The opinion
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK ES und
ELECTRONICALLY FILED
DOC #: □□
Regeneron Pharmaceuticals, Inc., DATE FILED: 9/21/21 __
Plaintiff,
20-cv-5502 (AJN)
~ MEMORANDUM
Novartis Pharma AG, et al., OPINION & ORDER
Defendants.
ALISON J. NATHAN, District Judge:
Plaintiff Regeneron Pharmaceuticals, Inc. has filed suit alleging various antitrust
violations against Defendants Novartis Pharma AG, Novartis Technology LLC, Novartis
Pharmaceuticals Corporation (collectively “Novartis”), and Vetter Pharma International GMBH.
The amended complaint alleges Novartis has attempted to monopolize the “anti-VEGF PFS
market” through Walker Process fraud and other anticompetitive means in violation of the
Sherman Act and has tortiously interfered with a contract between Regeneron and Vetter. It
further asserts that both Novartis and Vetter unreasonably restrained trade in violation of the
Sherman Act. Novartis and Vetter have filed multiple motions to dismiss. They argue that
Regeneron’s claims are compulsory counterclaims, warranting dismissal or transfer under
Federal Rule of Civil Procedure 13(a), or alternatively that a transfer under 28 U.S.C. § 1404(a)
or stay of this case is warranted. Defendants also move to dismiss each claim, to the extent it is
asserted against them, on the basis that the claims are time-barred and the complaint fails to state
a claim under Rule 12(b)(6). The parties have also filed various requests to seal papers before
the Court.
For the following reasons, the Court determines that transfer is warranted under 28
U.S.C. § 1404(a) and GRANTS Defendants’ motions to transfer this action to the Northern
District of New York. The Court does not reach the parties’ motions to dismiss under Rule 13(a)
or 12(b)(6) or motions to seal.
I. BACKGROUND
A. Factual Background
Plaintiff Regeneron “is in the business of inventing, developing, manufacturing, and
marketing” a variety of pharmaceutical products. Dkt. No. 87, Am. Compl. ¶ 23. Defendant
Novartis is one of Regeneron’s competitors in developing and marketing anti-VEGF treatments.
Anti-VEGF drugs “treat certain eye diseases involving overproduction of a naturally occurring
protein in the body called vascular endothelial growth factor.” Id. ¶ 5. Regeneron markets the
anti-VEGF treatment EYELEA, while Novartis markets LUCENTIS and BEOVU. The
treatment is injected in a patient’s eye and sold either in a vial or a “pre-filled syringe” (“PFS”).
Id. ¶¶ 5–6. Defendant Vetter is a “filler” company—meaning, for the PFS treatments, it “fill[s]
the syringe with the drug in accordance with the required sterile conditions.” Id. ¶ 7.
Regeneron and Vetter worked together for many years. Vetter was “a long-term filler for
EYELEA vials on a non-exclusive basis.” Id. ¶ 152. And in 2005, the two companies entered an
agreement to “collaborate” on the development of EYELEA in PFS form. Unbeknownst to
Regeneron, however, Vetter was working with Novartis as well. In 2013, Vetter and Novartis
entered a settlement agreement in 2013 regarding ownership of the underlying patent application
for U.S. Patent No. 9,220,631 (the ‘631 Patent). Id. ¶¶ 8, 256. The ‘631 Patent “broadly
claim[s] a PFS with any anti-VEGF, including EYELEA.” Id. ¶ 8. According to Regeneron, the
‘631 Patent is at “the heart of Defendants’ anticompetitive conduct” and a “cornerstone” to the
scheme. Id. ¶¶ 95, 238. Central to Regeneron’s complaint are allegations that Defendants
procured the ‘631 Patent “through fraud on the USPTO.” Id.
Regeneron alleges that the ‘631 Patent dramatically changed the relationship between
Regeneron and Vetter. After Vetter entered its settlement agreement with Novartis, the company
demanded “onerous” terms for Regeneron to continue using its filler service. Id. ¶¶ 166–67, 261.
Regeneron was consequently “forced to sever its relationship with Vetter.” Id. ¶ 261. This
resulted in significant financial burdens and delayed EYELEA PFS’s entrance into the market.
Regeneron contends the anticompetitive scheme continued when Vetter again attempted to force
Regeneron into an “anticompetitive” contract and Novartis sued Regeneron for infringing the
‘631 Patent in 2020. Id. ¶¶ 18–19.
