Otsuka Pharmaceutical Co., Ltd. v. Zydus Pharmaceuticals USA, (D. N.J. October 13, 2015)

Addressing the pleading standard for induced infringement, the U.S. District Court for the District of New Jersey dismissed Otsuka Pharmaceutical’s claims finding that a formulaic recitation of the legal standard without sufficient factual support did not state a claim for induced infringement. Otsuka Pharmaceutical Co., Ltd. v. Zydus Pharmaceuticals USA, et al., Civil Action No. 14-3168, Otsuka Pharmaceutical Co., Ltd. v. Torrent Pharmaceuticals Limited, Inc., et al., Civil Action No. 14-4671; Otsuka Pharmaceutical Co., Ltd. v. Teva Pharmaceuticals USA, Inc., Civil Action No. 14-5878; Otsuka Pharmaceutical Co., Ltd. v. Teva Pharmaceuticals USA, Inc., Civil Action No. 14-6398; Otsuka Pharmaceutical Co., Ltd. v. Zydus Pharmaceuticals USA, et al., Civil Action No. 14-7252 (D.N.J. October 13, 2015) (Simandle, J.).

Factual Background

The related Hatch-Waxman patent infringement actions generally concern Otsuka’s brand name aripiprazole product, Abilify®. Otsuka included U.S. Patent No. 8,759,350 (‘350 Patent) in the Orange Book listing for Abilify. The primary indication for the ‘350 Patent is as a product for the adjunctive treatment of major depressive disorder.

Following the court’s decision on Otsuka’s motions for preliminary injunction and to amend its complaints, but before the Markman hearing, defendants moved to dismiss Otsuka’s direct, induced and contributory infringement claims for the ‘350 Patent. Otsuka did not oppose the dismissal of its direct infringement claims; however, the company argued that dismissal of the induced infringement claim would be premature before claim construction and prior to the resolution of fact issues related to whether Defendants’ proposed labels actively instructed and/or encouraged infringement of the asserted patent, notwithstanding that each defendant submitted a “section viii” statement in its abbreviated new drug application (ANDA) certifying that the applicant did not seek approval for any indications or uses covered by the ‘350 Patent (e.g. “adjunctive treatment for major depressive disorder”).

Otsuka Failed to Sufficiently Allege Induced Infringement

The court focused on the standard for induced infringement and whether Otsuka’s complaints stated plausible claims of induced infringement of the ‘350 Patent. Otsuka’s claims would survive “if, but only if” it alleged direct infringement and presented plausible facts that Defendants knowingly induced infringing acts and possessed a specific intent to encourage another to infringe the ‘350 Patent.”

The court held that Otsuka’s allegations of “actual knowledge” of the ‘350 Patent and that the labels for the generic products would “recommend, suggest, encourage and/or instruct others to use [Defendants’] generic products in a manner that infringes at least one claim of the ‘350 Patent” were insufficient to state a cause of action for induced infringement. Otsuka’s complaints failed to allege any specific intent by the defendants or specific actions taken to encourage infringement “much less any attendant factual support to render these allegations plausible.” The “formulaic and incomplete” recitation of the standard for induced infringement failed to plead the “factual content” necessary for the Court to draw the “reasonable inference of culpable conduct intended to induce infringement.” 

The court dismissed Otsuka’s induced infringement claims without prejudice and with leave to amend within seven days “to the extent such amendment can be made consistent with counsel for Otsuka’s obligations under Federal Rule of Civil Procedure 11(b).”

Postscript

Otsuka filed amended complaints within the seven days and defendants again moved to dismiss. Following the court’s Markman ruling, the parties have entered stipulations converting the motions to dismiss to motions for summary judgment and stipulating to a partial summary judgment concerning direct infringement based on the court’s constructions.