DEPOMED, INC. v. PURDUE PHARMA L.P. et al
Filing
89
MEMORANDUM OPINION filed. Signed by Magistrate Judge Tonianne J. Bongiovanni on 7/25/2014. (eaj)
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
DEPOMED INC.,
Plaintiff,
v.
Civil Action No. 13-571 (JAP)
MEMORANDUM OPINION
PURDUE PHARMA L.P., et al.,
Defendants.
BONGIOVANNI, Magistrate Judge
This matter comes before the Court upon Defendants Purdue Pharma L.P., P.F.
Laboratories, Inc. and Purdue Pharmaceuticals L.P.’s (collectively, “Purdue”) application to stay
discovery pending the Patent Trial and Appeal Board’s (the “PTAB”) decisions on Purdue’s
three petitions for inter partes review (“IPR”). Plaintiff Depomed, Inc. (“Depomed”) opposes
Purdue’s application for a stay. The Court has fully reviewed and considered all of the
arguments made in support of and in opposition to Purdue’s application. The Court considers
same without oral argument pursuant to L.Civ.R. 78.1(b). For the reasons set forth more fully
below, Purdue’s motion is GRANTED.
I.
Background and Procedural History
On January 29, 2013, Depomed filed the Complaint in this matter alleging that Purdue
infringed three of Depomed’s patents: U.S. Patent Nos. 6,340,475 (the “‘475 patent”), 6,635,280
(the “‘280 patent”) and 6,723,340 (the “‘340 patent”). [Docket Entry No. 1]. Thereafter, on July
23, 2013, Depomed amended its Complaint to add a fourth patent, U.S. Patent No. 8,329,215
(the “‘215 patent”) to this lawsuit. [Docket Entry No. 49]. Depomed claims that Purdue’s
OxyContin®, a controlled-release oxycodone pain relief medication, infringes the patents-in-suit.
As such, Depomed seeks a judgment that Purdue has infringed the patents-in-suit, a permanent
injunction enjoining Purdue from manufacturing, using, offering to sell or selling OxyContin®
until the patents-in-suit expire as well as money damages. On August 9, 2013, Purdue responded
to Depomed’s Amended Complaint denying infringement, asserting various affirmative
defenses, including, but not limited to, noninfringement and invalidity, and asserting
counterclaims seeking declarations of noninfringement and invalidity. (See generally Purdue’s
Answer to Amended Complaint and Amended Counterclaims; Docket Entry No. 50).
On January 15, 2014, the parties submitted a letter to the Court indicating that they had
agreed to dismiss with prejudice all claims and defenses related to two of the four patents-in-suit,
the ‘340 and ‘215 patents. (Letter from Liza M. Walsh, Esq. to the Hon. Tonianne J.
Bongiovanni of 1/15/2014; Docket Entry No. 68). The Court conducted a telephone conference
the following day. During the telephone conference, the parties indicated that while certain
discovery issues had arisen, they had agreed to mediate this matter. Purdue also indicated that it
intended to file petitions for IPR review concerning the remaining patents and would seek to
have this matter stayed pending the IPR proceedings. The Court and the parties discussed
staying discovery, as well as the resolution of the outstanding discovery issues, until after
mediation. During the conference, the Court and the parties also discussed postponing any
application to stay this matter pending IPR review until after the mediation took place.
On January 24, 2014, Purdue filed the three anticipated petitions for IPR review. These
petitions sought review of all of the asserted claims of the remaining two patents, the ‘475 and
‘280 patents. On February 11, 2014, the Court emailed the parties to clarify that all discovery,
other than that agreed to in mediation, had been stayed for sixty days. The Court further
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confirmed that in the event mediation was not successful, the Court would address whether an
additional stay pending IPR review was warranted. On April 15, 2014, the Court learned that
despite the parties’ best efforts, mediation was unsuccessful. Upon learning that mediation
failed, the Court again emailed the parties to inform them that It intended to decide Purdue’s
request for a stay pending IPR review on an informal, expedited basis. The Court also relayed
that the stay in the matter would remain in place pending a determination on Purdue’s
application to stay.
