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In re Rivastigmine Patent Litigation

June 4, 2007

IN RE RIVASTIGMINE PATENT LITIGATION


The opinion of the court was delivered by: James C. Francis IV United States Magistrate Judge

(MDL No. 1661)

MEMORANDUM AND ORDER

Defendants Watson Pharmaceuticals Inc. and Watson Laboratories, Inc. (collectively, "Watson") and Sun Pharmaceutical Ltd. ("Sun") seek to amend their answers and counterclaims against plaintiffs Novartis Pharmaceuticals Corporation, Novartis AG, Novartis Pharma AG, Novartis International Pharmaceutical Ltd. and Proterra AG (collectively, "Novartis") to add a claim for attorneys' fees.*fn1 Novartis opposes the motion. For the reasons set forth below, the defendants' motion is granted.

Background

This multidistrict litigation concerns the patent rights for rivastigmine tartrate ("rivastigmine"), the active ingredient in Exelon, a medication marketed by Novartis Pharmaceutical Corporation for the treatment of mild to moderate dementia of the Alzheimer's type.*fn2 Novartis brought actions alleging that the defendants*fn3 had induced infringement of two patents owned by Novartis. One defendant, Watson, then counterclaimed against Novartis for a declaratory judgment holding the patents in question to be invalid.

After extensive discovery, Novartis moved to dismiss with prejudice its claims with regard to one of the two rivastigmine patents at issue, U.S. Patent No. 5,602,176 ("the '176 patent"),*fn4 and to dismiss without prejudice Watson's counterclaims regarding that patent. It also executed covenants not to sue Sun and Watson over the '176 patent. On April 19, 2007, this Court recommended that Novartis' motion to dismiss be granted, conditioned on certain alterations to their covenants not to sue. In re Rivastigmine Patent Litigation, No. 05 MD 1661, 2007 WL 1154000 (S.D.N.Y. April 19, 2007). The parties filed no objections to that recommendation.

Before that recommendation was issued, Sun and Watson moved to amend their answers to add certain allegations and defenses concerning Novartis' claims on both the '176 patent and the '807 patent. Among the added claims is a request for attorneys' fees under 35 U.S.C. § 285 on the grounds that the '176 patent was obtained fraudulently and that that claim was prosecuted in bad faith. Novartis does not oppose the amendments concerning the '807 patent. It does oppose the amendments concerning the '176 patent "to the extent that [the defendants] seek[] to add a claim for attorneys' fees." (Plaintiffs' Memorandum in Opposition to Watson's Motion For Leave to File An Amended Answer and Counterclaims ("Pl. Memo.") at 1).

Discussion*fn5

A motion to amend is governed by Rule 15(a) of the Federal Rules of Civil Procedure, which states that leave to amend "shall be freely given when justice so requires." Fed. R. Civ. P. 15(a); see also Oneida Indian Nation of New York v. City of Sherill, 337 F.3d 139, 168 (2d Cir. 2003), rev'd on other grounds, 544 U.S. 197 (2005). Notwithstanding the liberality of the general rule, "it is within the sound discretion of the court whether to grant leave to amend." John Hancock Mutual Life Insurance Co. V. Amerford International Corp., 22 F.3d 458, 462 (2d Cir. 1994)(citation omitted); accord Krumme v. WestPoint Stevens Inc., 143 F.3d 71, 88 (2d Cir. 1998). In discussing the use of this discretion, the Supreme Court has stated:

In the absence of any apparent or declared reason --- such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc. --- the leave should . . . be freely given.

Foman v. Davis, 371 U.S. 178, 182 (1962) (internal quotation marks omitted).

The plaintiffs argue that their motion to withdraw voluntarily their claim with regard to the '176 patent divested this Court of subject matter jurisdiction over that claim, thus precluding me from granting the defendants' motion to amend. As I noted in my Report and Recommendation of April 19, 2007, "'[i]t is well-established that a trial court may be divested or deprived of subject matter jurisdiction over a particular patent claim if the patentee covenants not to assert an infringement claim against a putative infringer.'" In re Rivastigmine Patent Litigation, 2007 WL 1154000 at *2 (quoting Crossbow Technology, Inc. v. YH Technology, No. C-03-04360, 2007 WL 174422, at *2 (N.D. Cal. Jan. 22, 2007)). However, as I also explained there, the Federal Circuit's recent decision in Highway Equipment Co. v. FECO, Ltd., 469 F.3d 1027 (Fed. Cir. 2006), limited this principle to declaratory judgment counterclaims in patent infringement cases.

While the covenant [not to sue on the claims in question] may have eliminated the case or controversy pled in the patent-related counterclaims and deprived the district court of Article III jurisdiction with respect to those counterclaims, the covenant does not deprive the district court of jurisdiction to determine the disposition of the patent infringement claims raised in the Complaint under Rule 41 or the request for attorney fees under 35 U.S.C. § 285.

Id. at 1033 n.1 (internal citations omitted).*fn6 Under Rule 41(a)(2) of the Federal Rules of Civil Procedure, dismissal at the plaintiff's behest may be made contingent upon "such terms and conditions as the court deems proper." Thus, I recommended that dismissal of Novartis' patent infringement claims be conditioned upon, among other ...


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