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Connetics Corp. v. Pentech Pharmaceuticals

April 16, 2009

CONNETICS CORPORATION AND STIEFEL RESEARCH AUSTRALIA PTY, LTD., PLAINTIFFS,
v.
PENTECH PHARMACEUTICALS, INC., COBREK PHARMACEUTICALS, INC., AND CIPLA LTD., DEFENDANTS.



The opinion of the court was delivered by: Judge Joan B. Gottschall

MEMORANDUM OPINION AND ORDER

Defendants Pentech Pharmaceuticals, Inc., Cobrek Pharmaceuticals, Inc. and CIPLA Ltd. (collectively "Defendants") have filed a motion for leave to file an Amended Answer, Affirmative Defenses and Counterclaims. Plaintiffs Connetics Corporation and Stiefel Research Australia Pty, Ltd. (collectively "Plaintiffs") object to Defendants' motion. For the reasons set forth below, Defendants' motion for leave to amend is granted.

I. Factual Background

Plaintiffs produce a drug known as LUXIQ which is a betamethasone valerate foam used to treat scalp dermatoses and non-scalp psoriasis. LUXIQ is protected by two patents. U.S. Patent No. 7,078,058 (filed Sep. 27, 2002) ("the '058 patent"); U.S. Patent No. 6,126,920 (filed Mar. 1, 1996) ("the '920 patent). In late September 2007, Plaintiffs received notice that Defendants had filed an Abbreviated New Drug Application ("ANDA") seeking FDA approval to market a generic copy of LUXIQ. In response, Plaintiffs filed this lawsuit on November 6, 2007, alleging the technical act of patent infringement of the '920 patent and the '058 patent.

On January 30, 2008, the court entered an initial scheduling order (Docket No. 31). That initial scheduling order allowed the parties until August 1, 2008 to amend their pleadings. Discovery was ordered closed by December 15, 2008. Pursuant to the initial scheduling order, Plaintiff Connetics filed an Amended Complaint on August 1, 2008 naming two new Defendants, Cobrek Pharmaceuticals and CIPLA Ltd. On November 20, 2008, the court entered a revised scheduling order (Docket No. 86). The revised scheduling order established the following new deadlines: document discovery by February 15, 2009, fact depositions by March 31, 2009, and answers to contention interrogatories by April 7, 2009.

On January 26, 2009, Defendants filed the instant motion for leave to file an Amended Answer, Affirmative Defenses and Counterclaims pursuant to Fed. R. Civ. P. 13(f), 15(a), and 16(b). Specifically, Defendants seek to add affirmative defenses and counterclaims relating to invalidity under 35 U.S.C. § 112, ¶ 1 and unenforceability due to inequitable conduct.

Defendants' invalidity claims under 35 U.S.C. § 112, ¶ 1 relate to information Defendants learned during depositions taken on December 4, 2008 and December 9, 2008. In those depositions, the inventors testified that an epoxy/phenolic-lined can was the best can in which to store the patented foam. Because neither the '920 patent nor the '058 patent mentions an epoxy/phenolic-lined can, Defendants assert that the '920 and '058 patents are invalid for failure to satisfy the requirements of 35 U.S.C. § 112, ¶ 1.

Defendants' new claim of unenforceability due to inequitable conduct relates to an article by Hans Bundgaard and Jens Hansen, entitled Studies on the Stability of Corticosteroids VI. Kinetics of the Rearrangement of Betamethasone-17-Valerate To The 21-Valerate Ester in Aqueous Solution ("Bundgaard article"). The '920 and '058 patents indicate that the Bundgaard article was not cited to the U.S. Patent & Trademark Office ("USPTO") during prosecution of either patent. Plaintiffs produced to Defendants communications between some of the named inventors of the '920 and '058 patents regarding the Bundgaard article on May 12, 2008. During the December 4, 2008 and December 9, 2008 depositions, Defendants asked the inventors about the Bundgaard article. Neither deponent recalled specific facts about the Bundgaard article during prosecution of the '920 and '058 patents. Defendants claim that the Bundgaard article was material to the patentability of both the '920 and '058 patents and, therefore, should have been disclosed to the USPTO.

Plaintiffs object to the proposed amendments, arguing that they are futile, that there is no good cause for the delay in seeking an amendment, and that permitting amendments now would prejudice Plaintiffs.

II. Legal Standard

The decision of whether to allow a party to amend its pleading is within the discretion of the district court judge. Zenith Radio Corp. v. Hazeltine Res., Inc., 401 U.S. 321, 330 (1971) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)); Pugh v. Tribune Co., 521 F.3d 686, 698 (7th Cir. 2008) (reviewed for abuse of discretion); Campania Mgmt. Co. v. Rooks, Pitts & Poust, 290 F.3d 843, 848--49 (7th Cir. 2002). "[A] party may amend its pleading only with the opposing party's written consent or the court's leave." Fed. R. Civ. P. 15(a)(2). Defendants filed the instant motion seeking leave to file an amendment because Plaintiffs refused to consent to Defendants' amendment. "The court should freely give leave when justice so requires." Id. "In the absence of any apparent or declared reason-such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc.-the leave sought should, as the rules require, be 'freely given.'" Foman, 371 U.S. at 182; see Bower v. Jones, 978 F.2d 1004, 1008 (7th Cir. 1992) (reversing denial of leave to amend where new facts discovered near end of discovery).

Plaintiffs allege that Defendants' new claims are futile. An amendment is futile if it would not survive a motion to dismiss. Crestview Vill. Apartments v. U.S. Dep't of Hous. & Urban Dev., 383 F.3d 552, 558 (7th Cir. 2004); Barry Aviation, Inc. v. Land O'Lakes Mun. Airport Comm'n, 377 F.3d 682, 687 (7th Cir. 2004); Garcia v. City of Chi., 24 F.3d 966, 970 (7th Cir. 1994); Duthie v. Matria Healthcare, Inc., 254 F.R.D. 90, 95 (N.D. Ill. 2008).*fn1

Because the court has entered a scheduling order, and Defendants are moving to amend after the period for amending pleadings has closed, Rule 16(b) also applies and requires a party to show "good cause" for the tardy amendment. Trustmark Ins. Co. v. Gen. & Cologne Life Re of Am., 424 F.3d 542, 553 (7th Cir. 2005). The Seventh Circuit has adopted the position of the Ninth Circuit that "'Rule 16(b)'s "good cause" standard primarily considers the diligence of the party seeking amendment.'" Id. (quoting Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 609 (9th Cir. 1992)); Connell v. KLn Steel Prods. Co., No. 04 C 0194, 2006 WL 1120514, at *4 (N.D. Ill. Apr. 25, 2006) (quoting Trustmark Ins., 424 F.3d at 553).

Thus, there are two hurdles Defendants must overcome to prevail in their motion for leave to amend their pleadings. First, Defendants must show "good cause" to amend their pleadings. Second, ...


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