also
point out that at least eight of the documents Sandoz now relies on were produced as early as
June 2012. Id. at 8-9. Plaintiffs, however, do not dispute that their document production was not
complete until November 2012. Indeed, it appears that more than half of Plaintiffs’ production
occurred at that time, including at least two documents which Sandoz claims are critical to its
proposed amended Invalidity Contentions. See Decl. of H. Liu at ¶ 7 (Ex.’s A-J). That pieces of
the puzzle might have been revealed at earlier times does not mean that a complete picture was
likewise available. It is reasonable to conclude, therefore, that Sandoz was not able to formulate
a “comprehensive story of Plaintiffs’ commercial activities in violation of the on-sale bar,”
Sandoz’s Br. at 5, until Plaintiffs had completed their document production.4
Sandoz also maintains its delay in moving to amend is justified by ongoing settlement
discussions as well as its own document production. See Sandoz Reply at 2. These arguments are
not, in and of themselves, independently compelling. To be sure, a party should not be able to
avoid its responsibilities in one respect (i.e., diligence in moving to amend) simply because it has
concurrent discovery obligations or ongoing settlement discussions. However, when viewed in
context, they suggest Sandoz was conscientiously pursuing its obligations in this case and further
counsel against a finding of neglect or lack of diligence.
Sandoz was also diligent in moving to amend following discovery of new evidence to
support its inventorship defense. Sandoz’s inventorship defense is based on papers Plaintiffs
4

This is not to say that Sandoz acted as expeditiously as possible. Still, when viewed on balance,
the Court believes Sandoz’s proposed amendments should be permitted.
7

filed with the U.S. Patent and Trademark Office in December 2012 seeking to remove Enrico
and Riccardo Braglia as inventors from each of the patents-in-suit. Based on Plaintiffs’ actions in
removing these inventors, Sandoz began researching the potential new inventorship defense. On
November 14, 2012, Plaintiffs produced a May 1995 “Formulation Book for Intravenous Dosage
Forms” (the “Formulation Book”) prepared by Dr. Roger Fu from nonparty Syntex. This book,
according to Sandoz, demonstrates that the invention may have been conceived at Syntex.
Plaintiffs argue that Sandoz was not diligent with respect to its inventorship defense
because the Formulations Book was previously produced. However, although excerpts of the
Formulations Book were, in fact, produced, the entire book was not produced until November
2012. And, more importantly, Plaintiffs did not seek to remove the previously named inventors
until December 2012—just one month before Sandoz filed its Motion to Amend. Thus, when
viewed in context, it appears Sandoz did diligently move to amend after it learned of the possible
defense.
Finally, Plaintiffs’ reliance on this Court’s decision in King Pharmaceuticals, Inc. v.
Sandoz Inc., 2010 WL 2015258 (D.N.J. May 20, 2010), is misplaced. King involved Sandoz’s
attempt to amend its Invalidity Contentions nearly eight months after serving its initial Invalidity
Contentions. Id. at 1. In that case, Sandoz based its motion to amend on documents which had
been available to it for 18 months prior to filing its motion. Id. This Court denied Sandoz’s
motion because “waiting 18 months to appreciate the materiality” of the publications which gave
rise to the motion to amend did not demonstrate diligence in moving to amend. Id. at *4. This
Court also denied Sandoz’s motion because the proposed amendments in that case would “delay
discovery, lengthen the life of this case and ultimately prejudice Plaintiffs.” Id. at *5.

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In this case, although Sandoz served its initial Invalidity Contentions in December 2011,
its First Amended Invalidity Contentions were not served until November 2012. In contrast to
King, Sandoz here took only two months to seek leave to amend its First Amended Invalidity
Contentions. In addition, Sandoz claims that it was not until document production was complete
in November 2012 that it fully appreciated the materiality of documents they claim support their
Motion. Accepting this as true, it took Sandoz only two months from that time to move to
amend. 5 Furthermore, as discussed below, the Court here does not have similar concerns
regarding prejudice and delay.
2.

Prejudice

In deciding whether Plaintiffs’ proposed amendments would unfairly prejudice Plaintiffs,
the Court considers whether permitting the proposed amendments would (1) require Plaintiffs to
expend significant additional resources; or (2) significantly delay the resolution of the dispute.
TFH Publications, Inc. v. Doskocil Mfg. Co., Inc., 705 F. Supp. 2d 361, 366 (D.N.J. 2010); see
also O2 Micro, 467 F.3d at, 1366-68.
Here, Plaintiffs will suffer no prejudice if Sandoz is granted leave to amend. Fact
discovery closed on May 15, 2013 and will likely not need to be reopened because of the new
Invalidity Contentions.

