sterns & weinroth, p.c. 50 west state street p.o. box · pdf file11/13/2007 ·...

STERNS & WEINROTH, P.C. 50 West State Street P.O. Box 1298 Trenton, New Jersey 08607-1298 (609) 392-2100 Attorneys for Defendants Mutual Pharmaceutical Company, Inc., and United Research Laboratories, Inc. _________________________________________________________________________

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY

______________________________________ TYCO HEALTHCARE GROUP LP, and MALLINCKRODT INC., Plaintiffs, v. MUTUAL PHARMACEUTICAL COMPANY, INC. and UNITED RESEARCH LABORATORIES, INC. Defendants. _______________________________________

: DOCUMENT FILED : ELECTRONICALLY : : : : : Civil Action No. 07-cv-1299 : (SRC)(MAS) : : : : : :

ANSWER, AFFIRMATIVE DEFENSES AND COUNTERCLAIMS, WITH JURY DEMAND

Defendants Mutual Pharmaceutical Co., Inc. (“Mutual”) and United Research

Laboratories, Inc. (“URL”) (collectively “Defendants”) hereby respond to the Complaint of

Plaintiffs Tyco Healthcare Group LP (“Tyco”) and Mallinckrodt Inc. (“Mallinckrodt”)

(collectively “Plaintiffs”) as follows:

1. Defendants deny the allegations in Paragraph 1 of the Complaint, except to state

that the Complaint purports to state a cause of action under Titles 28 and 35 of the U.S. Code.

2. Defendants admit the allegations in Paragraph 2 of the Complaint.


1

Case 2:07-cv-01299-SRC-MAS Document 56 Filed 11/13/2007 of 33

4. Defendants deny the allegations in Paragraph 4 to the extent Pharmaceutical

Holdings Corporation (“PHC”) has been identified as a defendant in this action. Defendants

admit the other allegations in Paragraph 4 of the Complaint.



7. Defendants deny the allegations in Paragraph 7 to the extent PHC has been

identified as a defendant in this action. Defendants admit the other allegations in Paragraph 7 of

the Complaint.


identified as a defendant in this action. Defendants admit that the Complaint at times refers to

the Defendants collectively as “Mutual.”




that Mutual sell various prescription drug products and conduct business in many areas of the

United States, including in this District.


that Mutual manufactures pharmaceutical products that are sold and used in many areas of the

United States, including this District.


that Mutual sell various prescription drug products and conduct business, and manufactures

pharmaceutical products that are sold and used in many areas of the United States, including this

District.

2


14. Defendants admit the allegations of Paragraph 14 of the complaint.


identified as a defendant in this action. Defendants admit the allegations of Paragraph 15 of the

complaint.


17. Defendants incorporate by reference their responses to Paragraphs 1-16 of the

Complaint as if set forth fully herein.

18. Defendants admit, on information and belief, the allegations in Paragraph 18 of

the Complaint.


20. Defendants admit that U.S. Patent No. 5,030,632 (“the ‘632 patent”) was issued

by the United States Patent and Trademark Office (“PTO”) on July 9,1991, and named Sandoz

Pharmaceutical Corp. as the assignee of the named inventor William R. Sterling. Defendants also

admit that a true copy of the ‘632 patent is attached to the complaint as Exhibit A. Defendants

deny the remaining allegations in Paragraph 20 of the Complaint.

21. Defendants admit the allegations of Paragraph 21 of the Complaint.

22. Defendants deny the allegations of Paragraph 22 of the Complaint.





that Mutual submitted Abbreviated New Drug Application (“ANDA”) No. 78-581 to the Food

and Drug Administration under 21 U.S.C. § 355(j) in order to obtain approval to manufacture

3


and sell Temazepam Capsules USP, 7.5 mg (“Mutual’s Temazepam Capsules”) and included a

patent certification in accordance with 21 U.S.C. § 355(j)(2)(A)(vii)(IV) with respect to the ‘632

patent, stating that the ‘632 patent is invalid, unenforceable and/or will not be infringed by the

manufacture, use or sale of Mutual’s Temazepam Capsules.


that Mutual sent a notice of its patent certification with respect to the ‘632 patent to Plaintiffs

pursuant to 21 U.S.C. § 355(j)(2)(B) in February 2007.





that Mutual submitted ANDA No. 78-581 to the Food and Drug Administration under 21 U.S.C.

§ 355(j) in order to obtain approval to manufacture and sell Mutual’s Temazepam Capsules and

included a patent certification in accordance with 21 U.S.C. § 355(j)(2)(A)(vii)(IV) with respect

to the ‘632 patent, stating that the ‘632 patent is invalid, unenforceable and/or will not be

infringed by the manufacture, use or sale of Mutual’s Temazepam Capsules.

32. Defendants incorporate by reference their responses to Paragraphs 1-16 and 18-19

of the Complaint as if set forth fully herein.


by the PTO on May 18, 1993, and named Sandoz Pharmaceutical Corp. as the assignee of the

named inventor William R. Sterling. Defendants also admit that a true copy of the ‘954 patent is

attached to the Complaint as Exhibit B. Defendants deny the remaining allegations in Paragraph

33 of the Complaint.

