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Unigene Laboratories, Inc. v. Apotex

July 7, 2010



The Court's opinion of August 31, 2009, granting the Plaintiffs' motion for summary judgment and directing that judgment be entered in favor of the Plaintiffs, is reinstated for the reasons stated herein.

I. Facts and Proceedings

In July of 2006, Unigene and Upsher-Smith ("Plaintiffs") filed a complaint alleging that Apotex, Inc. and Apotex Corp. ("Apotex" or "Defendants") had infringed U.S. Patent No. 6,440,392 ("the '392 patent"), which Unigene owned and licensed to Upsher-Smith for marketing and sales. (Complaint, at ¶¶ 11-29.) The patent, entitled "nasal calcitonin formulations," covered a calcitonin salmon nasal spray, marketed and sold under the brand-name FORTICAL. Id., at ¶15. In September 2006, Apotex filed its answer, denying many allegations and asserting various affirmative defenses and counterclaims. In October 2006, Plaintiffs filed a reply to the answer's counterclaims.*fn1

On October 6, 2006, the Court entered a scheduling order proposed by the parties providing, inter alia, that fact discovery would end August 31, 2007, all expert witnesses would be designated by October 5, 2007. The Markman hearing was to be held after January 4, 2008, and a joint pretrial order was to be submitted within thirty days after the Court decided any dispositive motion.

On August 17, 2007, fact discovery was extended to September 14, 2007, at the Defendants' request. In October 2007, Defendants moved the Court to "compel discovery of assertedly privileged documents based on the crime-fraud exception." After extensive briefing, the Court issued an opinion on February 4, 2008, holding that the Defendants had failed to make out a prima facie case of fraud and thus denied the Defendants' motion. Following this decision, the Court received claim construction memoranda and held a Markman hearing on July 14-15, 2008. In August 2008, the Court issued an opinion and order construing Claim 19 of the '392 patent.

On September 22, 2008, the Court issued a scheduling order for the completion of expert discovery and providing for termination of expert discovery by February 23, 2009. On October 23, 2008, Plaintiffs moved for a preliminary injunction to prevent Defendants' manufacture and sale of its generic version of FORTICAL. On November 7, 2008, Defendants filed their opposition papers, arguing that Plaintiffs' patent was invalid for obviousness. After receipt of Plaintiffs' reply, Defendants submitted a sur-reply on November 26, 2008. Although the motion for a preliminary injunction was settled by stipulation of the parties on December 1, 2008, no outstanding defense, other than obviousness, was mentioned or alluded to by the Defendants in these papers.

On March 16, 2009, the parties agreed that the Untied States Patent and Trademark Office ("USPTO") would reissue the '392 patent as Reissue Patent No. RE40812 ("the RE812 patent") and agreed to the substitution of the new reissue Claim 19 in the RE812 patent for Claim 19 in the '392 Patent for all litigation purposes. On June 30, 2009, the USPTO reissued the '392 patent as the RE812 patent. On July 2, 2009, the Court entered a consent order that allowed Plaintiffs to amend the complaint by substituting Claim 19 in the RE812 patent for Claim 19 in the '392 patent; that same day, the Plaintiffs filed the amended complaint. At no time did any party indicate that discovery should be re-opened or that additional expert reports would be required, in view of the stipulations. The Defendants' answer to the amended complaint was filed on July 20, 2009 and contains eight new inequitable conduct claims, and the non-infringement, invalidity, and inequitable conduct claims contained in the original answer.

On April 17, 2009, the Defendants filed for summary judgment on the issue of obviousness, and on April 23, 2009, Plaintiffs cross-moved for summary judgment on the lack of obviousness. The Court heard oral argument on the summary judgment motions on July 16, 2009. On August 31, 2009, the Court issued an opinion and order, deciding that the Claim 19, the single claim at issue in both the '392 patent and the reissued patent, was non-obvious, denying the Defendants' summary judgment motion, granting Plaintiffs' summary judgment motion, and entered judgment in favor of Plaintiffs.

On September 15, 2009, Defendants filed a motion to vacate the judgment "to permit remainder of affirmative defenses and counterclaims to be tried," alleging that a number of counterclaims and affirmative defenses remained at issue. On September 28, 2009, Defendants filed a notice of appeal to the Federal Circuit. Although the Court was under the clear impression that non-obviousness had been the sole remaining issue, it vacated its August 31 opinion, subject to reinstatement, in a decision issued October 30, 2009, held that it retained jurisdiction because the appeal to the Federal Circuit was premature, and directed the parties to file memoranda relating to the existence of any outstanding claims.

Plaintiffs and Defendants have each submitted memoranda and exhibits in reference to the Court's order of October 30, 2009. The Defendants assert that twelve affirmative defenses/counterclaims remain at issue in this case. These claims generally fall into three categories: noninfringement; invalidity; and inequitable conduct. Because of the numerosity of the Defendants' affirmative defenses/counterclaims and the Court's concern that the Defendants may be using their greater economic circumstances to increase the Plaintiffs' legal costs in this matter and thus pressure Plaintiffs to settlement, the Court has reviewed all filings, sealed and unsealed, in this matter, so that each of the Defendants' arguments could be subjected to scrutiny.

II. Non-Infringement (Count I)*fn2

In each of their pleadings, Defendants raised, as a defense and as a counterclaim, that "[t]he '392 patent would not be infringed by a product made in accordance with the ANDA No. 078200 because an invalid patent cannot be infringed." (Answer, at 11, 17; Amended Answer, at 12, 18; Answer to Amended Complaint, at 14, 24.) Defendants now argue that the Court erred in finding that Defendants had conceded infringement, pointing in part to these affirmative defenses/counterclaims.

In their papers, Defendants argue that actual non-infringement (i.e. whether the product to be made by Defendants would actually infringe the '392 and RE812 patent) remains at issue. However, in their pleadings, Defendants claimed that the non-infringement was "because an invalid patent cannot be infringed," not because the proposed product would not fall within the terms of the patent. This is, in itself, grounds for finding that this claim was never raised and that actual infringement was conceded. Moreover, Defendants did not raise these statements in pleading a counterclaim or an affirmative defense. Defendants do not raise a specific ground of non-infringement, and instead rely on broad language of patent invalidity, which is not in compliance with Rule 8 of the Federal Rules of Civil Procedure. Rule 8 requires that Defendants state in short and plain terms the defenses to claims asserted against it. Fed. R. Civ. P. 8(b)(1)(A). The defense must be simple, plain and direct. Broad claims of non-infringement due to invalidity do not preserve a claim of actual non-infringement under this standard. As stated in Unigene Laboratories, Inc. v. Apotex Inc., No. 06-cv-5571, 2009 WL 2762706, at *15 (S.D.N.Y. Aug. 31, 2009), and in light of the Defendants' briefing on Plaintiffs' motion for a preliminary injunction in which they failed to raise a claim of non-infringement, the only conclusion to be reached was that the Defendants had conceded infringement.

Therefore, this affirmative defense/counterclaim is no longer at issue, and Defendants' claims to the contrary are denied.

III. Invalidity (Counts II, V)

Defendants concede that Count III (invalidity due to obviousness) was decided by this Court, and thus is no longer outstanding. (Def. Mem., at 6.) Defendants contend, however, that Count IV (invalidity due to lack of enablement) is outstanding, but they have affirmed to the Court that they "do ...

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