The opinion
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
KING DRUG CO. OF FLORENCE, : CIVIL ACTION
INC., et al. :
:
v. :
: NO. 19-3565
ABBOTT LABORATORIES, et al. :
MEMORANDUM
Bartle, J. January 19, 2023
Plaintiffs1 are direct-purchase wholesalers of
pharmaceutical drugs. They bring this civil antitrust action
under the Sherman Act, 15 U.S.C. §§ 1 et seq., against drug
manufacturers AbbVie2 and Besins3. Plaintiffs allege that they
were denied the opportunity to purchase lower-priced generic
versions of the pharmaceutical product AndroGel 1%, transdermal
1. Plaintiffs are King Drug Company of Florence, Inc.,
AmerisourceBergen Corp., AmerisourceBergen Drug Corp., Bellco
Drug Co., H.D. Smith, LLC, Cardinal Health, Inc., The Harvard
Drug Group, LLC, McKesson Corp., J.M. Smith Corp. (d/b/a Smith
Drug Co.), Burlington Drug Co., Inc., The North Carolina Mutual
Wholesale Drug Co., Dakota Drug Inc., Value Drug Co., and FWK
Holdings, LLC.
2. “AbbVie” is used here to refer to defendants AbbVie Inc.,
AbbVie Products LLC (f/k/a Abbott Products LLC f/k/a Abbott
Products, Inc. f/k/a Solvay Pharmaceuticals, Inc.), Unimed
Pharmaceuticals, LLC (f/k/a Unimed Pharmaceuticals, Inc.) and
Abbott Laboratories.
3. “Besins” is used here to refer to defendant Besins
Healthcare, Inc. (f/k/a Laboratoires Besins Iscovesco and
testosterone replacement therapy gel, due to AbbVie and Besins’s
anticompetitive conduct.
Before the court is the motion of the plaintiffs for
partial summary judgment on the grounds that the lawsuit Abbott
Products, Inc. v. Perrigo Co., Civ. No. 3:11-cv-06357 (D.N.J.),
filed by AbbVie and Besins on October 31, 2011, was objectively
baseless. In Perrigo, AbbVie and Besins claimed that Perrigo’s
New Drug Application No. 203098 to market a generic version of
their AndroGel 1% infringed U.S. Patent No. 6,503,894 (“the '894
patent”).
I
The facts from the prosecution history record of the
'894 patent--issued on January 7, 2003 from U.S. Patent
Application Serial No. 09/651,777 ("the '777 application")--are
undisputed. In August 2000, AbbVie and Besins filed an
application for a "pharmaceutical composition comprising
testosterone in a gel formulation, and to methods of using the
same." Claim 1 of the '777 application included “a penetration
enhancer” as part of the active pharmaceutical ingredient. The
penetration enhancer would “accelerate the delivery of the drug
through the skin.” Claim 1 encompassed all penetration
enhancers without any limitations. The invention description in
the application included non-limiting examples of penetration
enhancers including isopropyl myristate, which was ultimately
used in AndroGel 1%.
In June 2001, the patent examiner at the U.S. Patent
and Trademark Office ("PTO") rejected claims 1-9 and 35-366 of
the '777 application as unpatentable over several prior art
references, including the Allen and Mak references. Allen is an
international patent application published in September 1996,
which discloses the use of isopropyl myristate, isopropyl
palmitate, and three other penetration enhancers in a
nitroglycerin cream. Mak is an international patent application
published in May 1999, which discloses a transdermal
testosterone gel that uses the penetration enhancer oleic acid.
Based on these references, the examiner stated: “Since all
composition components herein are known to be useful for the
percutaneous delivery of pharmaceuticals, it is considered prima
facie obvious to combine them into a single composition useful
for the very same purpose."