4













pursuant to 21 U.S.C. § 355(j)(2)(B) in February, 2007.












5



by the PTO on July 5, 1994, and named Sandoz Pharmaceutical Corp. as the assignee of the

named inventor William R. Sterling. Defendants also admit that a true copy of the ‘758 patent is

attached to the complaint as Exhibit C. Defendants deny the remaining allegations in Paragraph

44 of the Complaint.


46. Defendants deny the allegations of Paragraph 46 of the complaint.












pursuant to 21 U.S.C. § 355(j)(2)(B) in February, 2007.




6











by the PTO on May 13, 1997, and named William R. Sterling as the sole inventor. Defendants

also admit that a true copy of the ‘310 patent is attached to the complaint as Exhibit D.

Defendants deny the remaining allegations in Paragraph 57 of the Complaint.




that Mutual’s ANDA did not include a patent certification in accordance with 21 U.S.C.

§ 355(j)(2)(A)(vii)(IV) with respect to the ‘310 patent, because the ‘310 patent is not listed in the

Food and Drug Administration’s publication entitled “Approved Drug Products with Therapeutic

Equivalence Evaluations” (the “Orange Book”).





7





that ANDA No. 78-581 to the Food and Drug Administration under 21 U.S.C. § 355(j) in order

to obtain approval to manufacture and sell Mutual’s Temazepam Capsules and that Mutual’s

ANDA did not include a patent certification in accordance with 21 U.S.C.

§ 355(j)(2)(A)(vii)(IV) with respect to the ‘310 patent, because the ‘310 patent is not listed in the

Food and Drug Administration’s publication entitled “Approved Drug Products with Therapeutic

Equivalence Evaluations” (the “Orange Book”). Thus, no patent certification was necessary.

FIRST AFFIRMATIVE DEFENSE

Invalidity

1. The ‘632 patent is invalid by reason of the failure of the ‘632 patent to satisfy one

or more conditions of patentability specified in Title 35 of the United States Code, including but

not limited to Sections 101, 102, 103 and 112.










8


COUNTERCLAIMS

The Parties

1. Mutual Pharmaceutical Co., Inc. (“Mutual”) and United Research Laboratories,

Inc. (“URL”) are corporations incorporated under the laws of the state of Pennsylvania, having

their principal places of business at 1100 Orthodox Street, Philadelphia, Pennsylvania 19124.

2. Defendants Mutual and URL are collectively referred to herein as “Defendants.”

3. Tyco Healthcare Group LP (“Tyco Healthcare”) is a limited partnership organized

and existing and existing under the laws of the State of Delaware, having its principal place of

business at 15 Hampshire Street, Mansfield, Massachusetts 02048

4. Mallinckrodt Inc. (“Mallinckrodt”) is a corporation organized and existing under

the laws of the State of New York, having its principal place of business at 675 McDonnell

Boulevard, P.O. Box 5840, Hazelwood, Missouri 63042.

5. Upon information and belief, Plaintiff Tyco Healthcare holds an approved

Supplement (No. S-022) to an approved new drug application (“NDA”) No. 18-163 for Restoril®

capsules (7.5 mg), which contain the active ingredient temazepam. By way of NDA supplement

(No. S-022) Restoril® 7.5 mg capsules were approved by the United States Food and Drug

Administration (“FDA”) on October 25, 1991 for the treatment of transient insomnia.

6. Plaintiffs sell a variety of prescription pharmaceutical products, including

products sold under the trade name Restoril®, that are regularly sold and used throughout the

United States, including this District. Restoril® customers include drug wholesalers, health care

facilities, stand alone pharmacies as well as pharmacies contained within retail drug stores, mass

merchandisers and grocery stores.

9


Interstate Commerce

7. Plaintiff’s activities, including activities related to their monopolization and

attempted monopolization of the market for 7.5 mg Temazepam Capsules, are in the flow of, and

substantially affect, interstate commerce.

FIRST COUNT

Declaration of Noninfringement and Invalidity of U.S. Patent Nos. 5,030,632

8. Defendants repeat and reallege Paragraphs 1-7 of the counterclaims.

9. This claim arises under the patent laws of the United States, 35 U.S.C. § 1, et seq.,

and the Declaratory Judgment Act, 28 U.S.C. §§ 2201 and 2202. This court has subject matter

jurisdiction under 28 U.S.C. §§ 1331 and 1338.

10. In their Complaint, Plaintiffs have asserted that the Defendants have infringed

U.S. Patent No. 5,030,632 (“the ‘632 patent”) by Mutual’s submission of Abbreviated New Drug

Application (“ANDA”) No. 78-581 to the FDA under 21 U.S.C. § 355(j). Through ANDA No.

78-581, Mutual seeks approval to manufacture and sell Temazepam Capsules USP, 7.5 mg

(“Mutual’s Temazepam Capsules”) prior to the expiration of the ‘632 patent.

11. The Defendants seek declarations that the ‘632 patent is not infringed and that the

‘632 patent is invalid.

