The opinion of the court was delivered by: Koeltl, District Judge.
(Motion to Dismiss Antitrust and Related State Law Claims)
On August 15, 2001, the Judicial Panel on Multidistrict
Litigation consolidated for pre-trial purposes before this Court
four patent disputes, which had been consolidated under
MDL-1410, and twenty-two antitrust actions, which had been
consolidated under MDL-1413, all of which involve disputes among
the various parties over the propriety of the manufacture, use,
sale or allegedly anticompetitive conduct related to the use and
sale of buspirone,*fn1 a drug used to treat anxiety. The
Panel has also transferred twelve tag-along cases to this Court.
The Complaints assert a number of claims, all of which arise
out of two separate sets of circumstances. First, some of the
plaintiffs allege that Bristol-Myers attempted to extend and/or
extended an unlawful monopoly over buspirone products for use in
the treatment of anxiety, and also entered into a conspiracy to
restrain trade in this market, thereby violating Sections 1 and
2 of the Sherman Act, 15 U.S.C. § 1 & 2, by settling a patent
infringement suit with Danbury Pharmacal, Inc. and its affiliate
Schein Pharmaceuticals, Inc. ("Schein") in 1994. In that
litigation, Bristol-Myers had argued that Schein would infringe
the '763 Patent by manufacturing and selling generic buspirone
tablets before the '763 Patent expired. The plaintiffs who raise
these claims allege that Bristol-Myers's settlement was a sham
used to cover up an unlawful anticompetitive arrangement under
which Schein agreed to stay out of the buspirone market and help
maintain a public perception that the '763 Patent was valid in
return for $72.5 million, even though both parties knew that the
'763 Patent was not valid (the "Schein Settlement
Second, all of the Complaints allege that Bristol-Myers
attempted to extend and/or extended an unlawful monopoly over
the market in buspirone tablets in violation of Section 2 of the
Sherman Act, 15 U.S.C. § 2, by abusing a number of provisions of
the Hatch-Waxman Amendments, also known as the Drug Price
Competition and Patent Term Restoration Act, Pub.L. No. 98-417,
98 Stat. 1585 (1984) (codified as amended at 21 U.S.C. § 355 and
35 U.S.C. § 271(e)), which amended the Federal Food, Drug, and
Cosmetic Act ("FDCA"), Pub.L. No. 52-675, 52 Stat. 1040 (1938)
(codified as amended at 21 U.S.C. § 301-397). The antitrust
plaintiffs argue that Bristol-Myers thereby prevented the FDA
from approving generic buspirone products that competitors
sought to market after the '763 Patent expired. The Complaints
allege, in particular, that Bristol-Myers (i) listed a
newly-obtained patent (the "'365 Patent") in an FDA publication
entitled the "Approved Drug Products with Therapeutic
Equivalence Evaluations," or the "Orange Book," on November 21,
2000, less than one day before the '763 Patent expired; (ii)
fraudulently represented to the FDA in these listing submissions
that the new '365 Patent covered uses of buspirone and that a
reasonable claim of patent infringement could be asserted
against generic producers of the drug, when Bristol-Myers knew
these uses of buspirone clearly would be in the public domain
after the '763 Patent expired; and then (iii) immediately
brought patent infringement suits against generic competitors
who were seeking to enter the buspirone market, thereby
triggering an automatic stay of the FDA's approval of these
generic products for up to thirty months under the Hatch-Waxman
Amendments, specifically, 21 U.S.C. § 355(j)(5)(B)(iii). The
plaintiffs, Mylan, Watson and the thirty States raise analogous
state law causes of action for antitrust, unfair competition or
unfair or deceptive trade practices, and/or unjust enrichment
arising out of those same facts and circumstances (the "'365
Bristol-Myers moves pursuant to Rule 12(b)(6) of the Federal
Rules of Civil Procedure to dismiss all of the claims raised by
the antitrust plaintiffs in the antitrust actions (collectively,
the "antitrust claims").
When considering a motion to dismiss, the Court "`must accept
the material facts alleged in the complaint[s] as true and
construe all reasonable inferences in the plaintiff[s'] favor.'"
Gant v. Wallingford Bd. of Educ., 69 F.3d 669, 673 (2d Cir.
1995) (considering a motion to dismiss pursuant to Fed.R.Civ.P.