6

Although depositions are ongoing, the Parties have agreed to

conditionally allow questions regarding the proposed amendments. Expert discovery is also
ongoing. The deadline for dispositive motions is not until August 16, 2013, and a trial date has
5

Plaintiffs place great emphasis on a document relied on by Sandoz in its December 2011
Invalidity Contentions, the “Stacher Reference”. See, e.g., Pl.’s Opp. at 5. Plaintiffs claim the
Stacher Reference evidences Plaintiffs’ agreement with MGI. Id. at 5-6. Plaintiffs, however, fail
to adequately support their position that a single paragraph in this document should have led
Sandoz to conclude that Plaintiffs had reached an agreement with MGI prior to the Critical Date.
6
To the extent the Parties need to conduct additional discovery regarding Sandoz’s new
inventorship defense, the Court believes such discovery will be minimal. Thus, there would be
no significant prejudice to Plaintiffs in this regard.
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not yet been set. By all accounts, the litigation is progressing according to schedule. Allowing
the proposed Amended Invalidity Contentions, therefore, will not cause Plaintiffs to incur
additional expenses or significantly delay resolution of this matter.
Moreover, in contrast to Plaintiffs, Sandoz may be significantly prejudiced if it is not
permitted to proceed with its proposed new defenses. Plaintiffs do little to contradict Sandoz’s
position that the evidence is potentially fatal to Plaintiffs’ case (and patent). As a result,
preventing Sandoz from presenting all of its defenses would not facilitate resolution on the
merits. See Acco Brands, Inc. v. PC Guardian Anti-Theft Prods., Inc., 2008 U.S. Dist. LEXIS
88142 (N.D. Cal. May 22, 2008) (granting motion to amend invalidity contetions and discussing
court’s preference to decide cases on the merits); see also Dole v. Arco Chem. Co., 921 F.2d
484, 487 (3d Cir. 1990) (discussing strong policy for deciding claims on the merits as opposed to
technicalities). This notion is especially true where, as here, any risk of unfair surprise or delay is
mitigated by the fact that Plaintiffs’ own documents (and actions) form the bases of the proposed
Amended Invalidity Contentions. Contra CoreLogic Info. Solutions, Inc. v. Fiserv, Inc., 2012
WL 4051823, at *3 (E.D. Tex. Sept. 13, 2012) (denying motion to amend invalidity contentions
where movant “fail[ed] to appreciate the importance of enforcing the disclosure and discovery
rules to ensure that outcomes are based upon the merits, and not unduly influenced by surprise
and delay.”). Accordingly, Sandoz’s Motion is GRANTED.
B.

Teva’s Motion

Teva also seeks leave to amend its Invalidity Contentions to include on-sale bar defenses
that are substantially identical to Sandoz’s. Teva’s proffered bases for granting leave to amend
are likewise substantially the same as Sandoz’s. As a result, the discussion above is incorporated
by reference, and Teva’s Motion is GRANTED.

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C.

DRL’s Motion

DRL seeks leave to amend its Invalidity Contentions as to the obviousness of the patentsin-suit by adding certain pieces of prior art; namely, three Helsinn press releases totaling six
pages. According to DRL, these “newly-discovered prior art press releases strengthen DRL’s
existing contention that the patents-in-suit are invalid for obviousness.” DRL’s Br. at 1.
Plaintiffs once again point out that the press releases cited by DRL were produced first in
May 2012 and later in June 2012. Pl.’s Opp. at. 23. For substantially the same reasons discussed
with respect to Sandoz above, the Court concludes that DRL was diligent in moving to amend;
that is, DRL did not have a complete picture of Plaintiffs’ actions until document production was
complete.
Furthermore, Plaintiffs have not demonstrated any tangible prejudice which would result
if the press releases are permitted. In fact, Plaintiffs even argue that the press releases “are
simply not material because, among other reasons, they are at best cumulative of other
documents that [DRL] already cites.” Id. at 25. DRL, moreover, has stated that the press releases
do not add a new defense, but rather add to its existing obviousness defense. The Court,
therefore, concludes that the press releases would not cause additional expense or delay.
Accordingly, DRL’s Motion in this regard is GRANTED.
In addition to the press releases, DRL also asks the Court to grant it leave to amend its
Invalidity Contentions to “incorporate by reference” any amendments permitted as to Sandoz
and/or Teva. DRL’s Br. at 1. DRL’s request, without more, does not obviate DRL’s need to
comply with Local Patent Rule 3.7. Cf. Johnson v. Manhattan Ry. Co., 289 U.S. 479, 496-97
(1933) (“[C]onsolidation is permitted as a matter of convenience and economy in administration,
but does not merge the suits into a single cause, or change the rights of the parties, or make those

11

who are parties in one suit parties in another.”). Accordingly, DRL’s Motion is this regard is
DENIED.
IV.

CONCLUSION & ORDER
The Court has considered the papers submitted pursuant to FED. R. CIV. P. 78 and, for the

reasons set forth above,
IT IS on this 2nd day of July, 2013,
ORDERED that Sandoz’s Motion to Amend its Invalidity Contentions is GRANTED;
and it is further
ORDERED that Teva’s Motion to Amend its Invalidity Contentions is GRANTED; and
it is further
ORDERED that DRL’s Motion to Amend its Invalidity Contentions is GRANTED, in
part, and DENIED, in part; and it is further
ORDERED that Defendants shall serve their Amended Invalidity Contentions within
seven (7) days from the date of this Order; and it is further
ORDERED that a telephone status conference, to be initiated by counsel for Plaintiffs,
has been scheduled in this matter for July 10, 2013 at 10:00 AM.

/s/ Douglas E. Arpert
DOUGLAS E. ARPERT
UNITED STATES MAGISTRATE JUDGE

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