Allergan, Inc. v. Teva Pharmaceuticals USA, Inc. et al
MEMORANDUM OPINION AND ORDER. Signed by Judge William C. Bryson on 8/25/2017. (ch, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
TEVA PHARMACEUTICALS USA, INC.,
Case No. 2:15-CV-1455-WCB
MEMORANDUM OPINION AND ORDER
Before the Court are the parties’ submissions regarding the declaratory judgment claims
under 35 U.S.C. § 271(a), (b), and (c), Dkt. Nos. 405 and 406, and regarding the request of
plaintiff Allergan, Inc., for notice before any at-risk launch by any defendant, Dkt. Nos. 407 and
408. After consideration of the briefs filed by the parties, the Court will not at this time order the
defendants to give Allergan seven days’ advance notice of any at-risk launch. As for the
declaratory judgment claims, the Court will not dismiss or sever those claims, but will retain
them as part of the case to be tried.
Also before the Court is the defendants’ Notice of Stipulation of Infringement and
Motion to Modify the Order of Proof at Trial, Dkt. No. 415, and Allergan’s Brief in Response to
Defendants’ Notice of Stipulation of Infringement and Motion to Modify the Order of Proof at
Trial, Dkt. No. 433. While the defendants are free to concede or not contest any particular issue
at trial, the proposed stipulation does not, in the Court’s view, take the issue of infringement out
of the case and does not warrant changing the order of proof at trial. The motion to modify the
Order of Proof at Trial is therefore DENIED.
1. Advance Notice of At-Risk Launch.
Arguing that it would face irreparable harm if any of the defendants launch a generic
version of Allergan’s Restasis product during the pendency of this litigation, Allergan requests
that the Court order the defendants to provide Allergan with seven days’ advance notice of any
plan to launch such a product. The defendants object, arguing that the Court lacks authority to
issue such an order, that Allergan’s request for such an order is unripe, that Allergan has not
made a showing of irreparable harm that would justify such an order, and that such an order
would harm them competitively.
None of the defendants is free at this point to launch their generic versions of Restasis,
because the federal Food and Drug Administration has not yet approved any of their Abbreviated
New Drug Applications (“ANDAs”). However, the parties have advised the Court that the FDA
is expected to act on at least some of the defendants’ ANDAs shortly. Allergan notes that it is at
least open to question whether the 30-month stay that normally applies to generic manufacturers
in Hatch-Waxman litigation would apply to several of the defendants in this case. Therefore,
according to Allergan, there is a substantial risk that those defendants might conduct an at-risk
launch before the expiration of the 30-month period.
Four of the five defendants—Akorn, InnoPharma, Mylan, and Teva—have advised the
Court that they have agreed not to launch before the trial is complete. The remaining defendant,
Famy Care Ltd., is subject to a 30-month stay of approval and therefore is not free to launch
before the time that this Court is likely to enter its judgment in this case. See Dkt. No. 407, at 2
The defendants argue that the Court lacks the authority to enter an order requiring them
to provide Allergan with seven days’ notice of their intent to launch. There is very little
authority on this point, and what authority there is shows up mainly in the form of terse
observations by district courts without extended analysis. A few courts have issued such orders,
often when they are agreed to, at least in part. See, e.g., Aziende Chimiche Riunite Angelini
Francesco A.C.R.A.F. S.p.A. v. Actavis S. Atl. LLC, No. 1:12-cv-1061, Dkt. No. 21 (D. Del.
Jan. 9, 2013); Medeva Pharma Suisee A.G. v. Roxane Labs, Inc., No. 3:07-cv-5165, Dkt. No.
119, at 1 (D.N.J. Nov. 30, 2009); Eli Lilly & Co. v. Sicor Pharms., Inc., Case No. 1:06-cv-238,
Dkt. No. 171 (S.D. Ind. June 20, 2008).
A greater number of courts have refused to issue such orders, often expressing doubt as to
their authority to do so. See Otsuka Pharm. Co. v. Torrent Pharms. Ltd., 99 F. Supp. 3d 461,
471-72 (D.N.J. 2015) (recognizing “the principle that the generic defendants would not be
required to provide notice of intent to launch at risk”); Hoffman-LaRoche, Inc. v. Teva Pharms.
USA, Inc., No. 2:11-cv-3635, Dkt. No. 124 (Feb. 5, 2013) (“[T]he Court is not persuaded by
Roche’s arguments that the Court has the authority to order advance notice of its intent to launch
in the absence of an agreement by Teva.”); Teva Pharms. USA, Inc. v. Sandoz, Inc., No. 08 Civ.