On July 9, 2014, the Court entered a Letter Order determining that Purdue’s request for a
stay was premature in light of the fact that the PTAB had not yet determined whether to grant
IPR review. (See Letter Order of 7/9/2014; Docket Entry No. 84). Nevertheless, because the
PTAB had at most 27 days left to render its decision, the Court found that it would be inefficient
to reopen discovery at that juncture. Consequently, the Court maintained the stay currently in
place and directed Purdue to inform the Court immediately upon learning of the PTAB’s
decision with respect to the petitions for IPR review of the ‘475 and ‘280 patents. (Id.) On July
11, 2014, Purdue informed the Court of the PTAB’s July 10, 2014 decisions to institute IPR
review of every claim asserted by Depomed against Purdue other than dependent claims 11 and
12 of the ‘475 and ‘280 patents. (See Letter from Liza M. Walsh to the Hon. Tonianne J.
Bongiovanni of 7/11/2014; Docket Entry No. 85). The Court now considers Purdue’s request to
stay this matter pending the PTAB’s final decisions on the three pending IPRs of the two
remaining patents-in-suit.
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II.
Analysis
It is well-established that “the power to stay proceedings is incidental to the power
inherent in every court to control the disposition of the causes on its docket with economy of
time and effort for itself, for counsel, and for litigants.” Landis v. North Am. Co., 299 U.S. 248,
254, 57 S.Ct. 163, 81 L.Ed. 153 (1936). As such, the decision to stay a patent case in which the
PTAB has granted a request for IPR review rests within the sound discretion of the court. See
Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed. Cir. 1988) (noting that “[c]ourts have
inherent power to manage their dockets and stay proceedings, including the authority to order a
stay pending conclusion of a PTO reexamination.”) (internal citations omitted).
Staying a matter pending IPR review comes with both costs and benefits. In balancing
these costs and benefits to determine whether to grant a stay, courts typically apply a three-part
test. Under this test, courts consider “‘(1) whether a stay would unduly prejudice or present a
clear tactical disadvantage to the non-moving party; (2) whether a stay will simplify the issues in
question and trial of the case; and (3) whether discovery is complete and whether a trial date has
been set.’” Stryker Trauma S.A. v. Synthes (USA), Civil Action No. 01-3879 (JLL), 2008 WL
877848, *1 (D.N.J. March 28, 2008) (quoting Xerox Corp. v. 3Com Corp., 69 F.Supp.2d 404,
406 (W.D.N.Y. 1999)). These factors are discussed in greater detail below.
A. Prejudice
The Court first considers whether granting the requested stay would cause Depomed
undue prejudice or place Depomed at a clear tactical disadvantage. In so doing, the Court is
mindful of the fact that staying any case pending IPR review by the PTAB naturally risks
prolonging the final resolution of the pending case and, as such, may result in some inherent
prejudice to the non-moving party. See Textron Innovations, Inc. v. Toro Co., No. 05-486-GMS,
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2007 WL 7772169, at *2 (D.Del. April 25, 2007). The Court, however, is equally mindful of the
fact that the delay inherent in the review process is, itself, insufficient to establish undue
prejudice. See Oy Ajat, Ltd. v. Vatech Am., Inc., Civil Action No. 10-4875 (PGS), 2012 WL
1067900, *21 (D.N.J. March 29, 2012); Brass Smith, LLC v. RPI Indus., Inc., Civil No. 09-6344
(NLH/JS), 2010 WL 4444717, *4 (D.N.J. Nov. 1, 2010); ICI Uniqema, Inc. v. Kobo Products,
Inc., Civil Action No. 06-2943 (JAP), 2009 WL 4034829, at *2 (D.N.J. Nov. 20, 2009). In
determining whether a stay will likely result in undue prejudice to the non-moving party or place
it at a tactical disadvantage, the Court considers a number of additional factors including “the
timing of the request for reexamination, the timing of the request for [a] stay, the status of the
reexamination proceedings and the relationship of the parties.” Boston Scientific Corp. v. Cordis
Corp., 777 F.Supp. 2d 783, 789 (D.Del. 2011). For the reasons stated below, the Court finds that
collectively these sub-factors do not weigh against imposing a stay.
