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February 14, 2002


The opinion of the court was delivered by: Koeltl, District Judge.

  Opinion and Order No. 19

(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 defendant in the antitrust actions is Bristol-Myers Squibb Company ("Bristol-Myers" or "BMS"), a company that obtained a patent covering the use of buspirone for the treatment of anxiety in 1980 (the "'763 Patent") and that has been selling the product since 1986, when the Food and Drug Administration (the "FDA") approved the drug for human use. The plaintiffs are, variously, generic drug makers who seek or have sought to enter the buspirone market, direct purchasers of buspirone products, end-payors who have purchased buspirone, consumer protection organizations, or their representatives, and thirty States. These plaintiffs (the "antitrust plaintiffs") have consolidated their claims into six Amended Complaints or Pleadings (the "Complaints").

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 activities").*fn2

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 End-Payor 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 Patent activities").

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 (1962)).

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 patent 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.

Bristol-Myers argues that its listing meets this criterion because it was a request for governmental action, specifically, for the FDA to publish the information submitted to it in the Orange Book. However, in deciding whether a particular type of conduct is petitioning activity for Noerr-Pennington purposes, it is critical to distinguish between activities in which the government acts or renders a decision only after an independent review of the merits of a petition and activities in which the government acts in a merely ministerial or non-discretionary capacity in direct reliance on the representations made by private parties.*fn3 One of the reasons for extending Noerr-Pennington immunity to acts through which private parties seek to influence governmental decisions in the first class of cases is that these private parties can often only obtain the anticompetitive effects in question by first convincing the government of the merits of their views and by obtaining a valid and independent governmental decision, which intervenes between the private parties' actions and these anticompetitive results. See Noerr, 365 U.S. at 136-37, 81 S.Ct. 523. Another reason is that it would raise important First Amendment concerns if citizens affected by these kinds of governmental decisions were unable freely to inform ...

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