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Nycomed US Inc. v. Glenmark Generics Ltd.

March 26, 2010


The opinion of the court was delivered by: Roanne L. Mann, United States Magistrate Judge


Plaintiff Nycomed U.S. Inc. ("Nycomed" or "plaintiff") commenced this civil action on December 12, 2008, alleging that defendants Glenmark Generics Ltd. and Glenmark Generics Inc., USA (collectively, "Glenmark" or "defendant") infringed Nycomed's patent for its Cutivate(r) Fluticasone Lotion 0.05%, U.S. Patent No. 7,300,669 ("'669 Patent"), by seeking approval to market a generic fluticasone lotion. See generally Complaint ("Compl."), ECF Docket Entry ("D.E.") #1. On January 12, 2009, Glenmark filed its answer to the complaint, denying liability and asserting four affirmative defenses. See generally Answer ("Ans."), D.E. #10. Glenmark also counterclaimed for declarations that (1) Glenmark's fluticasone lotion product does not infringe any of the claims of the '669 Patent; (2) the '669 Patent is invalid; (3) the '669 Patent is unenforceable on account of Nycomed's inequitable conduct before the United States Patent and Trademark Office ("PTO"); and (4) this is an exceptional case, entitling Glenmark to attorney fees under 35 U.S.C. § 285. See id. (Counterclaims) ¶¶ 144-52. In a reply filed on February 17, 2009, Nycomed denied the allegations made in Glenmark's counterclaims. See generally Nycomed's Reply to Defendants' Counterclaims, D.E. #32. With Nycomed's consent, Glenmark amended its answer on July 24, 2009, to drop its affirmative defense of laches; Glenmark's counterclaims remained unchanged. See generally Amended Answer ("Am. Ans."), D.E. #108; Stipulation Regarding Motion and Defense, D.E. #104. Nycomed filed its reply to Glenmark's amended pleading on August 10, 2009. See Reply to Defendants' Amended Counterclaims ("8/10/09 Pl. Reply"), D.E. #123.

By letter dated September 18, 2009, plaintiff sought a pre-motion conference and leave to amend the complaint, in order to assert claims for bad faith, unclean hands, and exceptional case, based on Glenmark's submission of allegedly "false and misleading information" to the Food and Drug Administration ("FDA") and the "withholding of critical information from the Court and Nycomed." See Plaintiff's Motion to Amend/Correct/Supplement Complaint ("9/18/09 Pl. Mot.") at 1, D.E. #143; id. Ex. A ([Proposed] Amended Complaint ("Am. Compl.")) ¶¶ 69, 78-149. Nycomed supplemented its letter-motion by letter dated November 20, 2009. See Reply to Response to Motion ("11/20/09 Pl. Supp."), D.E. #195. Defendant opposes Nycomed's motion to amend as futile, arguing that Nycomed has failed to plead any cognizable causes of action with regard to any of the prospective additional claims. See Defendant's Response in Opposition to Plaintiff's Motion to Amend ("9/29/09 Def. Opp."), D.E. #169.

Not to be outdone, Glenmark wrote to the Court on November 13, 2009, seeking leave to file a Second Amended Answer, alleging a new theory of inequitable conduct before the PTO; specifically, Nycomed is alleged to have falsely told the PTO that Nycomed's Cutivate(r) lotion possessed unexpected and superior potency as compared with the prior art Cutivate(r) cream, despite the fact that the FDA had been told that there was no difference in potency between the cream and lotion. See Letter Motion for Leave to File Defendants' Second Amended Answer, Affirmative Defenses and Counterclaims ("11/13/09 Def. Mot.") at 1, D.E. #190; id. Ex. A (Defendants' [Proposed Second] Amended Answer ("Second Am. Ans.")). Predictably, Nycomed opposes the motion, arguing that it is "unduly belated" and that the new inequitable conduct claim "fails to meet the standards for pleading" such a claim "with particularity...." Response in Opposition to Letter Motion for Leave to File Defendants' Second Amended Answer ("11/18/09 Pl. Opp."), D.E. #194.