12. The ‘632 patent includes claims that purport to cover methods of treating transient

insomnia with hard gelatin capsules containing crystalline temazepam as the active ingredient

where said crystalline temazepam falls within a numerical range for both particle size and

surface area as measured prior to the encapsulation process.

13. Plaintiffs maintain, and Defendants deny, that Mutual’s Temazepam Capsules

infringe the ‘632 patent and that the ‘632 patent is valid.

10


14. Mutual’s Temazepam Capsules contain crystalline temazepam that does not fall

within the surface area range claimed in the ‘632 patent. Instead, Mutual’s ANDA requires

through specification and quality control measures that the temazepam used in its product falls

well outside the surface area range claimed in the ‘632 patent.

15. The ‘632 patent does not claim Mutual’s Temazepam Capsules.




17. Actual and justiciable controversies exist between Plaintiffs and the Defendants

regarding the infringement and validity of the ‘632 patent.

18. The Defendants are entitled to declarations that Mutual’s Temazepam Capsules

do not infringe the ‘632 patent and that the ‘632 patent is invalid.

SECOND COUNT







U.S. Patent No. 5,211,954 (“the ‘954 patent”) by Mutual’s submission of ANDA No. 78-581 to

the FDA under 21 U.S.C. § 355(j). Through ANDA No. 78-581, Mutual seeks approval to

manufacture and sell Mutual’s Temazepam Capsules prior to the expiration of the ‘954 patent.

11




23. The ‘954 patent includes claims that purport to cover a hard gelatin capsules

containing crystalline temazepam as the active ingredient where said crystalline temazepam falls

within a numerical range for both particle size and surface area as measured prior to the

encapsulation process.

24. Plaintiffs maintains, and Defendants deny, that Mutual’s Temazepam Capsules





well outside the surface area range claimed the ‘954 patent.









THIRD COUNT



12

























13






FOURTH COUNT


















14














FIFTH COUNT

Attempted Monopolization in Violation of the Sherman Act: Sham Litigation


53. This claim arises under Section 2 of the Sherman Act, 15 U.S.C. § 2 and the

Clayton Act, 15 U.S.C. §§ 15 and 26.

54. Jurisdiction is proper under 15 U.S.C. § 4 and 28 U.S.C. §§ 1331 and 1337.

Background

A. Plaintiffs and New Drugs

55. Plaintiffs are engaged in the development, commercialization and marketing of

OTC and prescription pharmaceuticals for the treatment of various disorders. For the fiscal year

ending June 30, 2006, Tyco Healthcare’s net revenues were $9,641 million.

15


56. Plaintiffs develop, commercialize and market “new drugs.” Once approved, new

drugs generally are referred to as brand-name drugs because they are marketed under a trade

name or trademark (e.g., Restoril®) for the drug product rather than under the generic chemical

name for the active ingredient in the drug product.

57. Before marketing a new drug in the United States, a manufacturer must submit an

NDA to FDA and FDA must approve it.

58. Among other things, an NDA must contain technical data on the composition of

the drug product, including its active ingredient, the means for its manufacture, and a statement

of its proposed uses. In addition, the manufacturer must submit evidence that the drug is safe

and efficacious for its proposed uses.

59. The FDA approves a new drug only if it determines that the drug is safe and

efficacious for its proposed uses.

B. Mutual and Generic Drugs

60. For over 50 years, Mutual has been a leading national supplier of generic and

branded pharmaceuticals. A generic drug is a version of a brand-name drug that is generally sold

without a trade name or trademark for the drug product.

61. Before marketing a generic drug in the United States, a manufacturer must submit

an ANDA to FDA and FDA must approve it. Generic drugs are generally referred to as

“generic” because they are marketed under the chemical name for the active ingredient in the

drug product (e.g., Temazepam Capsules). An ANDA is “abbreviated” because it may rely

upon, rather than duplicate, the safety and efficacy data contained in the approved NDA. An

ANDA applicant must supply additional data demonstrating that its generic drug is bioequivalent

to the previously-approved brand-name drug.

16


62. Generic drugs typically enjoy significant price advantage over their brand-name

counterparts. Consequently, generic drugs are frequently utilized in an effort to control health-

care costs. Generic drugs represent an increasing portion of the medicines used in the United

States.

63. The introduction of a generic drug as an alternative to a brand-name drug

typically results in a dramatic reduction in the brand-name drug’s market share, with a large

portion of that reduction occurring within the first year. The high level of an OTC generic drug’s

market penetration is due to its lower price, product placement directly next to the branded

alternative and retailer promotion, among other things.

C. Federal Regulation of Pharmaceutical Products and the Hatch-Waxman Act

64. The Federal Food, Drug and Cosmetics Act (“FDCA”), 21 U.S.C. § 301 et seq.,

establishes the requirements for marketing drugs in the United States.

65. In 1984, with the passage of The Drug Price Competition and Patent Restoration

Act of 1984, 21 U.S.C. § 355, Congress amended the FDCA to provide a streamlined process for

the approval of generic drugs. These amendments are known as the “Hatch-Waxman

Amendments” or “Hatch-Waxman Act.”

