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Cumberland Pharmaceuticals, Inc v. Mylan Institutional LLC

December 14, 2012

CUMBERLAND PHARMACEUTICALS, INC., PLAINTIFF,
v.
MYLAN INSTITUTIONAL LLC, AND MYLAN INC.,
DEFENDANTS.



The opinion of the court was delivered by: Judge Rebecca R. Pallmeyer

MEMORANDUM OPINION AND ORDER

Plaintiff Cumberland Pharmaceuticals, Inc. brought this patent infringement suit against Defendants Mylan Institutional, LLC and Mylan, Inc. (collectively "Mylan") for infringement of United States Patent No. 8,148,356. Mylan asserted affirmative defenses and counterclaims [31] alleging, inter alia, that the '356 patent is unenforceable because of Cumberland's inequitable conduct before the United States Patent and Trademark Office. Cumberland now moves pursuant to Rules 12(f) and 12(b)(6) to strike Mylan's inequitable conduct defense and dismiss the counterclaim for failure to plead with the particularity required by Rule 9(b), and failure to state a claim upon which relief can be granted. For the reasons set forth below, Cumberland's motion to dismiss [33] is granted in part and denied in part.

BACKGROUND

Plaintiff Cumberland Pharmaceuticals, Inc. manufactures and sells Acetadote, an intravenous drug formulation of N-acetylcysteine*fn1 ("NAC"), used to treat suspected acetaminophen overdoses. (Pl.'s Mem. [34] at 3.) The patent-in-suit, which issued on April 3, 2012, "relates to novel acetylcysteine compositions in solution, comprising acetylcysteine and which are substantially free of metal chelating agents, such as EDTA."*fn2 (U.S. Patent No. 8,148,356, Ex. 1 to Pl's Compl., at 1.) According to Cumberland, Acetadote is a "commercial embodiment encompassed by the patent-in-suit." (Pl.'s Compl. [1] ¶ 10.)

Cumberland first sought the Food and Drug Administration's ("FDA") approval of Acetadote in June 2002, when it filed New Drug Application ("NDA") No. 21-539. (Defs.' Opp'n [45] at 2.) On January 23, 2004, the FDA approved Acetadote as an "orphan drug."*fn3 (Id.) Because of Acetadote's status as an orphan drug, Cumberland enjoyed a seven-year period of exclusivity during which it faced no competition in the market. 21 U.S.C. § 360cc.

On August 24, 2005, Cumberland filed patent application no. 11/209,804 (the "'804 patent application"). (U.S. Patent No. 8,148,356 at 1.) Leo Pavliv ("Pavliv") is the named inventor on the '804 patent application (id.), and he is the individual named in all of Mylan's inequitable conduct allegations. (Defs.' Am. Answer to Compl. for Patent Infringement, Separate Defenses, and Countercls. [31] (hereinafter "Defs.' Am. Answer and Countercls.") Fourth Defense ¶¶ 1-39, Count III ¶ 22.) As Cumberland's Senior Vice President of Operations, Pavliv had allegedly overseen all aspects of drug development, including the development of Acetadote. Mylan alleges that Pavliv supplied the FDA with prior art references, and was aware of documents issued by both Cumberland and the FDA in connection with NDA No. 21-539, which, according to Mylan, should have been before the United States Patent and Trademark Office ("PTO") during the prosecution of the application from which the '356 patent issued. (Id. ¶¶ 7-9, 14, 18, 22.) He is also alleged to have conducted and directed experiments related to various aspects of the Acetadote formulation, and submitted the results as well as three declarations to the PTO to overcome examiner rejections to patentability of the '804 patent application. (Id. ¶¶ 4, 24, 34, 38.)

In December 2011, Mylan filed Abbreviated New Drug Application ("ANDA") No. 20-3624 seeking FDA approval of a generic version of Acetadote. (Defs.' Opp'n at 2.) Soon afterwards, on April 3, 2012, United States Patent No. 8,148,356 (the "'356 patent") issued from the '804 patent application. (U.S. Patent No. 8,148,356; Defs.' Opp'n at 2.) Mylan subsequently provided the FDA with a certification under 21 U.S.C. § 355(j)(2)(A)(vii) ("Paragraph IV certification") that its ANDA product does not infringe upon any valid claim of the '356 patent. (Defs.' Opp'n at 2.) Mylan also sent notice of the Paragraph IV certification to Cumberland. (Id.) On May 18, 2012, Cumberland filed a Citizen Petition with the FDA requesting that the FDA not approve any ANDA for Acetadote if the generic drug product includes EDTA in its formulation. (Citizen Petition, Ex. 2 to Defs.' Opp'n at 2.)