1. Timing of IPR
Purdue filed its three petitions for IPR review on January 24, 2014, eleven months and
seventeen days after Depomed’s Complaint was filed and just two weeks before the one year
statutory deadline would have expired. Depomed argues that the timing of Purdue’s petitions for
IPR review indicates gamesmanship on the part of Purdue and is just another example of Purdue
posturing to delay the resolution of this matter for as long as possible. In this regard, Depomed
points to Purdue’s motion to bifurcate and its failure to produce the accused product and
witnesses for deposition for over six months as examples of Purdue’s history of delay. Purdue,
however, claims that it promptly filed its petitions after the true scope of this matter was clarified
when two of the patents-in-suit, i.e., the ‘340 and ‘215 patents, were dropped from this litigation.
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While courts are reluctant “to grant a stay where the timing of the request for PTO review
suggests a dilatory intent on the movant’s part[,]” the Court is not convinced that the timing of
the IPRs here indicates that Purdue had such an intent. Nexans, Inc. v, Belden Inc., No. 12-1491SLR-SRF, 2014 WL 651913, at *3 (D.Del. Feb. 19, 2014) (citation omitted). Although Purdue
filed its petitions for IPR review just two weeks shy of the one year statutory deadline, it did so
within essentially 10 days of two patents being voluntarily dismissed from this matter. The
Court finds no gamesmanship on the part of Purdue. At best, this sub-factor is neutral neither
weighing in favor of or against the imposition of a stay.
2. Timing of Request for Stay
Purdue vocalized its intent to move to stay these proceedings pending IPR before the
petitions were even filed. Indeed, the day after the parties agreed to dismiss with prejudice all
claims and defenses related to the ‘340 and ‘215 patents, Purdue, on a telephone conference with
the Court, stated that it would seek to stay this litigation pending the PTAB’s review of the three
petitions for IPR it intended to file. After the IPRs were filed, Purdue renewed its request for a
stay. Nothing about the timing of Purdue’s request for a stay indicates that it sought an improper
tactical advantage over Depomed or that Depomed would be unduly prejudiced by a stay.
3. Status of Review
On July 10, 2014, the PTAB decided to grant review of the ‘475 and ‘280 patents. Under
the new IPR procedures, the PTAB must complete its review and issue a final determination on
the three petitions for IPR within eighteen months. Davol, Inc. v. Atrium Medical Corp., No. 12958-GMS, 2013 WL 3013343, at *2 (D.Del. June 17, 2013) (citing 35 U.S.C. §§ 314(b),
316(a)(11); 37 C.F.R. § 42.107). The PTAB has already scheduled a hearing date of March 19,
2015 for all three IPRs. (Letter from Liza M. Walsh, Esq. to the Hon. Tonianne J. Bongiovanni
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of 7/21/2014 at 1; Docket Entry No. 88). While as noted above, essentially any delay carries
with it the risk of some prejudice to Depomed, the delay inherent in the review process is, itself,
insufficient to establish undue prejudice. Furthermore, while a stay of this action would certainly
delay these proceedings, given the status of review, the Court does not view the anticipated delay
to be substantially protracted. As a result, the Court finds that this sub-factor militates in favor
of granting a stay.
4. Relationship of the Parties
“Courts are hesitant to grant a stay in a matter where the parties are direct competitors.”
Neste Oil OYJ v. Dynamic Fuels LLC, Civil Action No. 12-1744-GM, 2013 WL 3353984, at *3
(D.Del. July 2, 2013). Here, the parties dispute whether they are in fact direct competitors.
Depomed contends that they are, noting that “on March 12, 2014, the U.S. Food & Drug
Administration (“FDA”) approved Mallinckrodt’s use of Depomed’s patented technology in an
oxycodone hydrochloride based drug in the marketplace that directly competes with Purdue’s
accused OcyContin® product[.]” (Letter from Leda Dunn Wettre, Esq. to the Hon. Tonianne J.