In response to the June 2001 office action rejecting
the claim of all penetration enhancers, AbbVie and Besins
submitted their first amendment to their '777 application in
October 2001. AbbVie and Besins narrowed their claim from one
encompassing all penetration enhancers to a claim naming only
twenty-four penetration enhancers, including isopropyl
myristate. They added claim 47, in which they claimed “a
penetration enhancer selected from the group consisting of
isopropyl myristate and lauryl alcohol." In new claims 61 and
62, they identified only isopropyl myristate as the penetration
enhancer. In support of this amendment, they also submitted a
declaration discussing the success of AndroGel, which used only
isopropyl myristate as the penetration enhancer.
On December 6, 2001, attorneys for AbbVie and Besins
met with the patent examiner to discuss the October 2001
amendment. In her interview summary, the examiner noted that
claims 61 and 62, which identified only isopropyl myristate as
the penetration enhancer, "are seen to be allowable over the
prior art." She also noted that the "applicants argued claim
47,” which identified isopropyl myristate and lauryl alcohol as
penetration enhancers, “is novel [and] nonobvious over the prior
art because the prior art does not teach the composition with
particular concentration."
Two weeks later, on December 21, 2001, AbbVie and
Besins submitted a supplemental amendment to their patent
application. They cancelled the October 2001 amended claim 1 in
its entirety and amended claim 47 to specify only isopropyl
myristate as the penetration enhancer. As a result, they
reduced the number of penetration enhancers in the '777
application from twenty-four to one. They also modified the
concentration ranges for isopropyl myristate in claim 61. In
support of their amended application, they requested the
“reconsideration and withdrawal of the outstanding rejections
and allowance of the present claim.”
AbbVie and Besins submitted three additional
amendments in February, July, and August of 2022. The February
2002 amendment narrowed the concentration range for isopropyl
myristate in claims 47 and 61 and cancelled claim 62. They
again requested "reconsideration and withdrawal of the
outstanding rejections and allowance of the present claims.”
The remaining two amendments did not contain relevant changes.
The examiner issued a Notice of Allowability in August
2002 as to claims 47-48, 51-52, 54-57, 61, 78-81, 83, 87-89, and
97-121. The examiner approved the application because "the
prior art does not teach or fairly suggest the instant claimed
pharmaceutical composition consisting essentially of the
specific ingredients herein in the particular amounts." The
'894 patent was issued in January 2003, with isopropyl myristate
as the only claimed penetration enhancer.
II
After the '894 patent was issued, Perrigo developed a
generic version of AndroGel 1% that used isostearic acid, rather
than isopropyl myristate, as the penetration enhancer. In
response, AbbVie and Besins filed a lawsuit on October 31, 2011
against Perrigo alleging that Perrigo’s generic product
infringed the '894 patent under the doctrine of equivalents.
Abbott Products, Inc., Civ. No. 3:11-cv-06357 (D.N.J.). Because
Perrigo’s product was still in the process of obtaining Food and
Drug Administration (“FDA”) approval, the lawsuit triggered a
thirty-month stay of the approval process and delayed Perrigo’s
entry into the market. Perrigo began selling its generic
product in December 2014.
After AbbVie and Besins filed patent infringement
lawsuits against Perrigo and Teva, another competitor, the
Federal Trade Commission (“FTC”) filed an action against them in
this court. FTC v. AbbVie Inc. (FTC I), 2017 U.S. Dist. LEXIS
149824 (E.D. Pa. Sept. 15, 2017). The FTC alleged that AbbVie
and Besins had violated Section 5(a) of the Federal Trade
Commission Act, 15 U.S.C. § 45(a), by filing “sham patent
infringement lawsuits” against Perrigo and Teva. Id. at *2. As
part of the FTC’s claim that AbbVie and Besins “willfully
acquired or maintained monopoly power by filing sham patent
infringement litigation,” the FTC had to establish that the
lawsuits were objectively baseless. Id. at *12. AbbVie and
Besins claimed that their exclusion of isostearic acid in
December 2001 was not for a substantial reason related to
patentability. Id. at *25-*26. They argued that the exclusion
was not in response to a rejection by the examiner because the
examiner only rejected the application in June 2001, and they
had voluntarily amended the application in December 2001. Id.