B. Procedural Background
On July 17, 2020, Regeneron filed this suit alleging that Novartis (and Novartis and
Vetter together) has attempted to “stop EYELEA through anticompetitive means.” Dkt. No. 1,
Compl. ¶ 3. A month before this suit, however, Novartis filed two patent infringement suits
alleging that Regeneron’s EYELEA PFS infringes Novartis’s ‘631 Patent. The first infringement
action, Novartis Pharma AG v. Regeneron Pharms., Inc., No. 1:20-cv-00690-TJM-CFH
(N.D.N.Y.), was filed on June 19, 2020 in the Northern District of New York and seeks damages
and injunctive relief. The second action, In re Certain Pre-Filled Syringes For Intravitreal
Injection & Components Thereof, USITC Pub. 715158 (July 21, 2020), sought to bar importation
of EYELEA PFS and its components before the International Trade Commission. The NDNY
action was stayed on July 30, 2020, pending the resolution of the ITC action and pursuant to
Regeneron’s request under 28 U.S.C. § 1659(a). NDNY Action, Dkt. No. 25. However, on June
11, 2021, that stay was lifted after Novartis dropped its suit before the ITC. See Dkt. No. 135 at
1; Dkt. No. 136 at 1. The NDNY action is now proceeding—the court entered a pretrial
scheduling order on August 24, and Regeneron recently filed its answer and affirmative defenses
to Novartis’s complaint. See NDNY Action, Dkt. Nos. 74, 82.
Regeneron’s original complaint filed here asserted three claims for relief. Count One
alleged “attempted monopolization through Walker Process fraud in violation of Section 2 of the
Sherman Act” against Novartis. Compl. ¶¶ 183–97; see also Am. Compl. ¶¶ 218–32.
Regeneron alleges that the ‘631 Patent is unenforceable because Novartis “deliberately withheld
the existence of [material] prior art from the USPTO.” Novartis’s enforcement of the
“fraudulently procured ’631 Patent constitutes anticompetitive conduct.” Compl. ¶¶ 184, 194.
Count Two alleged “attempted monopolization in violation of Section 2 of the Sherman
Act” against Novartis. Compl. ¶¶ 198–213; see also Am. Compl. ¶¶ 233–50. In particular, it
alleged that “Novartis embarked on an anticompetitive scheme to maintain, entrench, extend, and
ultimately restore its monopoly power in the anti-VEGF PFS market, and the cornerstone of that
scheme was Novartis’s fraudulently procured ’631 Patent.” Compl. ¶ 203; see also Am. Compl.
¶ 238. The Count reasserted Regeneron’s argument that “the ’631 Patent is unenforceable
because Novartis committed fraud on the USPTO.” Id.
Finally, Count Three alleged “unreasonable restraint of trade in violation of Section 1 of
the Sherman Act” against both Novartis and Vetter. Compl. ¶¶ 214–32; see also Am. Compl. ¶¶
251–75. In particular, Regeneron alleged that “Novartis and Vetter tried to leverage the
fraudulently procured and unenforceable ’631 Patent to coerce Regeneron into an exclusive
arrangement with Vetter so that they could control the supply of all anti-VEGF PFS drugs.”
Compl. ¶ 222; see also Am. Compl. ¶ 261.
On September 4, 2020, Novartis and Vetter moved to dismiss, transfer, or stay the action.
See Dkt. Nos. 40, 43.1 On October 19, 2020, Defendants then moved to dismiss the complaint
under Rule 12(b)(6), arguing that the claims were time-barred, or alternatively, that Regeneron
failed to state a claim. See Dkt. Nos. 55, 58. Regeneron opposed both motions. See Dkt. Nos.
45, 66.
After this Court declined to stay discovery pending resolution of the motions to dismiss,
see Dkt. No. 69, the parties commenced discovery. Regeneron subsequently amended its
complaint on January 25, 2021, see Dkt. No. 87, 88, and the Court granted the unopposed motion
to seal because the amended complaint contains competitive business information, Dkt. No. 86.
The amended complaint added two additional causes of action against Novartis. Count Four
alleges “attempted monopolization through Walker Process fraud in violation of Section 2 of the
Sherman Act.” See Am. Compl. ¶¶ 276–84. While Count One alleges the ‘631 Patent is
unenforceable due to Novartis’s withholding of prior art, this Count alleges that “the ’631 Patent
is invalid under 35 U.S.C. 102(f) due to Novartis’s failure to name all actual inventors.” Id. ¶
277. In “deliberately omitting” this “material information with an intent to deceive the USPTO
about the true inventors of the ’631 Patent,” Novartis “deprive[d] Regeneron of its contractual
ownership rights” and “ensure[d] that they could wield Novartis’s fraudulently procured ‘631
Patent to frustrate and delay Regeneron’s entry into the U.S. anti-VEGF PFS market.” Id. ¶¶
278, 281–82. Finally, Count Five alleges “tortious interference” with a contract between
Regeneron and Vetter to develop EYELEA PFS. Id. ¶¶ 285–94. The motivation for this alleged
“tortious interference” was “to fraudulently conceal the Vetter employees’ inventorship from the
USPTO in order to sabotage Regeneron’s ownership rights.” Id. ¶ 288.