Bongiovanni of 4/30/2014 at 3; Docket Entry No. 81). Indeed, Depomed claims that
Mallinckrodt’s drug, XARTEMISTM XR Extended-Release Tablets (CII), which are composed of
oxycodone hydrochloride and acetaminophen, are directed to the same market as Purdue’s
product, OxyContin®. (See Letter from Leda Dunn Wettre, Esq. to the Hon. Tonianne J.
Bongiovanni of 5/5/2014 at 2; Docket Entry No. 82). Depomed states that it “expect[s] to
receive significant recurring royalty revenue from Mallinckrodt’s commercialization of
XARTEMIS XR.” (Id. (internal quotation marks and citation omitted)). As a result, Depomed
claims that it “will be significantly prejudiced by a stay because the longer Purdue is permitted to
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infringe, the longer Depomed will suffer the improper diminution of the value of its licensed
patents and its rightful market share attributable to its patented technology.” (Id.)
Purdue disagrees. Purdue argues that unlike OxyContin®, Mallinckrodt’s product “is a
‘combination product’ for short-term pain.” (Letter from Liza M. Walsh, Esq. to the Hon.
Tonianne J. Bongiovanni of 5/5/2014 at 4; Docket Entry No. 83). In this regard, as Depomed
acknowledges, Mallinckrodt’s product contains both oxycodone hydrochloride and
acetaminophen, whereas Purdue’s product does not contain acetaminophen. Purdue argues that
“[c]ombination products containing acetaminophen suffer dosing constraints because
acetaminophen has been associated with increased risk of liver damage.” (Id.) Purdue also
argues that there are already several combination oxycodone-acetaminophen products sold in the
United States, such as Percocet®, and that “as a new entrant, Mallinckrodt’s product does not
have an established market share or track record.” (Id.) Further, Purdue contends that its
product, in addition to not containing acetaminophen, “is indicated for chronic, long-term pain –
not short-term pain.” (Id.) As a result, Purdue argues that its product and that offered by
Mallinckrodt are in different market categories. Under these circumstances, Purdue contends
that its relationship with Depomed does not support a finding of undue prejudice.
Given Depomed’s licensing arrangement with Mallinckrodt, it appears that there may be
some competition in the market between Depomed and Purdue. The practical scope of said
competition, however, is in question. Unlike Mallinckrodt’s product, which is a combination
product containing acetaminophen, Purdue’s product does not contain acetaminophen and
therefore is not subject to the same dosing constraints as Mallinckrodt’s product can only
reasonably be assumed to be. Further, while Mallinckrodt’s product, like Purdue’s, is used for
the treatment of pain, it appears that Purdue’s product is indicated for chronic, long-term pain,
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while Mallinckrodt’s may not be. Moreover, it appears that there are already a number of
manufacturers selling combination oxycodone-acetaminophen products in the market. See Neste
Oil OYJ, 2013 WL 3353984, at *3 (noting that presence of multiple active firms in relevant
market may decrease likelihood of prejudice to plaintiff). Given these facts, the Court is not
persuaded that the parties’ relationship weighs against a stay. 1
B. Simplification of Issues for Trial
A stay pending IPR review by the PTAB can simplify the pending litigation in several
ways. For example, advantages from staying a matter that may result in the simplification of
issues include:
(1) a review of all prior art presented to a court by the PTO, with
its particular expertise; (2) the potential alleviation of numerous
discovery problems relating to prior art by PTO examination; (3)
the potential dismissal of a civil action should invalidity of a patent
by found by the PTO; (4) encouragement to settle based upon the
outcome of the PTO reexamination; (5) an admissible record at
trial from the PTO proceedings which would reduce the
complexity and length of the litigation; (6) a reduction of issues,
defenses and evidence during pre-trial conferences; and (7) a
reduction of costs for the parties and a court.