66. Before marketing a new drug, a company must submit an NDA to FDA. 21

U.S.C. § 355(a), (b). In addition to the technical data submitted in an NDA, a brand-name drug

manufacturer is required to submit to FDA information on each patent that claims the drug or a

method of using the drug that is the subject of the NDA, and with respect to which a claim of

patent infringement could reasonably be asserted if a person not licensed by the owner of the

patent engaged in the manufacture, use, sale or importation of the drug product. A brand-name

drug manufacturer should submit patent information – the patent’s number and its expiration

17


date – in connection with an NDA only if the patent claims the drug for which the applicant

submitted the NDA or claims a method of using the drug for which the applicant submitted the

NDA.

67. A brand-name drug manufacturer is required to certify to FDA that the patents

submitted by it to FDA cover the formulation, composition and/or method of use of the drug

product that is the subject of an approved NDA or an NDA for which approval is being sought.

68. Once FDA approves an NDA, the patent information submitted by the brand-

name drug manufacturer is listed in a publication entitled “Approved Drug Products with

Therapeutic Equivalence Evaluations” (the “Orange Book”).

69. FDA publishes the Orange Book. The Orange Book identifies drug products

approved on the basis of safety and efficacy by FDA under the FDCA. The drug patent

information in the Orange Book is based on information in NDAs submitted by brand-name drug

manufacturers. FDA accepts as true the drug patent information supplied by brand-name drug

manufacturers.

70. A generic drug manufacturer seeking FDA approval for a generic version of a

brand-name drug product listed in the Orange Book must file one of four certifications with

FDA: (i) that the brand-name drug manufacturer has not filed patent information with FDA;

(ii) that the patent has expired; (iii) that the patent expires on a date before which the generic

manufacturer is seeking to market its generic product; or (iv) that the patent claiming the brand-

name drug is invalid or will not be infringed by the manufacture, use or sale of the generic drug

for which the ANDA is submitted. This final certification is commonly referred to as a

Paragraph IV certification.

18


71. If an ANDA applicant submits a Paragraph IV certification to FDA, it is required

to notify the patent owner (usually the brand-name drug manufacturer) of its intent to seek

approval of its ANDA and to compete with the brand-name manufacturer by marketing its

generic version of the brand-name drug before expiration of the listed patent. This notice must

include a detailed statement of the factual and legal basis for the ANDA applicant’s opinion that

the listed patent is not valid or will not be infringed by the manufacture, use or sale of the generic

drug.

72. If, within 45 days of receiving notification of the ANDA applicant’s Paragraph IV

certification, the brand-name drug manufacturer files suit purporting to enforce its rights under a

patent to which the Paragraph IV certification was made, FDA is prohibited by law – 21 U.S.C.

§ 355(j)(5)(B)(iii) – from approving the ANDA for 30 months or until the resolution of the

infringement action, whichever is sooner. Thus, the mere filing of such a lawsuit becomes an

absolute barrier to the ability of a competitor, such as a generic drug manufacturer, to effectively

compete against a brand-name drug manufacturer.

73. To encourage firms to challenge or design around patents covering brand-name

drugs, the Hatch-Waxman Act provides that the first applicant to submit an ANDA with a

Paragraph IV certification is entitled to a 180-day market exclusivity period before FDA may

grant approval for any other ANDA regarding the same brand-name drug. The 180-day period

does not begin to run until the generic product is commercially marketed or a court enters a final

judgment that the patent(s) subject to the Paragraph IV certification are either invalid or not

infringed.

74. As a result of the process that an ANDA applicant must follow, a brand-name

drug manufacturer can receive advance notice of potential competition. The patent holder can

19


automatically extend its market exclusivity by up to 30 months by filing suit against the first

Paragraph IV ANDA applicant within 45 days of receiving notice of the Paragraph IV filing.

The lawsuit will not only prevent or delay the generic manufacturer from marketing a competing

product, but could delay other potential generic competitors for up to 30 months plus 180 days.

75. Accordingly, the triggering of FDA’s prohibition on approving an ANDA by the

filing of suit by a brand-name manufacturer against the first Paragraph IV filer substantially

increases the costs to a generic drug manufacturer and results in a substantial delay in the entry

of generic competition.

D. Plaintiffs’ Supplement (No. S-022) to NDA No. 18-163 and their Restoril® Product

76. Upon information and belief, Plaintiff Tyco Healthcare holds an approved

Supplement (No. S-022) to an approved new drug application (“NDA”) No. 18-163 for

Restoril® capsules (7.5 mg), which contain the active ingredient temazepam. By way of NDA

supplement (No. S-022) Restoril® 7.5 mg capsules were approved by the United States Food and

Drug Administration (“FDA”) on October 25, 1991 for the treatment of transient insomnia.

77. Upon information and belief, the FDA’s grant of supplement (No. S-022) for the

7.5 mg dosage of Restoril® capsules created an automatic exclusivity period of three years during

which the FDA would not approve generic versions of 7.5 mg Restoril® capsules.

