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WARNER-LAMBERT COMPANY v. APOTEX CORP.

July 25, 2003

WARNER-LAMBERT COMPANY, PLAINTIFF,
v.
APOTEX CORP., APOTEX, INC., AND TORPHARM, INC., DEFENDANTS.



The opinion of the court was delivered by: Arlander Keys, Magistrate Judge.

TO: THE HONORABLE PAUL E. PLUNKETT, UNITED STATES DISTRICT JUDGE
REPORT AND RECOMMENDATION

This case is before the Court on a Motion for Attorneys' Fees and Related Expenses filed by the defendants, Apotex Corp., Apotex, Inc. and TorPharm, Inc. (collectively, Apotex). Also before the Court is Apotex's Bill of Costs. For the reasons set forth below, the Court recommends that the district court deny the motion for attorneys' fees, but award costs in the amount of $20,876.53.

FACTS & PROCEDURAL HISTORY

Warner-Lambert, a giant in the pharmaceutical industry, holds various patents involving gabapentin, an amino acid compound that has been proven safe and effective in the treatment of epilepsy. First, Warner Lambert holds U.S. Patent No. 4,894,476 (the `476 Patent), which discloses gabapentin monohydrate, a form of gabapentin containing water, and a process for producing gabapentin monohydrate; the `476 Patent expires in 2008. Warner-Lambert also holds U.S. Patent No. 5,084,479 (the `479 Patent), which discloses the invention of "novel uses of known cyclic amino acids [including gabapentin] for treating neurodegenerative disorders, perinatal asphyxia, status epilepticus, Alzheimer's Huntington's, Parkinson's, and Amyotrophic Lateral Sclerosis." U.S. Patent No. 5,084,479, abstract. The `479 Patent expires in 2010.

In addition to the `476 and `479 Patents, Warner-Lambert holds two expired patents involving gabapentin: expired U.S. Patent 4,024,175 (the `1.75 Patent), which discloses the cyclic amino acid compounds that are used in the `479 Patent (including gabapentin in its water-free form), and expired U.S. Patent 4,087,544 (the `544 Patent), which discloses a method of using the compounds claimed in the `175 Patent (including gabapentin) to treat certain forms of epilepsy and other disorders. Because these two patents have expired, both the compounds claimed in the `175 Patent and the method of using those compounds claimed in the `544 Patent are now in the public domain.

In addition to the various patents, Warner-Lambert also holds an approved New Drug Application (NDA) issued in 1993 by the United States Food and Drug Administration.*fn1 The NDA allows Warner-Lambert to market gabapentin for use in "adjunctive therapy in the treatment of partial seizures with and without secondary generalization in adults with epilepsy." At least according to Apotex, gabapentin has been a huge cash cow for Warner-Lambert: in 2002 alone, Warner-Lambert rang up $2.26 billion in sales of Neurontin®, its gabapentin product.

On April 17, 1998, Apotex, also a player in the pharmaceutical industry, but one specializing in generic drugs, as opposed to brand-name or pioneer drugs, filed an Abbreviated New Drug Application (ANDA) with the FDA.*fn2 In it, Apotex sought approval to market a generic formulation of gabapentin "for adjunctive therapy in the treatment of partial seizures with and without secondary generalization in adults with epilepsy" — the same use claimed in the FDA-approved NDA. When it filed its ANDA, Apotex, as required by various statutory provisions, which the Court addresses in greater detail below, notified Warner-Lambert that its generic gabapentin, to be used in the treatment of epilepsy, would not infringe either the `476 Patent or the `479 Patent. Warner-Lambert disagreed with Apotex's assessment and sued.