For the reasons that follow, Nycomed's motion to amend its complaint is granted in limited part, to allow Nycomed to include in its ad damnum clause an allegation of exceptional case and request for attorney fees; the Court recommends that Nycomed's motion to amend otherwise be denied. Glenmark's motion to amend its pleading is granted.*fn1


Pursuant to Rule 15 of the Federal Rules of Civil Procedure, where, as here, a responsive pleading has already been filed, a party may amend its pleading "only with the opposing party's written consent or the court's leave[,]" which should be "freely" granted "when justice so requires." Fed. R. Civ. P. 15(a)(2). Amendments are favored because they "tend to facilitate a proper decision on the merits." Sokolski v. Trans Union Corp., 178 F.R.D. 393, 396 (E.D.N.Y. 1998) (internal quotation marks and citations omitted); see also Monahan v. New York City Dep't of Corr., 214 F.3d 275, 283 (2d Cir. 2000) ("[M]ere technicalities should not prevent cases from being decided on the merits[.]") (citations omitted). Therefore, consistent with Rule 15's mandate, leave to amend should be granted "absent evidence of undue delay, bad faith or dilatory motive on the part of the movant, undue prejudice to the opposing party, or futility...." Id. at 283 (citing Foman v. Davis, 371 U.S. 178, 182 (1962)). Whether to grant leave to amend is a decision committed to the discretion of the district court. See Ruffolo v. Oppenheimer & Co., 987 F.2d 129, 131 (2d Cir. 1993) (per curiam) (quoting 3 JAMES WM. MOORE ET AL., MOORE'S FEDERAL PRACTICE ¶ 15.08[4], at 15-64 (2d ed. 1992)).

I. Nycomed's Motion to Amend

In addition to its original claims for direct infringement and inducement of infringement, Nycomed's proposed new pleading contains two new counts: one entitled "Bad Faith and Unclean Hands" (Count Three) and another entitled "Exceptional Case" (Count Four). See Am. Compl. at pp. 17, 31. Although not expressly included in its amended pleading or initial application to amend, Nycomed also purports to add allegations of willful infringement. Compare Transcript of Oral Argument on December 4, 2009 ("12/4/09 Tr.") at 4, and 11/20/09 Pl. Supp. at 5-7, with 9/18/09 Pl. Mot. & Ex. A thereto.

Glenmark opposes Nycomed's amendments, on the ground that each of the proposed claims is futile. See 9/29/09 Def. Opp. at 1, 3. Futility is one of the grounds on which leave to amend a pleading should be denied. See Monahan, 214 F.3d at 283 (citing Foman, 371 U.S. at 182). An amendment is futile where it "fails to state a claim under the principles employed by the Court when deciding on a Rule 12(b)(6) motion to dismiss." Magee v. Paul Revere Life Ins. Co., 172 F.R.D. 647, 650 (E.D.N.Y. 1997) (citations omitted); see also Champion Titanium Horseshoe, Inc. v. Wyman-Gordon Inv. Castings, Inc., 925 F.Supp. 188, 189 (S.D.N.Y. 1996) ("[L]eave to file an amended pleading... must be denied where the proposed pleading fails to state a claim.") (citing Azurite Corp. v. Amster & Co., 52 F.3d 15, 19 (2d Cir. 1995)).

As discussed below, this Court concludes that Nycomed has not stated valid claims under any of the three articulated theories.

A. Exceptional Case

Nycomed has conceded, as it must, that allegations regarding exceptional case do not give rise to a separate cause of action; rather, a party pleading "exceptional case" is simply noting its intention to move for attorney fees at the conclusion of the case, pursuant to 35 U.S.C. § 285.*fn2 See Eli Lilly & Co. v. Wockhardt Ltd., Cause No. 1:08-cv-1547-WTL-TAB, 2009 WL 3032349, at *2 (S.D. Ind. Sept. 18, 2009) ("While the parties refer to Lilly's exceptional case allegations as a 'claim,' the Court believes it is more appropriate to view it as an expression of Lilly's intention to file a § 285 motion following trial in the event it is the prevailing party."); 11/20/09 Pl. Supp. at 3 (citing Wockhardt, Nycomed concedes that its "exceptional case allegations are more appropriately viewed as an expression of Nycomed's intention to file a § 285 motion following trial in the event that it is the prevailing party"); 12/4/09 Tr. at 6 (Nycomed acknowledged, at oral argument, that it would be sufficient to include in the ad damnum clause a demand for fees under section 285).