The court, however, refused to “ignore a significant
event in the prosecution history, that is the examiner's
rejection of all penetration enhancers including isostearic acid
in June 2001.” Id. at *26. Furthermore, the court noted that
the examiner provided “a telling signal to any reasonable person
that patentability required the narrowing of any claim so that
it disclosed isopropyl myristate at a particular concentration
as the sole penetration enhancer.” Id. Ultimately, the court
held that:
The patent lawsuits against Teva and Perrigo
were without question objectively baseless.
AbbVie and Besins could not realistically
have expected success on the merits of this
issue or have had a reasonable belief that
they had a chance to prevail. The FTC is
entitled to partial summary judgment on the
objective baselessness element of the sham
litigation prong of their illegal
monopolization claim.
Id. at *32 (citations omitted).
After a three-week trial, the court ultimately found
that AbbVie and Besins had actual knowledge that these
infringement lawsuits were baseless and that they had acted in
bad faith. FTC v. AbbVie Inc., 329 F. Supp. 3d 98, 126 (E.D.
Pa. 2018). In addition, the court determined that AbbVie and
Besins “possessed monopoly power and illegally and willfully
maintained that monopoly power through the filing of sham
litigation.” Id. at 136. The court ultimately awarded
disgorgement but denied the FTC’s request for an injunction.
Id. at 144-45.
Our Court of Appeals affirmed that the suit against
Perrigo was objectively baseless, stating that “[n]o reasonable
litigant in AbbVie and Besins's position would believe it had a
chance of winning . . . .” FTC v. AbbVie Inc. (FTC II), 976
F.3d 327, 366 (3d Cir. 2020). The Court found that “nothing in
the prosecution history supports AbbVie and Besins's claim that
the December 2001 amendment's purpose was to expedite
prosecution.” Id. Rather, the prosecution history demonstrated
that the December 2001 amendment was related to patentability.
Id. at 367. The Court, however, determined that Section 13(b)
of the Federal Trade Commission Act did not give this court the
power to order disgorgement. Id. at 374. As a result, the
judgment in favor of the FTC was reversed. Id. at 381. The
action was remanded on grounds unrelated to the sham litigation
claims and ultimately dismissed. Id.
In this case, the court denied plaintiffs’ motion to
preclude AbbVie and Besins from relitigating certain facts and
issues decided in FTC II. The court explained that the
plaintiffs could not assert issue preclusion because the FTC did
not receive any of its requested relief in the previous lawsuit
and therefore could not be considered a prevailing party. This
decision, however, does not preclude plaintiffs from moving for
summary judgment on objective baselessness.
III
As discussed in greater detail in FTC I, 2017 U.S.
Dist. LEXIS 149824, AbbVie and Besins’s suit against Perrigo was
objectively baseless. The court’s analysis of this issue has
not changed.
Litigation is objectively baseless if “no reasonable
litigant could realistically expect success on the merits.”
Pro. Real Est. Invs., Inc. v. Columbia Pictures Indus., Inc.
(PRE), 508 U.S. 49, 60 (1993). To demonstrate that litigation
is objectively baseless, “the plaintiff [must] prove that the
defendant lacked probable cause” in filing the underlying
lawsuit. Id. at 62. Probable cause “requires no more than a
‘reasonabl[e] belie[f] that there is a chance that [a] claim may
be held valid upon adjudication.’ ” Id. at 62-63 (quoting
Hubbard v. Beatty & Hyde, Inc., 178 N.E.2d 485, 488 (Ma. 1961)).
In the underlying lawsuit at issue here, AbbVie and
Besins alleged that Perrigo's use of isostearic acid as a
penetration enhancer for its generic product was an equivalent
of isopropyl myristate and therefore infringed the '894 patent
under the doctrine of equivalents. The doctrine of equivalents
provides that “[t]he scope of a patent is not limited to its
literal terms but instead embraces all equivalents to the claims
described.” Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co.
(Festo VIII), 535 U.S. 722, 732 (2002). See also Warner-
Jenkinson Co. v. Hilton Davis Chem. Co., 520 U.S. 17, 29 (1997).