12(b)(6)) (quoting Hernandez v. Coughlin, 18 F.3d 133, 136 (2d
Cir. 1994)). The Court's function on a motion to dismiss is "not
to weigh the evidence that might be presented at trial but
merely to determine whether the complaint[s] [themselves are]
legally sufficient." Goldman v. Belden, 754 F.2d 1059, 1067
(2d Cir. 1985). Therefore, Bristol-Myers's present motion should
only be granted if it appears that the antitrust plaintiffs can
prove no set of facts in support of their respective claims that
would entitle them to relief. See Conley v. Gibson,
355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Grandon v. Merrill
Lynch & Co., 147 F.3d 184, 188 (2d Cir. 1998); see also
Goldman, 754 F.2d at 1065.
In deciding the motion, the Court may consider documents
referenced in the Complaints and documents that are in the
relevant antitrust plaintiffs' possession or that they knew of
and relied on in bringing suit. See Brass v. American Film
Technologies, Inc., 987 F.2d 142, 150 (2d Cir. 1993); Cortec
Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 47-48 (2d Cir.
1991); I. Meyer Pincus & Assoc., P.C. v. Oppenheimer & Co.,
Inc., 936 F.2d 759, 762 (2d Cir. 1991); Skeete v. IVF America,
Inc., 972 F. Supp. 206, 208 (S.D.N.Y. 1997). The Court may also
consider "matters of which judicial notice may be taken." See
Leonard F. v. Israel Discount Bank, 199 F.3d 99, 107 (2d Cir.
1999) (quotation omitted); see also Kramer v. Time Warner
Inc., 937 F.2d 767, 773 (2d Cir. 1991). However, "in antitrust
cases, where `the proof is largely in the hands of the alleged
conspirators,' dismissals prior to giving the plaintiff ample
opportunity for discovery should be granted very sparingly."
Hospital Bldg. Co. v. Trustees of Rex Hosp., 425 U.S. 738,
746, 96 S.Ct. 1848, 48 L.Ed.2d 338 (1976) (quoting Poller v.
Columbia Broad., 368 U.S. 464, 473, 82 S.Ct. 486, 7 L.Ed.2d 458
The Court has already set forth a number of relevant facts
that are either undisputed or are matters of public record in a
companion Opinion, issued today, which decides the motion for
summary judgment filed by Danbury Pharmacal, Inc. and Watson
Pharmaceuticals, Inc. (collectively "Watson") and Mylan
Pharmaceuticals, Inc., Mylan Laboratories Inc. and Mylan
Technologies Inc. (collectively "Mylan") in the patent
infringement cases. See In re Buspirone, MDL No. 1410, slip
op. at 6-26 (S.D.N.Y. Feb. 14, 2002) (Order No. 18) (Motion for
Summary Judgment on Patent Infringement Claims). Familiarity
with those factual recitations is assumed.
Bristol-Myers moves to dismiss all of the federal and state
antitrust claims based on Bristol-Myers's conduct in listing the
'365 Patent in the Orange Book and then bringing its subsequent
infringement suits against Mylan and Watson. As a basis for this
motion, Bristol-Myers cites the Noerr-Pennington doctrine,
which was articulated in Eastern Railroad Presidents Conference
v. Noerr Motor Freight, Inc., 365 U.S. 127, 81 S.Ct. 523, 5
L.Ed.2d 464 (1961), and United Mine Workers v. Pennington,
381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965).
In Noerr, the Supreme Court held that "the Sherman Act does
not prohibit two or more persons from associating together in an
attempt to persuade the legislature or the executive to take
particular action with respect to a law that would produce a
restraint or a monopoly." Noerr, 365 U.S. at 136, 81 S.Ct.
523. Noting that the First Amendment to the United States
Constitution grants citizens the fundamental right to petition
the government with their views and wishes, the Court held that
the Sherman Act should not be read in a way that might vitiate
these rights by allowing for retaliatory antitrust lawsuits in
response to the kinds of "political activity" through which "the
people . . . freely inform the government of their wishes."
Id. at 137, 81 S.Ct. 523; see also id. at 138, 81 S.Ct. 523.
Noting that such expressions also provide the government with
valuable sources of information in a democratic society, the
Supreme Court held as a matter of statutory interpretation that
petitioning activity of this kind is generally immune from suit
under the Sherman Act. See id, see also Pennington, 381 U.S.
at 670, 85 S.Ct. 1585 ("Noerr shields from the Sherman Act a
concerted effort to influence public officials regardless of
intent or purpose.").