7611, 2010 WL 8760315, at *1 (S.D.N.Y. Oct. 12, 2010) (“Plaintiff’s request amounts, in
essence, for the Court to order Defendants to provide Plaintiffs with confidential business
information, which for all intent and purposes, would function as an injunction by prohibiting
Defendants from launching their product even if they have FDA approval and the thirty-month
statutory stay period has expired.”); Astrazeneca LP v. Breath Ltd., No. 08-cv-1512, Dkt. No. 86,
at 2 (D.N.J. Sept. 8, 2009) (request for order to provide advance notice of launch “is denied for
the reasons set forth in the record of these proceedings, including because the Court does not
believe it has legal authority to grant such relief.”); Novartis Pharms. Corp. v. Mylan Pharms.,
No. 3:06-cv-2885, Dkt. No. 98, at 6 (D.N.J. Sept. 22, 2008) (“I’ve been reluctant and have
refused to require that Mylan state when they would launch . . . [b]ecause frankly I am not
comfortable in determining that that is within my power to do.”).
Allergan asserts that entering such an order is within the Court’s discretionary power to
manage its docket. The Court is not persuaded that the matter is that simple. Imposing an
obligation on four of the five the defendants to provide advance notice to Allergan as to when
they will launch their competing products goes well beyond a mere matter of docket control; as
recognized by Judge Jones in the Teva v. Sandoz case cited above, it constitutes an injunction
that can be justified if and only if (1) the court has jurisdiction to issue the injunction and (2) the
court has made the requisite findings to warrant imposing such relief.
As to the first, the Court is satisfied that, under the proper circumstances, an order to
provide advance notice of a planned launch would not lie beyond the Court’s jurisdiction. The
Court’s equitable powers in a case such as this one extend to ancillary orders that may be
necessary to protect the protect the plaintiff against the risk that the defendants will take action
that will effectively defeat the plaintiff’s right to relief.
While recognizing that the Court’s jurisdiction may extend to matters such as orders for
advance notice of launch plans, the Court is cognizant of the prudential limitations on the
exercise of that jurisdiction. Launch dates are highly confidential and important commercial
information. The Court should not lightly order parties to disclose such information to their
competitors. Moreover, before entering such a mandatory injunction, the Court would have to be
confident that the equitable considerations that govern the issuance of injunctions require the
grant of the requested relief.
At this point, the Court is not satisfied that those equitable
considerations justify the entry of the requested injunction, for several reasons.
First, the Court is not currently prepared to conclude that Allergan has shown a
likelihood of success on the merits that would warrant the requested relief. The Court is aware at
this point only of the outlines of the parties’ cases. After sitting through the trial, the Court will
have a much better sense of Allergan’s likelihood of success, which will bear importantly on
how the Court will adjudicate Allergan’s various claims to temporary and permanent relief
Second, the defendants have agreed not to launch their generic versions of Restasis
during the trial. There is therefore no urgency for the Court to act prior to trial. Instead, the
Court will be able to reassess the need, if any, for the requested injunctive relief after hearing the
evidence in the case.
Third, Allergan’s claim of irreparable harm is predicated on an affidavit by one of its
employees and some citations to court decisions. Dkt. No. 408-1. Allergan’s claim is disputed
by the defendants, who contend that Allergan’s assertions regarding the damage that any at-risk
launch would cause to Allergan is greatly exaggerated. Dkt. No. 407, at 5-6. If Allergan
continues to desire some form of interim relief, it can move for a preliminary injunction and, in
support of that motion, can offer evidence regarding the injury that would be caused by an at-risk
launch. The defendants will be free at that point to offer contrary evidence if they choose. The
parties can also present evidence and argument regarding whether the harm to Allergan from an
at-risk launch would be compensable in damages, assuming Allergan were ultimately to prevail
in the lawsuit. That procedure will likely provide the Court with a much sounder evidentiary
basis for making a determination as to whether Allergan has shown irreparable harm.
For now, the Court sees no need to issue an order directing the defendants to give
Allergan seven days’ notice of their intent to launch; that issue can be revisited at trial, when the
issues bearing on Allergan’s entitlement to any such relief will presumably be clearer.
2. The Disposition of Allergan’s Claims Under 35 U.S.C. § 271(a), (b), and (c).
In its complaint, Allergan has not only brought claims for infringement under the HatchWaxman Act infringement provision, 35 U.S.C. § 271(e)(2), but also has sought a declaratory
judgment that any launch by the defendants would result in infringement under the more
conventional direct and indirect infringement statutes, 35 U.S.C. § 271(a), (b), and (c). 1 Because
the Court was concerned that the proof for the latter claims would complicate the case
unnecessarily, the Court asked the parties to brief the question whether the declaratory judgment
claims should be severed, or dismissed without prejudice, while the Hatch-Waxman claims were
tried. The defendants requested that the Court sever the declaratory judgment claims; Allergan
requested that the Court not sever or dismiss those claims, but try them alongside the section
Allergan has put to rest the Court’s principal concern regarding the section 271(a), (b),
and (c) claims by representing to the Court that the evidence in support of those claims will be
the same as the evidence in support of the section 271(e)(2) claims, and that the judgment on the
section 271(e)(2) claims will also resolve the declaratory judgment claims. Dkt. No. 405, at 1.