Nycomed should be permitted to amend its complaint to include in its prayer for relief a demand for attorney fees under section 285, as Glenmark has done in each of its pleadings. See Ans. at p. 35; Am. Ans. at p. 35; Second Am. Ans. at p. 40. Nycomed's expression of intent to move for fees requires no further verbiage in the pleading. The Court is aware of no precedent that has defined an assertion of "exceptional case" as a separate cause of action.*fn3

Therefore, Nycomed should not be permitted to include a separate count based on exceptional case, or the allegations underlying that nonexistent cause of action.*fn4 As the Second Circuit has opined: "That the amendments would not serve any purpose is a valid ground to deny a motion for leave to amend." Kaster v. Modification Sys., Inc., 731 F.2d 1014, 1018 (2d Cir. 1984). If and when Nycomed prevails, it will have an opportunity to make the requisite showing to support its motion for fees.*fn5

B. Willful Infringement

1. Incorporation By Reference

Although Nycomed's proposed amended complaint and letter-motion of September 18th are silent on the issue of willful infringement, Nycomed alleges in its November 20th supplemental letter, and confirmed at oral argument, that it purports to assert a claim of willful infringement. See 11/20/09 Pl. Supp. at 5-7; 12/4/09 Tr. at 3. Unable to fathom the precise contours of Nycomed's willful infringement claim, the Court infers that it is based at least in part on what Nycomed characterizes as Glenmark's litigation misconduct. See 11/20/09 Pl. Supp. at 5 (citing Novartis Pharms. v. Teva Pharms., 2005 WL 3664014 (discussing plaintiff's "claim of willful infringement/litigation misconduct")). In order to read a willful infringement claim into its amended complaint, Nycomed relies on Rule 10(c) of the Federal Rules of Civil Procedure,*fn6 and a single sentence in the proposed pleading, wherein Nycomed "incorporates the subject matter of its August 10, 2009 pleading entitled, 'Nycomed's Reply to Defendants' Amended Counterclaims,' as if fully set forth herein." Am. Compl. ¶ 69. See 11/20/09 Pl. Supp. at 5-6; 12/4/09 Tr. at 3-4.

Nycomed's incorporation-by-reference argument is unavailing. "Although there is no prescribed procedure for referring to incorporated matter, the references to prior allegations must be direct and explicit, in order to enable the responding party to ascertain the nature and extent of the incorporation." United States v. Int'l Longshoremen's Ass'n, 518 F.Supp.2d 422, 461 (E.D.N.Y. 2007) (quoting 5A WRIGHT & MILLER, FEDERAL PRACTICE & PROCEDURE: CIVIL 3d § 1326 (citing, inter alia, Arce v. Walker, 139 F.3d 329, 336 n.7 (2d Cir. 1998))). A Rule 10(c) adoption clause that does little more than make wholesale reference to the contents of a prior pleading exemplifies the kind of incorporation that fails to give the requisite "guidance to the responding party." Wolfe v. Charter Forest Behavioral Health Sys., Inc., 185 F.R.D. 225, 229 (W.D. La. 1999); accord Hinton v. Trans Union, LLC, 654 F.Supp.2d 440, 447-48 (E.D. Va. 2009); see Levitch v. Columbia Broadcasting System, Inc., 94 F.R.D. 292, 295 (S.D.N.Y. 1982).

Here, Nycomed purports to incorporate "the subject matter" of its August 10, 2009 Reply, by an adoption clause arbitrarily inserted at the end of its fact discussion, immediately preceding the declaration of its first claim for direct infringement. See Am. Compl. ¶ 69. Most of the averments in the incorporated pleading make no specific factual allegations, but instead include denials of allegations in defendant's counterclaims. See generally 8/10/09 Pl. Reply, D.E. #123. To be sure, some of these denials include language alluding to "evidence of Glenmark's willful infringement" in submitting its Abbreviated New Drug Application ("ANDA") to the FDA. See 8/10/09 Pl. Reply ¶¶ 49, 50, 55-70, 72, 76-78, 82-93, 98-99, 101-02, 146, 148-50. Nevertheless, none of Nycomed's pleadings articulates a separate claim for willful infringement, and surely not one based on litigation misconduct. The wholesale incorporation of Nycomed's 8/10/09 Reply thus makes it impossible to ascertain precisely which previously asserted facts are being realleged and for what purpose.*fn7 Such an obfuscating "backdoor" approach to pleading should not be countenanced, notwithstanding Rule 10(c)'s broader objective "to encourage pleadings that are short and free of unneeded repetition." Wolfe, 185 F.R.D. at 230. Nycomed's proposed amended complaint does not contain a claim for willful infringement, and Nycomed should not be permitted to concoct one by incorporating its entire prior pleading.

