The court granted plaintiffs’ motion to dismiss defendant’s antitrust and patent misuse counterclaims and related affirmative defenses.

Case Name: Duke Univ. v. Akorn, Inc., Civ. No. 3:18-cv-14035-BRM-TJB, 2019 U.S. Dist. LEXIS 159314, (D.N.J. Sept. 16, 2019) (Martinotti, J.)

Drug Product and Patent(s)-in-Suit: Latisse® (bimatoprost ophthalmic solution); U.S. Patent No. 9,579,270 (“the ’270 patent”)

Nature of Case and Issue(s) Presented: Plaintiff Allergan holds the NDA for Latisse. Latisse is a bimatoprost ophthalmic solution used to treat hypotrichosis of the eyelashes by increasing eyelash length, thickness, and darkness. Plaintiff Duke University owns the ’270 patent. Duke granted Allergan an exclusive license to the ’270 patent. Defendant Akorn, through Defendant Hi-Tech Pharmacal Co., Inc. (“Hi-Tech”), submitted an ANDA for a generic bimatoprost product. Allergan sued several generic manufacturers, alleging their ANDAs infringed patents covering Latisse. Duke joined three suits alleging infringement by Akorn’s ANDA (Latisse I–III, brought by Allergan in the Middle District of North Carolina).

In Latisse I, Allergan and Duke sued Hi-Tech for infringement by Akorn’s ANDA of U.S. Patents Nos. 7,531,404 (“the ’404 patent”) and 7,388,029 (“the ’029 patent”). The Middle District of North Carolina district court held Hi-Tech infringed the ’404 and ’029 patents. The Federal Circuit reversed, holding the patents were invalid as obvious. In Latisse II, filed while Latisse I was pending, Allergan and Duke sued several defendants, including Akorn, for infringement of U.S. Patent Nos. 8,263,054 (“the ’054 patent”), 8,038,988 (“the ’988 patent”), and 8,101,161 (“the ’161 patent”). The same district court held that the ’988, ’161, and ’054 patents related to the ’404 patent invalidated in Latisse I. The court found these patents were invalid as obvious and held that Allergan was collaterally estopped from asserting them. Plaintiffs did not appeal. Following the decision in Latisse I, plaintiffs filed Latisse III, contending that Akorn’s proposed ANDA product infringed U.S. Patent Nos. 8,906,962 (“the ’962 patent”) and 8,926,953 (“the ’953 patent”). Plaintiffs then amended their complaint, dropping infringement claims for the ’962 patent. The district court found that plaintiffs were collaterally estopped from asserting the ’953 patent against Akorn. The Federal Circuit affirmed that decision, holding that Plaintiffs were collaterally estopped from asserting the ’029, ’404, ’988, ’161, and ’953 patents.

After the USPTO issued the ’270 patent to Duke, plaintiffs brought the current suit. Plaintiffs argued claims 22 and 30 of the ’270 patent were limited and thus the findings by the Federal Circuit did not preclude them from asserting the ’270 patent against Akorn. Akorn counterclaimed, alleging that claims 22 and 30 were substantially similar to several claims within the patents deemed invalidated on the basis of collateral estoppel in Latisse I–III. Akorn asserted eight counterclaims: (i) invalidity of the ’270 patent; (ii) non-infringement of the ’270 patent; (iii) preclusion based on collateral estoppel; and a series of antitrust violations involving 15 U.S.C. § 1 and 2: (iv) actual monopolization: sham litigation; (v) series of sham litigations; (vi) attempted monopolization; (vii) conspiracy to monopolize; and (viii) unenforceability due to patent misuse. Plaintiffs filed a motion to dismiss Akorn’s antitrust and patent misuse counterclaims and to strike related affirmative defenses, or, in the alternative, to bifurcate and stay Akorn’s counterclaims and affirmative defenses. Akorn opposed. The court granted plaintiffs’ motion to dismiss.

Why Plaintiffs Prevailed: Plaintiffs argued that the court should dismiss counterclaims four through six because Akorn failed to meet its high pleading burden for alleging sham litigations under the Noerr-Pennington doctrine. Plaintiffs argued for dismissal of counterclaims seven and eight because Akorn did not provide proper support for an unlawful conspiracy to monopolize claim or a patent misuse claim. Akorn argued that the court should deny plaintiffs’ motions because plaintiffs did not challenge most elements required to establish monopolization counterclaims. Akorn further argued that it sufficiently pled sham litigation supporting actual monopolization and conspiracy to monopolize claims.

The Noerr-Pennington doctrine protects against monopolization, typically immunizing a party who petitions the government for redress. However, under the “sham” exception to the Noerr-Pennington doctrine, petitioners cannot use such process simply as an anticompetitive tool. The court noted a plaintiff cannot prove a sham by merely showing its competitor intended to delay the plaintiff’s market entry or meaningful access to an appropriate forum. Here, the court found Akorn failed to establish that Plaintiffs conducted sham proceedings via Latisse I–III. The court held that plaintiffs did not conduct sham proceedings because: (i) plaintiffs did not bring objectively baseless suits in which no reasonable litigant could realistically expect success on the merits; and (ii) plaintiffs’ suits did not conceal an attempt to interfere directly with the business relationships of a competitor through use of the governmental process.

The court held that, because plaintiffs’ conduct was not “exceptional,” plaintiffs’ conduct did not constitute sham litigation. Plaintiffs argued, and the court agreed, that the “exceptional case” standard in 25 U.S.C. § 285, which governs adjudication of attorney’s fees motions, is less exacting than the “objectively baseless” sham litigation standard. The court pointed to Octane Fitness, LLC v. ICON Health & Fitness, Inc., 72 U.S. 545 (2014) for this distinction. Because Akorn could not demonstrate that plaintiffs’ litigations were objectively baseless, the court found Akorn failed to state a claim for monopolization by virtue of sham litigation.

The court next analyzed Akorn’s counterclaim seven, involving conspiracy to monopolize in violation of 15 U.S.C. §§ 1 and 2. Akorn argued it had sufficiently pled and provided facts for each element required for an unlawful conspiracy to monopolize claim: “(1) concerted action by the defendants; (2) that produced anticompetitive effects within the relevant product and geographic markets; (3) that the concerted actions were illegal; and (4) that it was injured as a proximate result of the concerted action.” Gordon v. Lewistown Hosp., 423 F.3d 184, 207 (3d Cir. 2005) (citations omitted). Here, the court found Akorn failed to allege that plaintiffs’ actions were illegal and thus failed the Gordon test. Further, the court acknowledged that a corporation and its wholly owned subsidiaries cannot conspire with one another.

The court then considered counterclaim eight, alleging patent misuse. Agreeing with plaintiffs, the court found that Akorn failed to adequately plead patent misuse by not alleging fraud in plaintiffs’ obtaining of the patents at issue. The court noted that a patent misuse claim cannot be premised on sham litigation allegations. Further, the court held that Akorn failed to plead any specifics to support its claim that plaintiffs impermissibly broadened the scope of the ’270 patent.