Therefore it makes sense to retain those claims as part of the case to be tried along with the
section 271(e)(2) claims.
In this setting, where it is clear that the defendants intend to sell their generic products
if they prevail in this section 271(e)(2) action, the Court has jurisdiction to address Allergan’s
declaratory judgment claim brought under sections 271(a), (b), and (c). See Glaxo, Inc. v.
Novopharm, Ltd., 110 F.3d 1562, 1570-71 (Fed. Cir. 1997); Cephalon, Inc. v. Watson Pharms.,
Inc., 629 F. Supp. 2d 338, 351 (D. Del. 2009).
As a practical matter, the difference between severing the claims and retaining all the
pending claims in the same case may not be significant. However, it may be useful to facilitate
the consideration of the section 271(a), (b), and (c) claims along with the 271(e)(2) claims, if that
appears advisable in the course of the proceedings rather than having the two sets of claims
segregated for purposes of trial. Accordingly, the Court will retain the section 271(a), (b), and
(c) claims as part of the case to be tried and will neither dismiss nor sever those claims.
3. The Defendants’ Notice of Stipulation of Infringement and Motion to Modify the
Order of Proof at Trial.
On August 18, 2017, the defendants filed a “notice of stipulation” in which they stated
that they “do not intend to dispute at trial infringement under § 271(e)(2) under the present claim
construction” of the claims that are before the Court for trial. Dkt. No. 415, at 1. They also
moved to change the order of proof at trial, so that the order of proof would “begin with the
Defendants’ case on invalidity, then proceed to Allergan’s rebuttal of validity, and end with
Defendants’ reply.” Dkt. No. 415, at 2.
Allergan has objected to the defendants’ proposal on several grounds. Dkt. No. 433.
First, Allergan has scheduled several third-party witnesses to appear on the first day of trial, and
modifying the order of proof would significantly inconvenience them. Second, Allergan objects
to the qualifications attached to the defendants’ stipulation as to infringement—both that it is
limited to conceding infringement “under the present claim construction,” and that it is limited to
conceding infringement under 35 U.S.C. § 271(e)(2), and not necessarily under 35 U.S.C.
§ 271(a), (b), and (c), which are also pleaded in Allergan’s complaint. Allergan also expresses
concern that the stipulation might not have preclusive effect in later proceedings.
The Court shares Allergan’s reservations about the defendants’ proposed stipulation. For
one thing, as the Court explained in its order denying the defendants’ motion for invalidity based
on lack of enablement, Dkt. No. 393, the Court anticipates that in light of the parties’ positions as
revealed in the brief of that motion, it will likely be necessary to construe the term
“acrylate/C10-30 alkyl acrylate cross-polymer” at trial, and that the Court expects the parties to
provide additional evidence on that issue at trial. Because that issue bears on infringement as
well as invalidity, the defendants’ stipulation to infringement under the “the present claim
construction” is no real stipulation at all. 2
The defendants are free to stipulate to particular facts or legal issues at trial, which could
have the desired effect of shortening the proceedings. In addition, the defendants are free not to
challenge Allergan’s proof of infringement if they so choose, which presumably would also have
the effect of shortening the trial. But in the particular circumstances of this case, the Court is
wary of accepting a stipulation conditioned on the claim construction being correct. 3 That is not
to cast doubt on either (1) the frequent practice of parties that enter an unconditional stipulation
to infringement in order to contest validity, see, e.g., Millennium Pharms., Inc. v. Sandoz, Inc.,
862 F.3d 1356 (Fed. Cir. 2017); Cumberland Pharms Inc. v. Mylan Institutional LLC, 846 F.3d
1213 (Fed. Cir. 2017); Merck & Cie v. Watson Labs., Inc., 822 F.3d 1347 (Fed. Cir. 2016), or
(2) the occasional practice, by a party who has received an unfavorable claim construction, of
In its order denying the defendants’ motion for partial summary judgment of noninfringement, Dkt. No. 394, the Court also indicated that in light of the parties’ positions
expressed in the briefing on that motion, it might be necessary to conduct further claim
construction of the “treating” limitations found in several of the claims of the patents in suit.