However, the Supreme Court also carved out a limited exception
to this rule for so-called "sham" petitioning. See id. at 144,
81 S.Ct. 523. It concluded that "application of the Sherman Act
would [still] be justified" if petitioning activity that is
"ostensibly directed toward influencing governmental action, is
a mere sham to cover what is actually nothing more than an
attempt to interfere directly with the business relationships of
a competitor. . . ." Id.; see also California Motor Transp. Co.
v. Trucking Unlimited, 404 U.S. 508, 515, 92 S.Ct. 609, 30
L.Ed.2d 642 (1972) ("First Amendment rights may not be used as
the means or the pretext for achieving `substantive evils' . . .
which the legislature has the power to control.").
In California Motor Transport Co. v. Trucking Unlimited, 404
U.S. at 508, 92 S.Ct. 609, the Supreme Court clarified that the
Noerr-Pennington doctrine extends to petitioning activity
before "administrative agencies . . . and . . . courts." Id.
at 510-11, 92 S.Ct. 609. In this context, there is also a
limited exception to Noerr-Pennington immunity for so-called
"sham" litigation, which is litigation that meets the following
two criteria: (i) "the lawsuit [is] objectively baseless in the
sense that no reasonable litigant could realistically expect
success on the merits"; and (ii) the "baseless lawsuit conceals
an attempt to interfere directly with the business relationships
of a competitor through the use [of] the governmental process —
as opposed to the outcome of that process — as an
anticompetitive weapon." Professional Real Estate Inv's, Inc.
v. Columbia Pictures Indus., Inc., 508 U.S. 49, 60-61, 113
S.Ct. 1920, 123 L.Ed.2d 611 (1993) [hereinafter "PRE "]
(internal citations omitted).
Moreover, there are some circumstances in which there is an
additional exception to Noerr-Pennington immunity for conduct
in which a party knowingly and willfully makes false
representations to the government. For example, in Walker
Process Equipment, Inc. v. Food Machinery & Chemical Corp.,
382 U.S. 172, 86 S.Ct. 347, 15 L.Ed.2d 247 (1965), the Supreme Court
held that a party that had monopolized a
market through threats of suit and through a subsequent patent
infringement suit based on a patent that the party had obtained
by making fraudulent representations to the Patent Office did
not qualify for Noerr-Pennington immunity. See id. at
174-78; 86 S.Ct. 347. In circumstances where the Walker
Process exception applies, the Court of Appeals for the Federal
Circuit has made it clear that the Walker Process exception
co-exists with the sham litigation exception under PRE and
that either exception will strip a patent holder of
Noerr-Pennington immunity. See, e.g., In re Independent Serv.
Org. Antitrust Litig., 203 F.3d 1322, 1326 (Fed.Cir. 2000);
Glass Equip. Dev., Inc. v. Besten, Inc., 174 F.3d 1337, 1343
(Fed.Cir. 1999); Nobelpharma A.B. v. Implant Innovations,
Inc., 141 F.3d 1059, 1068 (Fed.Cir. 1998) (holding, in
addition, in a limited in banc ruling, that it is a question of
Federal Circuit law whether the fraudulent procurement of a
patent and its subsequent use to generate anticompetitive
injuries through suits and threats of suit are sufficient to
strip a patentee of Noerr-Pennington immunity).
Hence, under current Federal Circuit law, a patent holder who
seeks to enforce a patent through litigation can lose
Noerr-Pennington immunity in two ways: first, if the asserted
patent was obtained through knowing and willful fraud within the
meaning of Walker Process, and if the plaintiff in the patent
infringement suit was aware of the fraud when bringing suit; or
second, if the patent infringement suit was a mere sham within
the meaning of PRE, namely that it was objectively baseless
and subjectively motivated by a desire to impose collateral,
anti-competitive injury rather than to obtain a justifiable
legal remedy. See Nobelpharma, 141 F.3d at 1068, 1071.
Bristol-Myers argues that all of its conduct in listing the
'365 Patent in the Orange Book and bringing its subsequent
patent infringement suits against Mylan and Watson is immunized
from federal antitrust liability under these Noerr-Pennington
standards. Bristol-Myers argues, in particular, that its conduct
is immunized unless it was objectively baseless, and that its
conduct was not objectively baseless. Bristol-Myers argues, in
addition, that the Noerr-Pennington doctrine applies to the
analogous state law claims raised by the antitrust plaintiffs
arising out of the '365 Patent activities, and that these claims
should be dismissed for the same reasons.
The first issue is whether the Noerr-Pennington doctrine
applies to Bristol-Myers's conduct in listing the '365 Patent in
the Orange Book. This issue depends on whether this conduct was
petitioning activity for Noerr-Pennington purposes.