“The doctrine of equivalents allows the patentee to claim those
insubstantial alterations that were not captured in drafting the
original patent claim but which could be created through trivial
changes.” Festo VIII, 535 U.S. at 733. An element of the
alleged infringing product is equivalent to an element of the
patented invention if the alleged equivalent is insubstantially
different. See Dawn Equip. Co. v. Ky. Farms, Inc., 140 F.3d
1009, 1015-16 (Fed. Cir. 1998) (citing Warner-Jenkinson Co., 520
U.S. at 40).
Plaintiffs assert, however, that the doctrine of
prosecution history estoppel applies. Under this doctrine, a
patentee is precluded from claiming equivalents if the patentee
surrendered the equivalents for reasons of patentability during
the patent prosecution process. See Festo VIII, 535 U.S. at
733-34. When the prosecution history record demonstrates that
the patentee “turned his attention to the subject matter in
question, knew the words for both the broader and narrower
claim, and affirmatively chose the latter,” the patentee is not
entitled to the protections of the doctrine of equivalents as to
that subject matter. Id. at 734-35.
The Federal Circuit has established a three-step
inquiry to determine whether prosecution history estoppel
applies. A court must determine: (1) whether “an amendment
filed in the [PTO] has narrowed the literal scope of a claim”;
(2) “whether the reason for that amendment was a substantial one
relating to patentability”; and (3) whether the patentee can
rebut the presumption that “the patentee has surrendered all
territory between the original claim limitation and the amended
claim limitation.” Festo Corp. v. Shoketsu Kinzoku Kogyo
Kabushiki Co. (“Festo IX”), 344 F.3d 1359, 1366-67 (Fed. Cir.
2003).
To answer whether AbbVie and Besins filed an amendment
to the '777 application that narrowed the scope of the literal
claim, the court must consider the entire prosecution history.
See Wang Labs., Inc. v. Toshiba Corp., 993 F.2d 858, 867 (Fed.
Cir. 1993); Tex. Instruments, Inc. v. U.S. Int'l Trade Comm'n,
988 F.2d 1165, 1174 (Fed. Cir. 1993). The examiner first
rejected AbbVie and Besins’s claim 1, which claimed all
penetration enhancers. As a result, AbbVie and Besins narrowed
their claim over the course of their October 2001, December
2001, and February 2002 amendments from all penetration
enhancers to only isopropyl myristate at a particular
concentration.
Next, the court must determine if whether the reason
for the narrowing amendments “was a substantial one relating to
patentability.” See Festo IX, 344 F.3d at 1366-67. The patentee
“bear[s] the burden of showing that the amendment does not
surrender the particular equivalent in question.” Festo VIII,
535 U.S. at 740; Festo IX, 344 F.3d at 1368. In doing so, the
patentee “is restricted to the evidence in the prosecution
history record.” Festo IX, 344 F.3d at 1367 (citing Warner-
Jenkinson Co., 520 U.S. at 33).
If an amendment was for purposes of patentability, the
patentee can rebut the presumption of surrender by demonstrating
that: (1) the alleged equivalent was “unforeseeable at the time
of the application;” (2) “the rationale underlying the amendment
[ ] bear[s] no more than a tangential relation to the equivalent
in question;” or (3) there is “some other reason suggesting that
the patentee could not reasonably be expected to have described
the insubstantial substitute in question.” Festo VIII, 535 U.S.
at 740-41 (emphasis added).
As discussed above, the court rejects, as it did in
the prior action, AbbVie and Besins’s argument that their
exclusion of isostearic acid in December 2001 was not for
purposes of patentability and was tangential to isostearic acid.
They argue that the amendment was not in response to an
examiner’s rejection. However, the examiners June 2001
rejection of penetration enhancers including isostearic acid was
a significant event in the prosecution history. Furthermore,
the examiner’s comments served as a telling signal to any
reasonable person that AbbVie and Besins’s claims needed to be
narrowed to isopropyl myristate at a particular concentration to
be patentable. Accordingly, the court reiterates that AbbVie
and Besins’s suit against Perrigo was objectively baseless.