78. Upon information and belief, subsequent to October 25, 1991, Plaintiffs began

marketing the drug that is the subject of NDA No. 18-163 under the trade name Restoril®.

E. Plaintiffs’ Patents and Orange Book Listing

79. On information and belief, Mallinckrodt is the owner of the ‘632 patent, the ‘954

patent, the ‘758 patent, and the ‘310 patent (collectively “Mallinckrodt’s patents”).

20


80. The ‘954 patent includes claims that purport to cover a hard gelatin capsules

containing crystalline temazepam as the active ingredient where said crystalline temazepam falls

within a numerical range for both particle size and surface area as measured prior to the

encapsulation process.

81. The ‘632 patent, the ‘758 patent, and the ‘310 patent all include claims that

purport to cover methods of treating transient insomnia with hard gelatin capsules containing

crystalline temazepam as the active ingredient where said crystalline temazepam falls within a

numerical range for both particle size and surface area as measured prior to the encapsulation

process.

82. Plaintiffs certified to FDA that Mallinckrodt’s patents cover the formulation for

the drug product that is the subject of Plaintiffs’ NDA No. 18-163. By making that certification,

Plaintiffs caused Mallinckrodt’s patents to be listed in the Orange Book.

The Relevant Markets and Plaintiffs’ Monopoly Power

83. The relevant geographic market is the United States.

84. The relevant product market is the market for 7.5 mg Temazepam Capsules. The

unique strength, 7.5 mg Temazepam Capsules, is used for particular purposes and with particular

therapeutic effects unique to that dosage. 7.5 mg Temazepam Capsules is the lowest effective

dose of temazepam, for patients initially seeking treatment for short term insomnia and naive to

prescription sleep aids. Prescriptions written for 7.5 mg Temazepam Capsules can only be filled

with 7.5 mg Temazepam Capsules. Distinct groups of purchasers exist for 7.5 mg Temazepam

Capsules.

21


85. 7.5 mg Temazepam Capsules are used principally to treat transient insomnia.

Other products used to treat transient insomnia are not reasonably interchangeable with 7.5 mg

Temazepam Capsules.

86. On information and belief, Plaintiffs are currently the only entity in the United

States marketing 7.5 mg Temazepam Capsules.

87. On information and belief, Plaintiffs have a 100 percent share of the relevant

market.

88. Plaintiffs have and have exercised monopoly power in the relevant market.

89. Plaintiffs have the power to control prices and/or exclude competition in, or

prevent entry into, the relevant market.

90. There are substantial barriers to entry into the relevant market, including, but not

limited to, regulatory requirements and Plaintiffs’ actions to preclude Defendants’ entry.

Mutual’s Efforts to Compete with Plaintiffs

91. On or about October 31, 2006, Mutual filed ANDA No. 78-581, seeking approval

to market Mutual’s Temazepam Capsules.

92. As set forth in Mutual’s ANDA No. 78-581, Mutual’s Temazepam Capsules will

not infringe Mallinckrodt’s patents, because the crystalline temazepam used by Mutual does not

fall within the surface area range that is required by all of the claims of Mallinckrodt’s patents.

Because Plaintiffs caused the ‘632 patent, the ‘954 patent, and the ‘758 patent to be listed in the

Orange Book, Mutual was required to certify to those patents under 21 U.S.C. § 355(j)(2)(A)(vii)

and was required to notify Plaintiffs of its Paragraph IV certification. Because Plaintiffs have

not listed the ‘310 patent in the Orange Book, Mutual was not required to certify to that patent

under 21 U.S.C. § 355(j)(2)(A)(vii).

22


93. On February 5, 2007, Mutual sent a notice to Plaintiffs that it had filed Paragraph

IV certifications concerning the ‘632 patent, the ‘954 patent, and the ‘758 patent.

94. In accordance with 21 U.S.C. § 355(j)(2)(B)(ii) and 21 C.F.R. § 314.95(c)(6),

Mutual’s notice contained a detailed statement of the factual and legal basis for Mutual’s

Paragraph IV certifications.

95. On March 9, 2007, Mutual provided Plaintiffs with the entirety of Mutual’s

ANDA No. 78-581, which contains detailed information about Mutual’s Temazepam Capsules,

including specifications pertaining to the temazepam used to make Mutual’s Temazepam

Capsules, which indicate that Mutual’s Temazepam Capsules do not fall within the surface area

range of Mallinckrodt’s patents.

96. Prior to the filing of the Complaint, Mutual also offered to provide test samples of

its temazepam to Plaintiffs. Plaintiffs declined Mutual’s offer of test samples, and filed their

Complaint without performing any analysis of Mutual’s temazepam.

97. Despite the conclusive and irrefutable proof provided to Plaintiffs that the product

covered by Mutual’s ANDA does not and cannot infringe Mallinckrodt’s patents, Plaintiffs filed

this objectively baseless lawsuit (and another one in the United States District Court for the

Eastern District of Pennsylvania) alleging infringement of Mallinckrodt’s patents. Plaintiffs filed

their objectively baseless lawsuits for the purpose of invoking the automatic 30-month stay of

FDA’s ability to approve Mutual’s ANDA and thereby significantly delaying Defendants’ entry

into relevant markets.