Eberle v. Harris, Civil Action No. 03-5809 (SRC), 2005 WL 6192865, *2 (D.N.J. Dec. 8, 2005)
(citing GPAC, Inc. v. D.W.W. Enterprises, Inc., 144 F.R.D. 60, 63 (D.N.J. 1992)). Obviously,
where all of the asserted claims are found invalid as a result of the IPR proceedings, the
“litigation would be simplified because it would be concluded.” Softview LLC v. Apple Inc.,
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In reaching this conclusion, the Court notes that where there is a question as to whether there is
direct competition between the parties, courts at times consider whether the plaintiff sought a
preliminary injunction because “[t]he decision by a litigant to seek such injunctive relief may
suggest that the parties, in fact, do compete and that real prejudice will flow from the imposition
of a stay.” Neste Oil Oyj, 2013 WL 3353984, at *4 (citing SenoRx, Inc. v. Hologic, Inc., No. 12173-LPS-CJB, 2013 WL 144255, at *8 (D.Del. Jan. 11, 2013)). Here, Depomed has not sought
preliminary injunctive relief.
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C.A. No. 12-989-LPS, C.A. No. 10-389-LPS, 2013 WL 4757831, at *1 (D.Del. Sept. 4, 2013)
(internal quotation marks omitted). However, as just noted, simplification can result even if only
some of the asserted claims are found to be invalid in that “the number of issues left to be
litigated” is reduced. Id. Indeed, even where “some or all of the claims are found not invalid”
the litigation “should be somewhat simplified due to the estoppel effect” of the IPR proceedings
and because of the insight a court gains from the PTAB’s review process. Id.; see 35 U.S.C. §
315(e)(2) (stating that if PTAB grants petition for IPR, petitioner is estopped from asserting
invalidity in civil action on “any ground that the petitioner raised or reasonably could have raised
during that inter partes review.”)
The likelihood that IPR review will simplify the issues also depends on the number of
claims asserted in the pending litigation that would be subject to IPR review as well as the
overlap between the issues to be decided in the litigation and the IPR proceedings. The more the
scope of the litigation exceeds the scope of the IPR proceedings, the less likely the IPR
proceedings and requested stay will simplify the issues. (See Princeton Digital Image Corp. v.
Konami Digital Entertainment Inc., et al., Civil Action No. 12-1461-LPS-CJB, Civil Action No.
13-335-LPS-CJB, at *5-6 (D.Del. Jan. 15, 2014); Docket Entry No. 80-1).
Here, the Court finds that this factor favors imposing a stay. On July 10, 2014, the PTAB
decided to institute IPR review of all claims asserted by Depomed against Purdue other than
dependent claims 11 and 12 of the ‘475 and ‘280 patents. Despite the significant number of
claims at issue in this litigation that will also be considered in the IPR proceedings, Depomed
contends that this factor does not favor imposing the requested stay. In this regard, Depomed
claims that the PTAB instituted IPR review under 35 U.S.C. §§ 102(e) & 103 for particular
combinations of prior art and “explicitly declined to institute IPR review on the grounds of
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anticipation under 35 U.S.C. § 102(b).” (Letter from Leda Dunn Wettre, Esq.to the Hon.
Tonianne J. Bongiovanni of 7/16/2014 at 1; Docket Entry No. 86). Further, Depomed argues
that “the only combinations of prior art references in the IPRs that are identical to that asserted
by [Purdue] in this litigation concern just six of the seventeen asserted claims in . . . the ‘475
Patent” and “one of twelve asserted claims of the ‘280 Patent.” (Id.; Letter from Leda Dunn
Wettre, Esq. to Hon. Tonianne J. Bongiovanni of 7/18/2014 at 1; Docket Entry No. 87). In
addition, Depomed contends that the claims subject to IPR review involve only method claims
and that none of the exact same invalidity challenges that are the subject of the IPR proceedings
apply to the product claims asserted by Depomed against Purdue. (Letter from Leda Dunn
Wettre, Esq. to the Hon. Tonianne J. Bongiovanni of 7/16/2014 at 1, n. 1). Depomed also argues
that the IPR proceedings cannot dispose of “Depomed’s claims of infringement and damages,
Purdue’s claims of invalidity under 35 U.S.C. §§ 101, 112 purdue’s defense regarding failure to
comply with marking, and Purdue’s defense of no equitable relief.” (Id. at 1-2). For these
reasons, Depomed argues that, at best, the outcome of the IPRs will have only a minimal impact
on this litigation and will not simplify the majority of issues to be decided in this case.