1 Vetter joined Novartis’s motion to dismiss, transfer, or stay in its entirety, rather than filing an independent motion.
See Dkt. No. 43.
Defendants again moved to dismiss the amended complaint as time-barred and for failure
to state a claim. See Dkt. Nos. 89, 94. Regeneron opposed, and Defendants filed their replies.
See Dkt. Nos. 105, 114, 117. The Court now considers Defendants’ request to transfer this
action to the Northern District of New York and GRANTS the request under 28 U.S.C. §
1404(a). It does not reach the remaining motions to dismiss and seal as those motions are more
properly addressed by the transferee court. See, e.g., Enigma Software Group USA, LLC v.
Malwarebytes, Inc., 260 F. Supp. 3d 401, 413 (S.D.N.Y. 2017).
II. ANALYSIS
Defendants argue that this Court should dismiss or transfer this action to NDNY under
Rule 13(a) and the first-to-file rule because Novartis’s patent infringement suit was filed a month
before the instant action. See Dkt. No. 41. Even assuming without deciding that the first-to-file
rule does not apply in this case, the Court concludes that transfer to NDNY is warranted under 28
U.S.C. § 1404(a).
A motion to transfer under 28 U.S.C. § 1404(a) involves two inquiries: first, whether the
action might have been brought in the proposed transferee court (in this case the Northern
District of New York), and second whether transfer is warranted for the convenience of the
parties and witnesses, and in the interest of justice. See 28 U.S.C. § 1404(a); Herbert Ltd. P’ship
v. Elec. Arts, Inc., 325 F. Supp. 2d 282, 285 (S.D.N.Y. 2004). The party seeking to transfer a
case carries the burden of making out a strong case for transfer, and courts evaluate such motions
under a clear and convincing evidence standard. See New York Marine & Gen. Ins. Co. v.
Lafarge N. Am., Inc., 599 F.3d 102, 113–14 (2d Cir. 2010).
First, NDNY is clearly a district in which this action “might have been brought.” 28
U.S.C. § 1404(a). And Regeneron does not contend otherwise. Rather, the parties appropriately
focus on whether transfer is warranted under the familiar factors considered with respect to a
transfer motion, namely: (1) the plaintiff’s choice of forum, (2) the convenience of witnesses, (3)
the location of relevant documents and relative ease of access to sources of proof, (4) the
convenience of parties, (5) the locus of operative facts, (6) the availability of process to compel
the attendance of unwilling witnesses, (7) the relative means of the parties, (8) the comparative
familiarity of each district with the governing law, and (9) judicial economic and the interests of
justice. New York Marine & Gen. Ins. Co., 599 F.3d at 112; Herbert Ltd. P’ship, 325 F. Supp. 2d
at 285–86.
The most important factor in this case is the consideration of judicial efficiency and the
interests of justice. “Courts consistently recognize that the existence of a related action in the
transferee district is a strong factor to be weighed with regard to judicial economy; it can be
decisive.” Brown v. New York, 947 F. Supp. 2d 317, 325–26 (E.D.N.Y. 2013) (cleaned up).
Looming over this antitrust action is Novartis’s patent infringement suit. As outlined above, the
enforceability of the ‘631 Patent runs throughout Plaintiff’s amended complaint—indeed, in
Plaintiff’s own words, it is at the “heart” of Defendants’ allegedly anticompetitive scheme. Am.
Compl. ¶ 95; see also id. ¶ 238 (labeling the ‘631 Patent the “cornerstone” of the scheme).
Plaintiff alleges two factual bases for finding the ‘631 Patent was “fraudulently procured,” and
both of these factual disputes will necessarily be determined by the NDNY in adjudicating the
enforceability of the patent. Thus, this action “will hinge at least in part on the same facts and
issues” as the NDNY litigation. See McGraw-Hill Companies Inc. v. Jones, No. 12-CV-7085
AJN, 2014 WL 988607, at *10 (S.D.N.Y. Mar. 12, 2014). And “transfer is particularly
appropriate where there is a pending lawsuit in the transferee district involving the same facts,
transactions, or occurrences.” Nieves v. Am. Airlines, 700 F. Supp. 769, 773 (S.D.N.Y. 1988).
To do otherwise would risk unnecessarily “duplicative litigation and inconsistent results.” Id.
