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From Antitrust Law Daily, August 12, 2015

Monopolization, patent misuse counterclaims stand in Abilify® suit

By Greg Hammond, J.D.

A generic pharmaceutical company seeking U.S. Food and Drug Administration (FDA) approval of generic Abilify® has adequately stated unlawful monopolization and patent misuse counterclaims against Otsuka Pharmaceutical Co., Ltd., for allegedly bringing sham patent infringement litigation. The counterclaims were nevertheless bifurcated and stayed for judicial economy reasons, pending resolution of the patent infringement issues (Otsuka Pharmaceutical Co., Ltd. v. Apotex Corp., August 11, 2015, Simandle, J.).

Otsuka holds New Drug Application No. 21-436 for aripiprazole tablets, which the pharmaceutical company markets under the trade name Abilify. Apotex subsequently filed an Abbreviated New Drug Application (ANDA), seeking approval to market generic aripiprazole tablets in the United States, prior to expiration of the Patents-in-Suit. After Apotex provided Otsuka with confidential access to its ANDA and supporting materials, Otsuka filed suit, alleging patent infringement. Apotex brought counterclaims for unlawful monopolization and patent misuse. Conversely, Otsuka moved to dismiss the two counterclaims and, in the alternative, to bifurcate and stay the counterclaims, pending resolution of the patent infringement claims.

Unlawful monopolization. Otsuka alleges that the antitrust counterclaim must be dismissed because Apotex has failed to allege anticompetitive or antitrust injury required for antitrust standing, and because Apotex’s “cursory conclusions” fail to plausibly overcome Otsuka’s Noerr-Pennington immunity. The court first rejected Otsuka’s argument that Apotex cannot be considered a competitor for purposes of antitrust standing, due to its lack of FDA approval. Rather, Apotex has standing as a competitor for purposes of antitrust injury because it is an ANDA filer intending to manufacture and directly distribute generic aripiprazole in the United States market awaiting final FDA approval, the court concluded.

Apotex also sufficiently alleged antitrust injury, the court found. In its antitrust counterclaim, Apotex alleges that Otsuka has initiated meritless infringement actions and subsequently pursued preliminary injunctions against ANDA filers, in order to prevent any and all competitors from competing in the marketplace and to maintain its exclusive monopoly over the aripiprazole market. The pursuit of litigation that forestalls entry into the generic market and effectively extends a long-standing monopoly, as alleged here, constitutes precisely the type of anticompetitive behavior that the antitrust laws seek to redress, according to the court.

Finally, Noerr-Pennington immunity did not bar Apotex’s unlawful monopolization counterclaim. Apotex claims that it provided Otsuka with over 13,000 pages of supporting documentation that detailed legal and factual bases for its position on the non-infringement of Apotex’s ANDA product. Nevertheless, Otsuka filed the infringement action the following day. Apotex therefore argued that because Otsuka initiated litigation despite the volume of Apotex’s evidence of alleged noninfringement, Otsuka filed the patent infringement action in bad faith and with the express purpose of achieving and maintaining monopoly power, and not in a legitimate effort to obtain judicial review. The court found that these allegations, accepted as true for purposes of the motion to dismiss, set forth plausible facts that are sufficient to overcome Otsuka’s presumptive antitrust immunity under the Noerr-Pennington doctrine.

Patent misuse. Otsuka next argued that Apotex’s patent misuse counterclaim failed to state a cognizable claim as a matter of law. The counterclaim asserted that Otsuka has used the Patents-in-Suit beyond their permissible physical or temporal scope in order to obtain a market advantage. Accepting this as true for purposes of the motion to dismiss, the court found that Apotex sufficiently stated a claim of patent misuse.

The court, however, granted Otsuka’s request to bifurcate and stay the antitrust and patent misuse counterclaims. It found that resolution of the patent infringement issue could moot the counterclaims, thereby preserving judicial economy. Bifurcation could also enhance the parties’ right to jury trial by making the issues the jury must consider less complex.

The case number is 14-8074 (JBS/KMW).

Attorneys: Brian Ronald Zurich (Pepper Hamilton LLP) for Otsuka Pharmaceutical Company, Ltd. Michael S. Weinstein (Cole Schotz PC) for Apotex Corp., Apotex Inc., and Hetero Labs Ltd.

Companies: Otsuka Pharmaceutical Co., Ltd.; Apotex Corp.; Apotex Inc.; Hetero Labs Ltd.

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