IV
AbbVie and Besins argue that their suit against
Perrigo was not objectively baseless because it “was based on an
objectively ‘good faith argument for the extension,
modification, or reversal of existing law.’” PRE, 508 U.S. at
65 (quoting Fed. R. Civ. P. 11). The Advisory Committee Notes
to the 1993 Amendment states that:
Arguments for extensions, modifications, or
reversals of existing law or for creation of
new law do not violate subdivision (b)(2)
provided they are “nonfrivolous.” This
establishes an objective standard, intended
to eliminate any “empty-head pure-heart”
justification for patently frivolous
arguments. However, the extent to which a
litigant has researched the issues and found
some support for its theories even in
minority opinions, in law review articles,
or through consultation with other attorneys
should certainly be taken into account in
determining whether paragraph (2) has been
violated. Although arguments for a change of
law are not required to be specifically so
identified, a contention that is so
identified should be viewed with greater
tolerance under the rule.
AbbVie and Besins claim they had the right in Perrigo
to ask the Federal Circuit or Supreme Court for three changes in
the law. First, AbbVie and Besins argue that a court should
only determine that “the reason for [an] amendment was a
substantial one relating to patentability” if the amendment was
made to overcome a statutory defect in patentability. They
assert that this position is supported by Warner-Jenkinson, 520
U.S. 17 (1997), and that they would ask the Supreme Court to
return to this interpretation. Defendants’ complaint in Perrigo
does not mention or even suggest this argument.
This court previously rejected, for the reasons
stated above, AbbVie and Besins’s argument that their December
2001 amendment was not made for a reason relating to
patentability because it was not made to comply with a provision
of the Patent Act. The court determined that the amendment was
motivated by the examiner’s June 2001 rejection and her signal
that patentability required claiming only isopropyl myristate at
a particular concentration. Our Court of Appeals agreed. It
ruled that “[t]o the extent the prosecution history reveals the
December 2001 amendment’s purpose, it shows the amendment
related to patentability.” FTC II, 976 F.3d at 367.
Furthermore, AbbVie and Besins previously argued that
the reason for their December 2001 amendment was “to expedite
prosecution,” even if that purpose “did not appear in the
prosecution history.” Our Court of Appeals rejected this “even
as an argument for the extension, modification, or reversal of
existing law,” because the existing approach is “fundamental” to
protecting “the needs of would-be competitors for adequate
notice of the scope of [patent] protection.” FTC II, 976 F.3d
at 362 (quotation marks omitted).
Second, AbbVie and Besins claim they could have asked
for Honeywell International Inc. v. Hamilton Sundstrand Corp.,
370 F.3d 1131 (Fed. Cir. 2004) (en banc), to be reversed. The
Honeywell rule treats the cancellation of an independent claim
as a narrowing amendment when one of its formerly dependent
claims is then pursued as an independent claim. AbbVie and
Besins argue that they are facing litigation because this rule
applied to their cancellation of claim 1 and subsequent pursuit
of separate, narrower claims. Finally, AbbVie and Besins state
that they could have asked for the abolishment of the
prosecution history estoppel doctrine altogether. Neither of
these arguments was mentioned or even hinted at in the Perrigo
complaint, nor was any of them raised in prior briefing on the
issue of objective baselessness.
Regardless, AbbVie and Besins’s suit against Perrigo
was not based on objectively good faith arguments for seeking
these three changes in the law. The Supreme Court, in Festo
VIII, reiterated that it had “made it clear that the doctrine of
equivalents and the rule of prosecution history estoppel are
settled law” and that “[t]he responsibility for changing them
rests with Congress.” 535 U.S. at 739. AbbVie and Besins have
not provided any basis that the Supreme Court has changed its
position or that Congress has passed any legislation related to
the prosecution history estoppel doctrine. Consequently, no
reasonable litigant could have expected that filing this patent
infringement suit against Perrigo would have led to these
proposed changes in the law.
V
AbbVie and Besins filed an objectively baseless suit
against Perrigo. Accordingly, the court will grant the motion
of the plaintiffs for summary judgment in their favor and
against defendants AbbVie and Besins.