It is not clear to the Court whether the limitation on the stipulation to infringement
under section 271(e)(2) might make the stipulation less than fully effective to remove the issue
of infringement from the case. The Court understands Allergan’s position to be that, absent an
at-risk launch by one or more of the defendants, Allergan’s proof will be the same for its claims
under section 271(a), (b), and (c) as for its claims under section 271(e)(2). The Court also
understands that the defendants did not intend to limit the scope of their stipulation so that fails
to remove the issue of infringement under section 271(a), (b), and (c) from the trial. However,
the scope of the stipulation, as currently framed, leaves that matter unresolved.
stipulating to infringement under that claim construction to put the case in a posture for an
immediate appeal, see, e.g., Augme Techs., Inc. v. Yahoo! Inc., 755 F.3d 1326 (Fed. Cir. 2014);
Seachange Int’l, Inc. v. C-COR, Inc., 413 F.3d 1361 (Fed. Cir. 2005); Durel Corp. v. Osram
Sylvania, 256 F.3d 1298 (Fed. Cir. 2001).
In the former category of cases, the issue of infringement is removed from the case for
good, allowing the district court and the court of appeals to focus exclusively on the issue of
invalidity. Because the invalidity issue is typically discrete, factually and legally, from the issue
of infringement, the stipulation procedure ordinarily results in a clear gain in efficiency for the
courts and the parties.
In the second category of cases, the benefits of the stipulation process are not so selfevident. In those cases, the parties are able to obtain what amounts to interlocutory review of a
claim construction without having to obtain permission from the appellate court, as would be
required if the parties sought formal interlocutory review under 28 U.S.C. § 1292(c). And while
the stipulation process may be efficient in some cases, it sometimes has significant costs. First,
the district court is denied the opportunity to shape its claim construction in light of information
obtained in the course of the trial. Second, and relatedly, the appellate court does not have the
benefit of a factual context in which to consider the claim construction issue. See Jang v. Boston
Sci. Corp., 532 F.3d 1330, 1337-38 (Fed. Cir. 2008); Lava Trading, Inc. v. Sonic Trading Mgmt.,
LLC, 445 F.3d 1348, 1350 (Fed. Cir. 2006); Superior Indus., Inc. v. Masaba, Inc., 553 F. App’x
986 (Fed. Cir. 2014). Third, the appellate court is denied the opportunity to decide whether, in
light of the evidence at trial, any claim construction error would not have affected the judgment.
Jang, 532 F.3d at 1336-37.
Notwithstanding those concerns, such stipulations have been approved by district courts,
and appeals predicated on such stipulations have frequently been permitted.
In this case,
however, there is uncertainty as to the scope of the stipulation and as to the ultimate claim
construction. As a result, the offered stipulation in its current form has the potential to make the
proceedings—and particularly any appeal that may be taken from the ultimate judgment—more
complicated, not less.
During an August 23, 2017, telephonic conference at which the Court heard from the
parties regarding the pending motions, counsel for the defendants stated that the defendants’
intention was to take the issue of infringement out of the case and not to do so in a qualified
manner that would fail to achieve the purpose of the defendants’ stipulation. The Court urged
the parties to discuss the possibility of a stipulation that would not have the problems that
Allergan complained of (and the Court found to be present) in the defendants’ initial offered
The parties agreed to do so and to advise the Court of the outcome of their
As for the order of proof at trial, Allergan intends to offer some background evidence at
trial regarding the development of Restasis through the witnesses who are now scheduled to
testify at the beginning of the trial. Having that evidence come in at the beginning of the trial is
more logical than postponing it until after the defendants have presented their case-in-chief on
invalidity. Moreover, the convenience of the third-party witnesses is a factor that bears on the
Court’s decision as to the order of proof at trial. The defendants made their proposal to modify
the order of proof only ten days before the beginning of the trial. By then, it is understandable
that Allergan’s witnesses had made arrangements to be present at the beginning of the trial, and
that altering the order of proof could be highly inconvenient for them.
When infringement has been conceded, courts have on occasion acquiesced in the request
of the accused infringer to present its case first at trial. In several of those instances, however,
the courts have allowed the patentee to present background information at the outset before the
accused infringer begins its invalidity challenge. See Novartis Pharms. Corp. v. Teva Pharms.
USA, Inc., No. 05-cv-1887, 2009 WL 3334850, at *2 (D.N.J. Oct. 14, 2009); Pfizer Inc. v. Ivax
Pharms., Inc., No. Civ. A 07-cv-174, 2009 WL 2905454, at *9 (D.N.J. Sept. 9, 2009); Merck
Sharp & Dohme Pharms., SRL v. Teva Pharms. USA, Inc., No. 07-1596 (D.N.J. Nov. 5, 2008).
That sequence seems fair to the Court in this case, particularly in light of Allergan’s having
organized the appearance of its background witnesses around the assumption that it would go
first at trial. The Court therefore will not accept the current version of defendants’ stipulation as
a basis for treating the issue of infringement as being removed from the case and will deny the
defendants’ motion to alter the order of proof.
IT IS SO ORDERED.
SIGNED this 25th day of August, 2017.
WILLIAM C. BRYSON
UNITED STATES CIRCUIT JUDGE
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