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Abbott Laboratories v. Mylan Pharmaceuticals

February 23, 2007

ABBOTT LABORATORIES, PLAINTIFF,
v.
MYLAN PHARMACEUTICALS, INC., DEFENDANT.



The opinion of the court was delivered by: Judge Virginia M. Kendall

MEMORANDUM OPINION AND ORDER

Plaintiff Abbott Laboratories ("Abbott") has brought suit against Defendant Mylan Pharmaceuticals, Inc., ("Mylan") for alleged infringement of two patents used in the manufacture of the pharmaceutical "Depakote." Mylan has filed several counterclaims, two of which allege that Abbott's procurement and enforcement of the patents constitute federal antitrust violations. Abbott moves to dismiss these two counterclaims pursuant to Federal Rule of Civil Procedure 12(b)(6). Because Mylan has adequately stated a claim for Walker Process fraud, Abbott's Motion to Dismiss is denied.

Facts

For purposes of a motion to dismiss, the Plaintiff's version of the facts of the case is taken as true. In the late 1980's and early 1990's, Abbott procured a number of patents from the United States Patent and Trademark Office ("PTO") in connection with production of the drug Depakote. Abbott has sued Mylan for infringement of two of these patents, Nos. 4,988,731 ("the '731 patent") and 5,212,326 ("the '326 patent").*fn1 Mylan counterclaims that during the prosecution of these two patents, two individual employees of Abbott made misrepresentations to the PTO that were material to Abbott's procurement of the patents.

Specifically, Mylan alleges that Abbott employee Dr. Bauer submitted a declaration to the PTO during prosecution of the '731 and the '326 patents in which he testified that he had prepared certain compounds or "ionic oligomers" in accordance with the process detailed in the patent, and then tested the compounds. Dr. Bauer testified to the weight and structure of the compounds based on the results of the tests he performed. But Mylan alleges that the tests performed were known to be incapable of measuring the type of oligomer detailed in the patents and that Dr. Bauer could not have reached the conclusions to which he testified on the basis of the tests he performed. Mylan alleges that Dr. Bauer mislead the PTO by suggesting that his tests supported his conclusions and by failing to disclose that the tests he performed were inappropriate for the compounds that he tested. Mylan alleges that Dr. Lambert's declaration corroborated Dr. Bauer's testimony and that a person of Dr. Lambert's skill in the relevant art would have known that the tests were inappropriate and the results inaccurate.

Mylan also alleges that Dr. Bauer's and Dr. Lambert's misrepresentations before the PTO were material to the PTO's decision to grant Abbott the patents. The PTO examiner rejected the continuation-in-part applications for the '731 and the '326 because they were not supported by the specification of the originally-filed application as required by 35 U.S.C. § 112. The Patent Appeals Board reversed the examiner's decision and stated in its opinion that it based its decision to reverse on the declarations of Drs. Bauer and Lambert.

Finally, Mylan alleges that as a result of the fraudulent procurement of the '731 and '326 patents, Mylan has not been able to enter the market for generic Depakote and has been subject to suit by Abbott.

Legal Standard

A motion to dismiss pursuant to Federal Rule of Civil Procedure ("Rule") 12(b)(6) tests the legal sufficiency of the claims alleged in the complaint. See Cler v. Illinois Educ. Ass'n., 423 F.3d 726, 729 (7th Cir. 2005). A complaint will not be dismissed for failure to state a claim unless there is no set of circumstances that could be proved that would entitle the plaintiff to relief. See Hishon v. King & Spalding, 467 U.S. 69, 73 (1984); DeWalt v. Carter, 224 F.3d 607, 612 (7th Cir. 2000).

But a plaintiff may plead facts that show that he has no claim, meriting dismissal. See McCready v. Ebay, 453 F.3d 882, 888 (7th Cir. 2006).

Immunity from Antitrust Suit

Generally, a patentee suing to enforce statutory rights is immune from suit for antitrust violations even if the suit has an anticompetitive effect. See Glass Equip. Dev., Inc.. v Besten, Inc., 174 F.3d 1337, 1343 (Fed. Cir. 1999). A patentee who brings suit for patent infringement may be subject to antitrust liability if the alleged infringer can prove either: (i) that the infringement suit was "sham litigation" designed to interfere with legitimate business relationships; or (ii) that the patent was obtained through knowing and willful fraud, known as "Walker Process" fraud. See Nobelpharma AB v. Implant Innovations, Inc., 141 F.3d 1059, 1068 (Fed. Cir. 1998); citing Walker Process Equip., Inc. v. Food Machinery & Chem. Corp., 382 U.S. 172, 177 (1965). Sham litigation and Walker Process are independent legal theories; if the elements of Walker Process liability have been met, liability can be imposed without the additional requirements for sham litigation. See Nobelpharma, 141 F.3d at 1071. Because antitrust actions against patentees are almost always brought as counterclaims to a patent infringement action, Federal Circuit precedent governs determination of whether the patentee's conduct constitutes an antitrust violation. Id. at 1067-68.

Abbott argues that Mylan's Third and Fourth Counterclaims as alleged do not fall within either of these exceptions to immunity. Because Mylan has properly pled a claim for Walker Process fraud, and because any similarity between this litigation and prior litigation between Abbott and other generic manufacturers is a factual issue for discovery, Mylan's Third and Fourth Counterclaims of Walker Process fraud will not be dismissed. Because existence of prior successful litigation to enforce these patents as well as Mylan's own answers to the ...


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