2. Willful Infringement v. Exceptional Case

In any event, even if Nycomed had expressly pled a cause of action for willful infringement, this Court would recommend that it be disallowed. Nycomed concedes that such a claim would be "surplusage" in this case. See 12/4/09 Tr. at 6, 18. Moreover, it appears that Nycomed misapprehends the gist of a claim for willful infringement.

As the Federal Circuit has explained, "[t]he tort of willful infringement arises upon deliberate disregard for the property rights of the patentee" and, if proven, "may be accompanied by enhanced damages" under 35 U.S.C. § 284. Vulcan Eng'g Co. v. Fata Aluminium, Inc., 278 F.3d 1366, 1378 (Fed. Cir. 2002); see also Yarway Corp. v. Eur-Control USA, Inc., 775 F.2d 268, 277 (Fed. Cir. 1985). Here, however, the Hatch-Waxman Act -- which amends the Federal Food, Drug and Cosmetics Act ("FFDCA") and patent laws, and under which this patent infringement action was brought -- expressly precludes "damages or other monetary relief" for an act of infringement based on an ANDA filing or certification unless "there has been commercial manufacture, use, offer to sell, or sale within the United States or importation into the United States of an approved drug...." 35 U.S.C. § 271(e)(4)(C).*fn8 As it is undisputed that Glenmark has not engaged in any of the aforementioned activities, Nycomed will not recover damages if it prevails, and there thus can be no damages to enhance under section 284 based on a finding of willfulness. See 12/4/09 Tr. at 5. Therefore, Nycomed's "claim" of willfulness is of no discernible legal import.

Furthermore, relying on Novartis Pharmaceuticals v. Teva Pharmaceuticals, 2005 WL 3664014,*fn9 Nycomed mistakenly equates "willful infringement" with "exceptional case" and assumes that litigation misconduct may support a finding of willful infringement. See 11/20/09 Pl. Supp. at 5. In fact, the Federal Circuit has made clear that those concepts are not interchangeable, and that litigation misconduct is entirely distinct from willful infringement. See Glaxo Group Ltd. v. Apotex, Inc., 376 F.3d 1339, 1350 (Fed. Cir. 2004) ("This court has recognized many types of misconduct that may create an exceptional case for purposes of awarding fees, including inequitable conduct before the PTO, litigation misconduct such as vexatious or unjustified litigation or frivolous filings, and willful infringement.") (emphasis added); accord Yamanouchi Pharm. Co. v. Danbury Pharmacal, Inc., 231 F.3d 1339, 1346-47 (Fed. Cir. 2000). In other words, willful infringement is but one of a number of bases on which a court may make an "exceptional case" finding and award fees under 35 U.S.C. § 285. See Yamanouchi, 231 F.3d at 1347 ("In assessing whether a case qualifies as exceptional, the district court must look at the totality of the circumstances.").

Contrary to the premise of Nycomed's theory of willful infringement, the Federal Circuit has expressly declined to equate willful infringement with filing an infringing (and even a baseless) ANDA, even when followed by litigation misconduct. In Glaxo Group, the Federal Circuit clarified its earlier opinion in Yamanouchi:

In Yamanouchi, the district court had found that the generic company's ANDA filing constituted willful infringement, but we did not adopt that rationale on appeal. Instead we cautioned that the trial court "need not have elevated the ANDA certification into a finding of willful infringement" and held that Danbury's entire conduct justified the award of attorney's fees.... Therefore, in Yamanouchi, we did not agree that the generic company had engaged in willful infringement, but rather determined that an award of attorney's fees was permitted because the generic had filed numerous baseless filings supporting its fruitless and meritless ...

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