2000), pleaded claims identical to those in the instant
complaint, under §§ 340 and 349 of the N.Y. Gen. Bus. Law. In all
of those cases, the federal courts concluded that, while patent
validity issues were implicated, they were not central to proving
the elements of plaintiffs' claims.
Drug Mart deserves the closest look because the complaint in
all material respects is identical to this one. Plaintiff Drug
Mart alleged violations of New York's antitrust and consumer
protection laws, G.B.L. § 340 and § 349, arising from defendant's
allegedly sham litigation and subsequent illegal agreements to
pay generic drug manufacturers millions of dollars not to market,
or to delay the introduction of, their generic versions of the
drug Hytrin. Judge Seitz distinguished Hunter Douglas by noting
that all theories on which Hunter Douglas could prevail — i.e.
proving falsity by the defendants — depended on resolving a
question of federal patent law. See id. In contrast, the
plaintiffs in Drug Mart alleged theories of sham patent
litigation and illegal agreements to restrain trade, neither of
which "arises under" patent law. See id. (citing
Christianson, 486 U.S. at 813, 108 S.Ct. 2166). The court
concluded that the fact that an element of a particular theory is
governed by patent law did not mean that the entire claim arises
under patent law. See id.
The following is a review of the elements of the claims
appearing on the face of plaintiff Altman's complaint.
1. N.Y.G.B.L. § 340
Plaintiff alleges two counts of an agreement in restraint of
trade and one count of a conspiracy to monopolize under the
Donnelly Act, N.Y. Gen. Bus. Law § 340.
To make out an action under the Donnelly Act, plaintiff must
plead elements similar to those required for a federal antitrust
claim. Although the Sherman and Donnelly Acts differ in some
areas, they require identical basic elements of proof for claims
of monopolization or attempt to monopolize. See, e.g., Int'l
Television Productions Ltd. v. Twentieth Century-Fox Film Corp.,
622 F. Supp. 1532, 1540 (S.D.N.Y. 1985). Thus, in order to state a
claim under the Donnelly Act, plaintiff must 1) identify the
relevant product market; 2) describe the nature and effects of
the purported conspiracy; 3) allege how the economic impact of
that conspiracy is to restrain trade in the market in question;
and 4) show a conspiracy or reciprocal relationship between two
or more entities. See id.
Furthermore, courts consistently have adhered to the principle
that to have standing to sue, antitrust injury must be
demonstrated, regardless of the type of antitrust violation
asserted. Atlantic Richfield Co. v. U.S.A. Petroleum Co.,
495 U.S. 328, 341-42, 110 S.Ct. 1884, 1892, 109 L.Ed.2d 333 (1990).
To state an antitrust claim, a plaintiff must show both (1) "that
the defendants' conduct caused [plaintiffs] an injury," and (2)
that such an injury is an "antitrust injury, which is to say
injury of the type the antitrust laws were intended to prevent
and that flows from what makes defendants' acts unlawful. The
injury should reflect the anticompetitive effect either of the
violation or of anticompetitive acts made possible by the
violation." Balaklaw v. Lovell, 14 F.3d 793, 797 (2d Cir. 1994)
(quoting Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc.,
429 U.S. 477, 489, 97 S.Ct. 690, 697, 50 L.Ed.2d 701 (1977)).
A patent holder has a legal monopoly and a concomitant "right
to invoke the State's power to prevent others from utilizing his
discovery without his consent." SCM Corp. v. Xerox Corp.,
645 F.2d 1195, 1203 (2d Cir. 1981) (quoting Zenith Radio Corp. v.
Hazeltine Research, Inc., 395 U.S. 100, 89 S.Ct. 1562, 23
L.Ed.2d 129 (1969)). Simply put, a patent holder is permitted to
maintain his patent monopoly through conduct that is permissible
under the patent laws. See id. Because "antitrust laws do not
negate the patentee's right to exclude
others from patent property," Intergraph Corp. v. Intel Corp.,
195 F.3d 1346, 1362 (Fed.Cir. 1999); Virginia Panel Corp. v. MAC
Panel Co., 133 F.3d 860, 873 (Fed. Cir. 1997), cert. denied,
525 U.S. 815, 119 S.Ct. 52, 142 L.Ed.2d 40 (1998) (holding that a
"patentee may lawfully police a market that is effectively
defined by its patent"), defendant asserts that plaintiff cannot
prove the "injury in fact" element of her case without
challenging the validity of the patent itself.
Both Christianson and Drug Mart involved allegations of
monopolization, as does plaintiff Altman's Donnelly Act claim in
this action. It is true that those plaintiffs, like plaintiff
Altman, asserted theories of monopolization other than patent
misuse, such as making false statements, filing a lawsuit in bad
faith and urging potential customers to refrain from doing
business with plaintiff (Christianson); and entering into
illegal agreements (Drug Mart). Yet even with that, in both
Christianson and Drug Mart, the plaintiff would have had to
prove injury-in-fact in order to prevail. And plaintiff Altman
virtually conceded that she could not prove injury-in-fact
without establishing that the Cipro patent was invalid, since
counsel admitted at oral argument that Bayer has an absolute
right to keep generics out of the market until 2003 if the patent
Nonetheless, neither the Supreme Court in Christianson nor
Judge Seitz in Drug Mart mentioned the injury-in-fact
requirement, and obviously neither court viewed its undeniable
existence as a bar to its conclusion that the antitrust claims in
the cases before them did not "arise under" federal patent laws.