In its complaint, Warner-Lambert claimed infringement of both the `476 Patent and the `479 Patent. Early on, Apotex sought summary judgment of noninfringement with respect to the '479 Patent, arguing that there could be no infringement as a matter of law because the use for which Apotex's ANDA sought approval was different from the use claimed in the patent. The district court denied the motion because it found that, under an inducement of infringement theory, which Warner-Lambert was perfectly entitled to pursue, the question of whether Apotex's proposed use of the drug was within the scope of the patent was irrelevant. Warner-Lambert v. Apotex, No. 98 C 4293, 1999 WL 259946, at *3 (N.D. Ill. April 8, 1999). The court further found that the' circumstantial evidence raised a genuine issue as to whether, by filing the ANDA seeking approval to use gabapentin in the treatment of epilepsy, Apotex intended to induce doctors to use the drug in the treatment of neurodegenerative diseases as taught in the `479 Patent, and it therefore denied Apotex's motion for summary judgment. Id. at *4-*6.

After discovery was completed, Apotex moved for summary judgment of noninfringement with respect to the `476 Patent. Apotex again argued that its ANDA fell outside the scope of the patent — this time, with respect to the product; the ANDA sought approval of anhydrous gabapentin (a version containing no water), whereas the `476 Patent discloses gabapentin monohydrate. In response to the motion, Warner-Lambert stated that it had always conceded that Apotex's final product did not infringe the patent. But it alleged that the company that manufactured the gabapentin for Apotex likely made an infringing version as an intermediary in the manufacturing process. With discovery closed, Warner-Lambert was forced to admit that it had been utterly unsuccessful in trying to obtain discovery concerning whether gabapentin monohydrate was, in fact, used at any point during the manufacturing process, and, with no evidence to support its claim, Warner-Lambert advised the court that it did not oppose the entry of summary judgment. Based upon that concession, the court entered judgment in Apotex's favor and certified the order as final and appealable under Rule 54(b). Warner-Lambert v. Apotex, No. 98 C 4293 (N.D. Ill. Order dated March 2, 2001). On a motion from Warner-Lambert, the court later vacated that order and disposed of the claim under Rule 56; in other words, Apotex still won its motion, but the order was neither final nor appealable at that time. See Warner-Lambert v. Apotex, No. 98 C 4293, 2001 WL 736024, at *2 (N.D. Ill. June 28, 2001).*fn3

Shortly after its victory on the claim of infringement of the `476 Patent, Apotex again moved for summary judgment on the claim of infringement of the `479 Patent. This time, the court sided with Apotex. With discovery closed, the court held, Warner-Lambert had failed to adduce any evidence that Apotex knew or should have known that its actions would induce actual infringement of the patent, i.e., that Apotex knew its actions would induce doctors to use the generic gabapentin in the treatment of neurodegenerative diseases (the method of use claimed in the `479 Patent). Warner-Lambert Co. v. Apotex Corp., No. 98 C 4293, 2001 WL 1104618, at *3-*4 (N.D. Ill. Sept. 14, 2001). Accordingly, the court entered summary judgment in Apotex's favor. Id. at *4. Warner-Lambert appealed the court's decision on the `479 Patent only, and, on January 16, 2003, the Federal Circuit affirmed. See Warner-Lambert Co. v. Apotex Corp., 316 F.3d 1348 (Fed. Cir. 2003).

Apotex then filed a timely motion for attorneys' fees, which was referred to this Court. Apotex seeks an award of fees and related expenses under both 35 U.S.C. § 285 and Rule 11 of the Federal Rules of Civil Procedure, though its arguments justifying the award under both provisions are the same: Apotex argues that Warner-Lambert knew that its infringement claims had no basis in law or fact, but pursued them nonetheless. All told, Apotex seeks to recover $726,932.38 in fees and expenses. Apotex also seeks from Warner-Lambert $22,260.01 in costs. The purpose of the Court's opinion herein is to determine whether Apotex is entitled to anything, and, if so, how much.

DISCUSSION

A. Apotex's Motion for Attorneys' Fees under 35 U.S.C. § 285

A prevailing party in a patent case is not, as a matter of course, entitled to recover its attorneys' fees; rather, courts award fees only in "exceptional cases." 35 U.S.C. ยง 285. Apotex argues that this is such a case. To give full meaning to why Apotex claims this is so, the Court must provide a bit of ...


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