Nature of Plaintiffs’ Unlawful Anticompetitive Conduct

98. Plaintiffs’ actions, as described herein, evidence their specific intent to restrain

competition, attempt to monopolize and to monopolize the relevant market. Plaintiffs have

23


engaged in an overall predatory scheme to monopolize the relevant market through, but not

limited to, initiating objectively baseless and sham judicial proceedings designed to effectuate

their monopoly of 7.5 mg Temazepam Capsules.

99. These judicial proceedings are not a genuine effort to obtain an adjudication of a

valid claim but rather were instituted to achieve an unlawful objective to the detriment of

competition in the relevant market. The purpose of such action is to directly interfere with and to

harm the business of competitors in the relevant market, including Defendants, and to forestall,

frustrate and prevent competition by such competitors.

100. Plaintiffs’ anticompetitive and monopolistic actions evince their overall predatory

scheme to injure or destroy competition in the relevant market. Plaintiffs have baselessly and

improperly wielded Mallinckrodt’s patents as an anticompetitive weapon in order to consolidate,

entrench and enhance their monopolistic position in the relevant market and to stifle and

eliminate competition and competitors with no economic, market or competitive benefit.

101. Plaintiffs’ exclusionary, anticompetitive and unlawful action will preclude other

pharmaceutical companies, including Defendants, from obtaining and attempting to obtain timely

FDA approval to market 7.5 mg Temazepam Capsules that would compete with Plaintiffs’ 7.5

mg Temazepam Capsules (Restoril®). Plaintiffs’ actions will directly, materially and

proximately cause FDA to be unable to approve Mutual’s ANDA No. 78-581. A pharmaceutical

company cannot market 7.5 mg Temazepam Capsules without FDA approval.

102. Instead of allowing Mutual to enter the market for 7.5 mg Temazepam Capsules

according to ANDA No. 78-581, Plaintiffs, with specific intent to maintain monopoly power

over the relevant market, instituted this suit against Defendants on March 22, 2007, alleging

infringement of Mallinckrodt’s patents. Plaintiffs filed another lawsuit against Defendants in a

24


different judicial district also alleging infringement of Mallinckrodt’s patents. Both lawsuits

were filed within 45 days of Plaintiffs’ receipt of Mutual’s Paragraph IV notifications. On

information and belief, Plaintiffs filed these lawsuits with an intent to delay, hamper, hinder and

impede Mutual from obtaining timely FDA approval of its proposed 7.5 mg Temazepam

Capsules.

103. Plaintiffs initiated litigation after Defendants provided ANDA No. 78-581 which

clearly indicates that Mutual’s product is not covered by any of Mallinckrodt’s patent claims.

104. On information and belief, the patent infringement claims that Plaintiffs asserted

in both lawsuits against the Defendants are objectively baseless. No reasonable litigant could

expect to secure favorable relief against the Defendants upon the merits under Mallinckrodt’s

patents. Plaintiffs brought their patent infringement claims in bad faith, for an improper purpose,

and as a means of directly interfering with and harming the Defendants’ business and in order to

forestall, frustrate and prevent competition by Defendants. Plaintiffs’ ulterior motive is, and has

been, to limit competition in the relevant market and to maintain a monopoly in the relevant

market.

105. By bringing suit after Mutual notified Plaintiffs that Mutual had filed Paragraph

IV certification ANDA No. 78-581, Plaintiffs triggered the 30-month statutory stay of FDA

approval of ANDA No. 78-581. Without FDA approval, Mutual cannot market 7.5 mg

Temazepam Capsules.

106. On information and belief, Plaintiffs desired to trigger the 30-month statutory stay

of FDA approval in order to manipulate the use of FDA procedures as an anticompetitive barrier

to competition within the relevant markets and for the purpose of directly interfering with

Defendants’ ability to market 7.5 mg Temazepam Capsules.

25


107. On information and belief, Plaintiffs brought this lawsuit, and the other lawsuit

they filed against Defendants, to invoke the 30-month automatic stay of FDA approval of

Mutual’s ANDA No. 78-581. Plaintiffs’ intention was to use those lawsuits (and the resultant

FDA stay), rather than the outcome of the lawsuit, to forestall, frustrate and prevent competition

in the relevant market.

108. But for the initiation of the litigations that Plaintiffs filed against Defendants

alleging infringement of Mallinckrodt’s patents, Mutual would enter the market for 7.5 mg

Temazepam Capsules upon obtaining FDA approval of Mutual’s ANDA No. 78-581.

109. On information and belief, Plaintiffs intentionally engaged in the exclusionary

conduct alleged herein with the express purpose of achieving and maintaining monopoly power

in the market for 7.5 mg Temazepam Capsules. Plaintiffs’ litigations filed against Defendants

alleging infringement of Mallinckrodt’s patents are both objectively and subjectively baseless.