This Court can only assume that the United States Supreme Court
was aware that an antitrust plaintiff had to prove injury-in-fact
when it decided Christianson, and concluded (albeit sub
silentio) that injury-in-fact, while a predicate to standing was
not an "element" of a claim of monopolization — even if this
particular predicate to standing depended on a showing that the
patent was invalid. It is not intuitively obvious to this Court
why this should be so, but it is the only reading of
Christianson that supports the result reached by the Supreme
Court. And if this reading is correct, then plaintiff's counsel
was also correct when he asserted-at oral argument that the
instant complaint "was Christianson" and should be remanded to
the State Supreme Court.
2. N.Y.G.B.L. § 349
Not only does plaintiff assert alternate theories for recovery
under section 340, she also brings a second claim under N.Y. Gen.
Bus. Law § 349, alleging that the Stipulation and Agreement
between Bayer and Barr amounted to a deceptive trade practice
contrary to New York law.
To state a claim under section 349, the complaint must plead
that (1) the defendant's conduct was consumer-oriented; (2) the
defendant engaged in a materially deceptive and misleading act;
and (3) plaintiff was injured by the defendant's act. See
S.Q.K.F.C., Inc. v. Bell Atl. Tricon Leasing Corp., 84 F.3d 629
(2d Cir. 1996); Abraham v. Penn Mutual Life Insurance Co., 2000
WL 1051848 (S.D.N.Y. July 31, 2000). Although ostensibly directed
at "any business," section 349 is in fact only "directed at
wrongs against the consuming public," Oswego Laborers' Local 214
Pension Fund v. Marine Midland Bank, 85 N.Y.2d 20, 24-25,
623 N.Y.S.2d 529, 647 N.E.2d 741 (1995).
Plaintiff here contends that the Agreement between Bayer and
Barr, in which Barr agreed to refrain from marketing its Cipro
generic equivalent, was entered to avoid triggering the 180 day
exclusivity period, and to prevent other generic manufacturers
from entering the market. The result was that class members were
injured by paying prices for Cipro that were "supracompetitive,"
i.e., substantially higher than the prices that Plaintiff and
members of the Class would have paid absent the allegedly
deceptive and misleading stipulation.
Plaintiff cites a two cases with similar facts, Aetna U.S.
Healthcare, Inc. v. Hoechst Aktiengesellschaft, 54 F. Supp.2d 1042
(D.Kan. 1999) and In Re Cardizem CD Antitrust Litigation,
90 F. Supp.2d 819 (E.D.Mich. 1999). Aetna involved a suit
alleging unfair competition in violation of the Kansas Trade and
Consumer Protection Act.*fn2 There, plaintiff charged that
defendants violated Kansas law by instigating patent litigation
to hold up FDA approval of a generic version of Cardizem, a drug
to treat high blood pressure. The Andrx Pharmaceutical Company
had applied to the FDA to approve a generic version of Cardizem,
and HMR responded by filing a patent infringement action against
Andrx. See id. at 1046. As the FDA did in the present case, the
FDA gave preliminary approval to Andrx's generic drug, and HMR
entered into a "stipulation agreement" with Andrx. The agreement
provided that HMR would make quarterly payments to Andrx in
exchange for Andrx' dismissing its claims in the patent suit,
refraining from marketing its generic drug until the end of the
suit, continuing to prosecute its claim for FDA approval, and
asserting its rights as first in line against other potential
producers of generic drugs. See id.
After the agreement, HMR and Andrx "did not actively pursue"
their patent suit, Andrx did not begin selling its generic
product, and the 180 day Hatch-Waxman period did not begin to
run. See id. Consequently, producers of competing generic
products were unable to compete against either HMR or Andrx. See
id. at 1047. Plaintiffs alleged that the defendants acted for
the sole purpose of delaying and preventing competition. See
id. at 1053. The defendants removed to federal court, arguing
that plaintiffs' claims hinged on the validity of defendants'
patents, raising a substantial question of patent law. The court
disagreed, concluding that plaintiffs claims did not depend on
whether the defendants' patents were valid — only whether
defendant had an impure heart when it filed suit. See id. Judge
Vratil explained: "Any discussion of patent law is merely
tangential to plaintiffs' claim that [defendant] had an ill
motive which resulted in unfair competition. While federal law
may be implicated in an examination of [defendant's] motives, it
is hardly a substantial or necessary part of plaintiffs' claim."
Id. at 1054.
Similar suits were consolidated and tried in the In Re
Cardizem CD Antitrust Litigation, 90 F. Supp.2d 819 (E.D.Mich.
1999). In Cardizem, plaintiffs alleged that defendants violated
various state antitrust statutes and common law principles of
unjust enrichment by instigating patent litigation for the sole
purpose of delaying and preventing competition. See id. at 839.
The Michigan court, relying entirely on the reasoning in Aetna,
concluded that plaintiff's allegations of impure heart when it
filed patent infringement suit did not depend on resolution of a
substantial question of federal law. See id.
Altman's § 349 theories are virtually identical to those
alleged in Cardizem and Aetna. Here, the plaintiff has
alleged that defendants acted with an impure heart when Bayer
brought litigation against
Barr for patent infringement; entered the Stipulation to extend
the 30-month waiting period; signed the Agreement in which Barr
agreed not to market its generic Cipro in exchange for $24.5
million; and entered into a consent judgment acknowledging the
validity of Bayer's patent. Following Christianson, plaintiff's
alternate theories make it unnecessary to resolve any substantial
question of patent law for plaintiff to prevail.
The motion to remand is therefore granted.
This constitutes the decision and order of the Court.