Regeneron’s arguments that judicial economy militates against transfer largely hinge on
the prior stay in the NDNY action—that if transferred, its antitrust claims would “not be litigated
until five years from now.” Dkt. No. 45 at 25. As noted above, however, the NDNY stay was
recently lifted after the ITC action was dismissed. See Dkt. No. 135 at 1. Regeneron has now
filed its answer to Novartis’s complaint and asserted several affirmative defenses, including that
the ‘631 Patent is invalid based on the same factual predicates asserted in the instant suit. See
NDNY Action, Dkt. No. 74. Regeneron proffers that there is a possibility that the NDNY action
is stayed once again, see Dkt. No. 136, but it provides no reason to think the stay would be
lengthy.
Regeneron’s further arguments regarding the interests of justice are unavailing. It argues
that the interests of justice would be disserved by transfer because “any delay in litigating
Regeneron’s antitrust claims would only risk jeopardizing the health and safety” of elderly
patients “who rely on EYELEA PFS.” Dkt. No. 45 at 27. But Regeneron does not explain how
EYELEA PFS will return to the market before the patent infringement suit is adjudicated.
Finally, Regeneron argues transfer “would lead to the exactly type of harm that the U.S. antitrust
laws were designed to protect.” Id. But transfer to the NDNY does not dismiss Regeneron’s
claims, “leaving an [allegedly] significant antitrust violation undetected or unremedied,” it
simply transfers the task of adjudicating Regeneron’s claims to a more appropriate district. See
id. at 28.
The remaining “convenience” factors do not outweigh this “decisive” factor. See
Brown, 947 F.Supp.2d at 325–26. First, a plaintiff's choice of forum is entitled to considerable
weight and is generally not disturbed unless the balance of the factors strongly favors
transfer. See Tomjai Enters., Corp. v. Laboratorie Pharmaplus U.S.A., Inc., No. 12-cv-3729,
2012 U.S. Dist. LEXIS 107033, at *13–14 (S.D.N.Y. July 29, 2012); Am. S.S. Owners Mut. Prot.
& Indem. Ass'n., 474 F. Supp. 2d 474, 486 (S.D.N.Y. 2007). But the overlapping litigation
strongly favors transfer. Moreover, while Regeneron is headquartered within the SDNY, its
complaint does not allege that any of the operative facts of the action occurred here. See Tomjai
Enters., 2012 U.S. Dist. LEXIS 107033, at *13–14 (finding a Plaintiff’s choice of forum holds
diminished weight when the selected forum is not where the operative facts of the action
occurred). On the other hand, the complaint expressly pleads that “the next logical step in
[Defendants’] conspiracy” occurred in the NDNY—Novartis’s patent infringement suit. Am.
Compl. ¶ 265; see Tomjai Enters., 2012 U.S. Dist. LEXIS 107033, at *17 (“The locus of
operative facts is a primary factor in determining whether to transfer venue.”).
As for witness convenience, Regeneron notes that the majority of its witnesses are
located in the SDNY, weighing against transfer. See Dkt. No. 45 at 28. However, many of the
witnesses would have to travel both to the SDNY and to the NDNY due to the overlapping
litigation. Witness convenience may be gained by transfer and potential consolidation.
Regeneron also argues that the NDNY is outside the “100-mile subpoena range of the two U.S.
Novartis Defendants in East Hanover, New Jersey.” Id. at 30–31. But Regeneron only
speculates about the possibility of Novartis witnesses refusing to appear without a subpoena.
Party witnesses, and employees of party witnesses, of course typically appear voluntarily. The
unavailability of process to compel witness attendance is less weighty when there is only
speculation that prospective witnesses would refuse to attend. See Pecorino v. Vutec Corp., 934
F. Supp. 2d 422, 442–43 (E.D.N.Y. 2012). In any event, Novartis Pharma AG is based in
Switzerland and Vetter in Illinois. See Am. Compl. 24, 27. Novartis’s co-developer of
LUCENTIS PFS is based in California. Dkt. No. 41 at 28. All would be outside the subpoena
range for either district. The Court finds that this factor is neutral.
Considering the factors, the issue of judicial economy and interests of justice outweigh
everything else. The Court accordingly finds that Defendants have met their burden to show by
clear and convincing evidence that this matter should be transferred to the NDNY pursuant to 28
U.S.C. § 1404(a).
IV. CONCLUSION
For the foregoing reasons, Defendants’ motion to transfer is GRANTED. Regeneron’s
request for oral argument is denied as moot. In light of Plaintiff's amended complaint, the Court
hereby denies as moot Defendants’ motions to dismiss the original complaint for failure to state a
claim and related oral argument request. The Court does not reach Defendants’ motions to
dismiss the amended complaint for failure to state a claim nor the parties’ various motions to
seal. This resolves Dkt. Nos. 40, 43 55, 57, 58, 68.
The Clerk of Court is respectfully directed to transfer this matter to the Northern District
of New York.
SO ORDERED.
Dated: September 21, 2021 MMi ( ig
New York, New York ‘
ALISONJ.NATHAN
United States District Judge
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