Plaintiffs’ litigations filed against Defendants alleging infringement of Mallinckrodt’s patents

constitute sham litigation and bad faith enforcement of Mallinckrodt’s patents.

110. Plaintiffs’ anticompetitive activities are a direct, proximate and reasonably

foreseeable cause of Defendants’ foreclosure from the relevant market. But for Plaintiffs’

anticompetitive activities, Mutual would enter the market for 7.5 mg Temazepam Capsules upon

obtaining FDA approval of Mutual’s ANDA No. 78-581.

111. Plaintiffs have created a dangerous probability that they will achieve their goal of

monopolizing the relevant market.

112. Plaintiffs’ market share in the relevant market, coupled with other market

structure and conduct evidence, including, but not limited to, the lack of competition for 7.5 mg

Temazepam Capsules, the likely effect of competitive entry, the nature of the anticompetitive

26


conduct alleged herein, and related economic and market factors, constitute a dangerous

probability that Plaintiffs will succeed in their efforts to maintain a monopoly in the relevant

market.

113. But for Plaintiffs’ actions alleged herein, the market share of Plaintiffs in the

relevant market would have decreased with the addition of a strong competitor, such as Mutual

and subsequently other generic drug manufacturers, to the benefit of competition and consumers

in the relevant market.

114. On information and belief, Plaintiffs have not acted to advance their position by

competing on the merits in the relevant market, but solely to exclude potential competition from

an alternate source in the relevant market.

115. Plaintiffs’ exclusionary, anticompetitive and unlawful actions have harmed

consumers by depriving them of timely market entry by low-cost, alternative 7.5 mg Temazepam

Capsules.

116. Plaintiffs have unlawfully acquired and/or maintained monopoly power in the

relevant market as a result of the conduct alleged herein.

117. As demonstrated by the foregoing conduct alleged herein, Plaintiffs have acted

with the specific intent to monopolize the relevant market.

118. The effect of Plaintiffs’ overall scheme, course of conduct and attempt to

monopolize will be to unreasonably restrain trade and commerce in the relevant market, and

permit Plaintiffs to monopolize the relevant market in violation of Section 2 of the Sherman Act,

15 U.S.C. § 2.

27


119. Plaintiffs’ exclusionary, anticompetitive and unlawful activities, as alleged herein,

threaten loss or damage to Defendants by forestalling, frustrating and preventing Defendants

ability to compete in the relevant market.

120. As a result of Plaintiffs’ exclusionary, anticompetitive and unlawful actions,

Defendants have suffered, and will continue to suffer, injury to their business and property,

including lost profits and business opportunities.

SIXTH COUNT

Unlawful Monopolization in Violation of the Sherman Act: Sham Litigation


122. This claim arises under Section 2 of the Sherman Act, 15 U.S.C. § 2, and the

Clayton Act, 15 U.S.C. §§ 15 and 26.

123. Jurisdiction is proper under 15 U.S.C. § 4 and 28 U.S.C. §§ 1331 and 1337.

124. Plaintiffs are monopolizing the relevant market by engaging in exclusionary,

unfair, anticompetitive and unlawful acts, as alleged herein, which are not honestly undertaken

and which are designed to endanger, injure or destroy competition in the relevant market.

125. Plaintiffs possesse monopoly power in the relevant market.

126. Plaintiffs are willfully maintaining their monopoly power in the relevant market,

as distinguished from their maintenance as a consequence of a superior product, business acumen

or historic accident.

127. Plaintiffs have the power to control prices and/or exclude competition in, or

prevent entry into, the relevant market.

28


128. Plaintiffs’ exclusionary, anticompetitive and unlawful actions are harming

competition and consumers by excluding Mutual from the relevant market and thus depriving

consumers of low-cost, alternative 7.5 mg Temazepam Capsules.

129. Plaintiffs’ exclusionary, anticompetitive and unlawful activities, as alleged herein,

threaten loss or damage to Defendants by forestalling, frustrating and preventing Defendants

ability to compete in the relevant market.

130. As a result of Plaintiffs’ exclusionary, anticompetitive and unlawful actions,

Defendants have suffered, and will continue to suffer, injury to their business and property,

including lost profits and lost business opportunities.

SEVENTH COUNT

Tortious Interference

131. Defendants repeat and reallege Paragraphs 1- 130 of the counterclaims.

132. This claim arises under state common law and is related within the meaning of 28

U.S.C. §§ 1338(b) and 1367(a) to the claims made in Plaintiffs’ Complaint in this action and to

the federal claims made in this counterclaim.

133. Jurisdiction is proper under 28 U.S.C. §§ 1338(b) and 1367(a).

134. Because generic drugs enjoy significant price advantage over their brand-name

counterparts, and are equally safe and effective, wholesalers, distributors, drug stores, health

maintenance organizations and other direct purchasers buy generic drugs in large quantities as

soon as they are available on the market.

135. Therefore, upon approval of Mutual’s ANDA, Defendants expect to enter into,

and likely will enter into, advantageous contractual relations for the sale of Mutual’s Temazepam

Capsules with numerous third parties, including, but not limited to, those with whom Defendants

29


have existing business relationships, and including, but not limited to, wholesalers, distributors,

drug stores and health maintenance organizations.