The Court disagrees. While Depomed is correct that there are matters presented in this
case that cannot and/or will not be addressed through the IPR proceedings, as already noted “the
‘issue simplification’ factor does not require complete overlap.” Neste Oil, 2013 WL 3353984 at
*5. Here, almost every claim asserted by Depomed against Purdue is at issue in the IPR
proceedings. Further, while certain issues like those involving infringement and damages cannot
be addressed in the IPR review, if the asserted claims are found to be invalid, such issues will not
have to be addressed. Moreover, the IPR proceedings will have an estoppel effect on Purdue.
Should the PTAB determine that one or more of the asserted claims is not invalid, Purdue will be
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estopped from asserting in this litigation any prior art that it asserted or reasonably could have
asserted in the IPRs. 35 U.S.C. §315(e). Simply put, the Court finds that there is a significant
likelihood that the IPR proceedings will simplify and streamline the issues to be decided here.
Consequently, the Court finds that this factor weighs in favor of granting Purdue’s requested
stay.
C. Status of Litigation
Applications to stay are most often granted when the case remains in the early stages of
litigation. See Abbott Diabetes Care, Inc. v. DexCom, Inc., C.A. No. 06-514 GMS, 2007 U.S.
Dist. LEXIS 73198, at *15 (D.Del. Sept. 30, 2007) (staying case “where the court ha[d] not yet
conducted a Rule 16(b)(2) scheduling conference, no scheduling Order [wa]s in place, no
discovery ha[d] taken place, and little time ha[d] yet been invested in the litigation.”) Staying a
case early in the litigation can be said to “‘save time and judicial resources” (Id.), as the stay
“maximize[s] the likelihood that neither the Court nor the parties expend their assets addressing
invalid claims.’” Neste Oil OYJ, 2013 WL 3353984, at*5 (quoting SenoRx, Inc., 2013 WL
144255, at *7). In contrast, when a matter has already reached its later stages with discovery
being complete and/or a trial date being set, requests to stay are less frequently granted. In such
cases, “it is likely that ‘the Court and the parties have already expended significant resources . . .
and the principle of maximizing the use of judicial and litigant resources is best served by seeing
the case through to its conclusion.’” Id. (quoting SenoRx, Inc., 2013 WL 144255, at *7).
Here, the Court finds that the stage of proceedings weighs in favor of granting the
requested stay. While it is true that this matter is not in its absolute infancy – a scheduling
conference has been held, discovery has taken place, a discovery motion has been decided, a
mediation has occurred – it is still in the relatively early stages of these proceedings. Indeed,
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while fact discovery has commenced, only document discovery has been exchanged; no
depositions have been taken. Further, a Markman hearing has not been held. In fact the claim
construction process has not yet begun. In addition, expert discovery still needs to take place,
dispositive motions remain to be filed and a trial date has not been set. Under these
circumstances, the Court finds that a stay will promote judicial economy and efficiency by
maximizing the use of the Court’s and the parties’ resources.
III.
Conclusion
Balancing the three factors discussed above, the Court finds that a stay is warranted here.
The Court finds that the likelihood of Depomed being prejudiced by a stay is minimal. Further,
the PTAB’s decisions on Purdue’s three petitions for IPR review will likely substantially
simplify the issues before the Court and the relatively early stage of these proceedings increases
the likelihood that a stay will promote judicial economy and the efficient resolution of this
matter. For these reasons, Purdue’s application to stay this litigation pending IPR review is
GRANTED. An appropriate Order follows.
Dated: July 25, 2013
s/Tonianne J. Bongiovanni
HONORABLE TONIANNE J. BONGIOVANNI
UNITED STATES MAGISTRATE JUDGE
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