Cumberland filed the instant suit for infringement on May 17, 2012, pursuant to the Hatch Waxman Act, 21 U.S.C. § 355(j)(B)(iii), alleging that Mylan's filing of its ANDA with a Paragraph IV certification constituted an act of infringement of the '356 patent under 35 U.S.C. § 271(e)(2)(A). (Pl's Compl.; Pl.'s Mem. at 3.) In an amended answer filed on July 30, 2012, Mylan asserted an inequitable conduct affirmative defense ("Fourth Defense") and an inequitable conduct counterclaim ("Count III") which incorporates the allegations from the Fourth Defense by reference. (See Defs.' Am. Answer and Countercls. at 9-18, 21-23.) Cumberland has moved to strike Mylan's Fourth Defense and dismiss Count III pursuant to Rules 12(f) and 12(b)(6) for failure to plead with the particularity required by Rule 9(b), and failure to state a claim upon which relief can be granted. (Pl.'s Mot. to Dismiss [33] at 1; Pl.'s Mem. at 1.)

DISCUSSION

I. Standard of Review

Although this is a patent case, dismissal of a claim under Rule 12(b)(6) is a matter of procedure, and as such, the Seventh Circuit's Rule 12(b)(6) standard applies. Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1318 (Fed. Cir. 2009) (citation omitted); see also Ferguson Beauregard/Logic Controls v. Mega Sys., LLC, 350 F.3d 1327, 1344 (Fed. Cir. 2003). That standard is familiar: "[a] motion under Rule 12(b)(6) challenges the sufficiency of the complaint to state a claim upon which relief may be granted." Hallinan v. Fraternal Order of Police of Chicago Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). "The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." AnchorBank, FSB v. Hofer, 649 F.3d 610, 614 (7th Cir. 2011) (citation and quotation omitted). When ruling on a Rule 12(b)(6) motion to dismiss, the court treats all well-pleaded allegations as true, and draws all reasonable factual inferences in favor of the plaintiff. Justice v. Town of Cicero, 577 F.3d 768, 771 (7th Cir. 2009).

To survive a Rule 12(b)(6) motion, "the complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Indep. Trust Corp. v. Stewart Info. Servs. Corp., 665 F.3d 930, 934 (7th Cir. 2012) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). The factual allegations must be sufficient "to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). On the other hand, the claim "need not be probable, only plausible: 'a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and that a recovery is very remote and unlikely.'" Indep. Trust Corp., 665 F.3d at 935 (quoting Twombly, 550 U.S. at 556).

Cumberland's motion to strike Mylan's defenses under Rule 12(f) is governed by a different standard. Rule 12(f) allows the court to "strike from a pleading . . . any redundant, immaterial, impertinent, or scandalous matter." FED. R. CIV. P. 12(f). The court "has considerable discretion" in striking such material. Delta Consulting Grp., Inc. v. R. Randle Constr., Inc., 554 F.3d 1133, 1141 (7th Cir. 2009). Striking defenses under Rule 12(f) is generally disfavored, although such motions may be granted if they remove unnecessary clutter and serve to expedite, not delay the case. See Heller Fin., Inc. v. Midwhey Powder Co., Inc., 883 F.2d 1286, 1294 (7th Cir. 1989).

II. Inequitable Conduct and Rule 9(b)

Each individual involved with the filing and prosecution of a patent application is subject to a duty of candor, good faith, and honesty in dealing with the U.S. Patent and Trademark Office ("PTO"). Honeywell Intern. Inc. v. Universal Avionics Sys. Corp., 488 F.3d 982, 999 (Fed. Cir. 2007); see also 37 C.F.R. § 1.56(a). The inequitable conduct defense may render a patent unenforceable where the patentee has breached this duty of candor. Honeywell, 488 F.3d at 999. The two substantive elements of an inequitable conduct claim are materiality and intent. Star Scientific, Inc. v. R.J. Reynolds Tobacco Co., 537 F.3d 1357, 1365 (Fed. Cir. 2008). Thus, to prevail on its inequitable conduct claim, Mylan must show that Cumberland: (1) made an affirmative misrepresentation of material fact, submitted false material information, or failed to disclose material information; and (2) intended to deceive the PTO. See Rentrop v. Spectranetics Corp., 550 F.3d 1112, 1119 (Fed. Cir. 2008); Praxair, Inc. v. ATMI, Inc., 543 F.3d 1306, 1314 (Fed. Cir. 2008).

The circumstances constituting inequitable conduct must be pleaded with particularity under Rule 9(b). Exergen,575 F.3d at 1326 (citation omitted); see also FED. R. CIV. P. 9(b). While the Rule 12 inquiry calls for application of Seventh Circuit law, the question of whether an inequitable conduct claim satisfies Rule 9(b)'s heightened pleading requirement is governed by Federal Circuit law. Id. at 1318. In Exergen Corp. v. Wal-Mart Stores, Inc., the Federal Circuit held that Rule 9(b) requires identification of the "specific who, what, when, where, and how of the material misrepresentation or omission committed before the PTO."575 F.3d at 1327. "A pleading that simply avers the ...


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