136. On information and belief, Plaintiffs filed their objectively baseless and bad faith

patent infringement lawsuits for the purpose and with the specific intent of forestalling,

frustrating and preventing Defendants’ ability to sell their Temazepam Capsules, thereby

preventing these advantageous contractual relationships from occurring.

137. Plaintiffs conduct is not protected by any privilege or justification.

138. Had Plaintiffs not engaged in the conduct alleged herein, Defendants likely would

have been successful in entering into advantageous contractual relations with third parties as

described above.

139. By reason of, and as a direct and proximate result of Plaintiffs’ tortious conduct,

Defendants have been injured throughout the United States, including New Jersey.

SEVENTH COUNT

Common Law Unfair Competition

140. Defendants repeat and reallege Paragraphs 1- 139 of the counterclaims.

141. This claim arises under state common law pertaining to unfair competition, and is

related within the meaning of 28 U.S.C. §§ 1338(b) and 1367(a) to the claims made in

Plaintiffs’s Complaint in this action and to the federal claims made in this counterclaim.

142. Jurisdiction is proper under 28 U.S.C. §§ 1338(b) and 1367(a).

143. On information and belief, Plaintiffs brought groundless, objectively baseless and

bad faith litigations for the purpose and with the intent of interfering with the business of

Defendants and injuring Defendants in New Jersey and throughout the United States.

30


144. Plaintiffs’ bringing of such groundless, objectively baseless and bad-faith

litigations violate federal antitrust law, tortiously interferes with Defendants business

expectancies, offends public policy and is unfair, unethical, oppressive, unscrupulous and/or

substantially injurious to consumers. Plaintiffs’ actions as alleged herein are an unlawful

interference with the business of a competitor.

145. Plaintiffs’ acts, practices and policies as alleged herein are unfair methods of

competition and/or unfair competition.

146. By reason of and as a direct and proximate result of Plaintiffs’ unfair methods of

competition and unfair competition, Defendants have been injured.

PRAYER FOR RELIEF

WHEREFORE, Defendants demand judgment in their favor and against Plaintiffs and

request that this Court:

(a) Dismiss the Complaint with prejudice and deny each request for relief

made by Plaintiffs;

(b) Adjudge the claims of Mallinckrodt’s patents not infringed;

(c) Adjudge the claims of Mallinckrodt’s patents invalid;

(d) Declare that this case is exceptional under 35 U.S.C. § 285;

(e) Award the Defendants their attorneys’ fees pursuant to 35 U.S.C. § 285,

other statutes or rules, or the general power of the Court;

(f) Preliminarily and permanently enjoin Plaintiffs, their officers, agents,

servants, employees, attorneys, and any person who acts in concert or participation with

Plaintiffs, from utilizing Mallinckrodt’s patents to block, hamper, hinder or obstruct FDA

approval of Mutual’s Temazepam Capsules;

31


(g) Permanently enjoin Plaintiffs, their officers, agents, servants, employees,

attorneys, and any person who acts in concert or participation with Plaintiffs, from

asserting or otherwise seeking to enforce Mallinckrodt’s patents against Defendants or

anyone in privity with Defendants;

(h) Permanently enjoin Plaintiffs, their officers, agents, servants, employees,


engaging in any of the unfair and anticompetitive acts, practices and policies complained

of;

(i) Permanently enjoin Plaintiffs, their officers, agents, servants, employees,


engaging in any conduct that has the purpose or effect of forestalling, frustrating or

preventing Defendants’ manufacture or sale of any products containing temazepam;

(j) Order Plaintiffs to request the FDA to terminate the 30-month statutory

stay provided by 21 U.S.C. § 355(j)(5)(B)(iii);

(k) Award Defendants the damages sustained by it as a proximate result of

Plaintiffs’ unfair and anticompetitive acts, practices and policies;

(l) Award Defendants treble damages due to Plaintiffs’ violations of the

Sherman Act;

(m) Award Defendants punitive damages;

(n) Award Defendants their costs, reasonable attorneys’ fees and expenses;

and

(o) Award Defendants such other and further relief as the Court deems just

and proper.

32


JURY DEMAND

Defendants demand a trial by jury of all issues in this action, both on the

Complaint and the counterclaims.

Dated: November 13, 2007 STERNS & WEINROTH, P.C.

By: /s/ Karen A. Confoy ___ Karen A. Confoy

[email protected] 50 West State Street P.O. Box 1298 Trenton, New Jersey 08607-1298 (609) 392-2100 James D. Veltrop AXINN, VELTROP & HARKRIDER LLP 90 State House Square Hartford, CT 06103 (860) 275-8100 James P. Doyle Jennifer Chung AXINN, VELTROP & HARKRIDER LLP 1370 Avenue of the Americas New York, NY 10019 (212) 728-2200 Attorneys for Defendants

33


sterns & weinroth, p.c. 50 west state street p.o. box · pdf file11/13/2007 ·...

Documents