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NOVARTIS PHARMACEUTICALS CORPORATION v. APOTEX CORPORATION

June 18, 2004.

NOVARTIS PHARMACEUTICALS CORPORATION, NOVARTIS AG, NOVARTIS PHARMA AG and NOVARTIS INTERNATIONAL PHARMACEUTICAL LTD., Plaintiffs,
v.
APOTEX CORPORATION and NOVEX PHARMA, Defendants.



The opinion of the court was delivered by: HENRY PITMAN, Magistrate Judge

OPINION AND ORDER

I. Introduction

Defendants in this patent infringement action move for a separate trial on the issue of willfulness and to defer discovery concerning willfulness until the conclusion of the trial of liability issues. For the reasons set forth below, defendants' motion is denied in all respects.

  II. Facts

  Plaintiff Novartis AG is the owner of United States Patent No. 5,733,569 ("the '569 Patent") which describes and claims, among other things, liquid pharmaceutical compositions for the nasal administration of calcitonin, a hormone known to participate in calcium and phosphorus metabolism. The '569 Patent claims compositions that contain benzalkonium chloride to enhance bioavailability as well as an application device and method for administering the compositions.

  Novartis AG is also the owner of United States Patent No. 5,759,565 ("the '565 Patent") which claims liquid pharmaceutical compositions for the nasal administration of calcitonin which contain benzalkonium chloride.

  In or about September 2002, defendants filed an abbreviated new drug application with the United States Food and Drug Administration for approval of the commercial manufacture, use and sale of a salmon calcitonin nasal spray. As required by 21 U.S.C. § 355 (j)(2) (vii), defendants submitted with their application an opinion letter from the firm of Caesar, Rivise, Berstein, Cohen & Pokotilow, Ltd., ("Caesar, Rivise") opining that the '569 and '565 Patents were invalid on the grounds of obviousness and prosecution laches. If plaintiffs' patents are valid and defendants' products are within the scope of the patents' claims, defendants' abbreviated new drug application constitutes an act of infringement. 35 U.S.C. § 271 (e)(2).

  Plaintiffs commenced the pending infringement action in November 2002. Plaintiffs allege that defendants have willfully infringed the '569 and '565 Patents and seek an injunction, damages and other relief. In the course of discovery, defendants have admitted that the subject of their abbreviated new drug application is within the scope of the claims of the '569 and '565 Patents (Defendants Supplemental Responses to Plaintiffs' First Set of Requests for Admission, dated November 7, 2003, Nos. 20-22; Defendants' Responses to Plaintiffs' Second Set of Requests for Admissions, dated December 1, 2003, Nos. 60-67). Thus, the principal issues at trial will be the validity of the '569 and '565 Patents and, if the patents are valid, whether defendants' infringement was willful.

  In October 2003, defendants advised plaintiffs that they would rely on an advice-of-counsel defense to plaintiffs' claim of willful infringement and produced 75 pages of documents that had previously been withheld on the ground of privilege. Because plaintiffs believe that the documents produced by defendants are incomplete, and in order to explore further the advice-of-counsel defense, plaintiffs seek additional documents and deposition testimony from Caesar, Rivise and to depose defendants' principals concerning the advice of counsel. Defendants oppose this discovery, claiming that trying validity and willfulness together will lead to confusion, delay and unfairly prejudice defendants by forcing a premature waiver of the attorney-client privilege.

  III. Analysis

  The factors to be considered in resolving a motion for separate trials were succinctly and cogently summarized by the Honorable Laura Taylor Swain, United States District Judge, in Dallas v. Goldberg, 143 F. Supp.2d 312, 315 (S.D.N.Y. 2001):
Under Rule 42(b) of the Federal Rules of Civil Procedure the Court, in its discretion, can bifurcate the trial of an action for "convenience or to avoid prejudice, or when separate trials will be conducive to expedition and economy." Fed.R.Civ.P. 42(b). The decision to bifurcate a trial rests within the sound discretion of the trial court. See Simpson v. Pittsburgh Corning Corp., 901 F.2d 277, 283 (2d Cir. 1990); Agron v. Trustees of Columbia Univ., No. 88 Civ. 6294, 1997 WL 399667 at *1 (S.D.N.Y. July 15, 1997). Although bifurcation of trials is not unusual and may under appropriate circumstances be the preferred method, bifurcation remains the exception rather than the rule. See Lewis v. Triborough Bridge, No. 97 CIV. 0607, 2000 WL 423517 at *2 (S.D.N.Y. Apr. 19, 2000); Agron, 1997 WL 399667 at *1; Kerman v. City of New York, No. 96 Civ. 7865, 1997 WL 666261 at *5 (S.D.N.Y. Oct. 24, 1997).
The application of Rule 42(b) does not lend itself to a bright-line test but, rather, requires case-by-case analysis. See Monaghan v. SZS 33 Associates, 827 F. Supp. 233, 245 (S.D.N.Y. 1993). Factors that courts consider in determining whether bifurcation is appropriate include: (1) whether the issues are significantly different from one another; (2) whether the issues are to be tried before a jury or to the court; (3) whether the posture of discovery on the issues favors a single trial or bifurcation; (4) whether the documentary and testimonial evidence on the issues overlap; and (5) whether the party opposing bifurcation will be prejudiced if it is granted. See Lewis, 2000 WL 423517 at *2; Reading Indus., Inc. v. Kennecott Copper Corp., 61 F.R.D. 662, 664 (S.D.N.Y. 1974). The party seeking bifurcation bears the burden of establishing that bifurcation is warranted. See Lewis, 2000 WL 423517 at *2.
See also Kos Pharm., Inc. v. Barr Labs., Inc., 218 F.R.D. 387, 390-91 (S.D.N.Y. 2003).

  Application of relevant factors to this case leads to the conclusion that separate trials are not appropriate here. A. Overlap of Issues

  Although defendants state that there is no overlap between the issues of willfulness and validity, their argument does not withstand analysis.

  "In order to find willful infringement, [a] district court `[is] required to find by clear and convincing evidence in view of the totality of the circumstances that [the infringer] acted in disregard of the [patentee's] patent and lacked a reasonable basis for believing it had a right to do what it did.'" WMS Gaming, Inc. v. International Game Tech., 184 F.3d 1339, 1354 (Fed. Cir. 1999), quoting Amsted Indus., Inc. v. Buckeye Steel Castings Co., 24 F.3d 178, 181 (Fed. Cir. 1994). Accord Golight, Inc. v. Wal-Mart Stores, Inc., 355 F.3d 1327, 1339 (Fed. Cir. 2004); Crystal Semiconcductor Corp. v. TriTech Microelectronics Int'l, Inc., 246 F.3d 1336, 1346 (Fed. Cir. 2001). Although "[i]t is well settled that an important factor in determining whether willful infringement has been shown is whether or not the infringer obtained the opinion of counsel," Comark Communications, Inc. v. Harris Corp., 156 F.3d 1182, 1191 (Fed. Cir. 1998), the mere fact that an infringer has received the advice of counsel is not the end of the analysis. Amsted Indus. Inc. v. Buckeye Steel Castings Co., supra, 24 F.3d at 182; Kori Corp. v. Wilco Marsh Buggies & ...


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