Endo Pharms., Inc. v. Impax Labs., Inc., Civil Action No.: 16-2526 (JLL)

ENDO PHARMACEUTICALS, INC., Plaintiff, v. IMPAX LABORATORIES, INC., Defendant.

Civil Action No.: 16-2526 (JLL)

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY

October 25, 2016

NOT FOR PUBLICATION

OPINION

LINARES, District Judge.

This matter comes before the Court by way of Defendant Impax Laboratories, Inc.'s Motion to Dismiss the Amended Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure (ECF No. 22). Plaintiff Endo Pharmaceuticals, Inc. has submitted an opposition (ECF No. 25), to which Defendant has replied to (ECF No. 26). The Court decides this matter without oral argument pursuant to Rule 78 of the Federal Rules of Civil Procedure. For the reasons set forth below, the Court grants in part and denies in part Defendant's Motion to Dismiss Plaintiff's Amended Complaint.

I. BACKGROUND¹

A. The Parties

Plaintiff is a Delaware corporation that researches, develops, manufactures, and sells prescription pharmaceuticals which are used to treat various ailments, including pain. (See ECFNo. 13 at ¶ 2 ("Compl.")). Defendant is a Delaware corporation who is in the business of researching, developing, manufacturing, and selling generic and brand-name prescription pharmaceuticals. Compl. at ¶ 3. In 2006, Plaintiff received U.S. Food and Drug Adminitration ("FDA") approval for its new extended-release pain reliever, OPANA® ER ("Original OPANA"), pursuant to patents issued in 1997 and 1999.² Compl. at ¶ 13. Shortly thereafter, Plaintiff began selling Original OPANA.

B. The Prior District of New Jersey Lawsuit

In June of 2007, Defendant submitted an Abbreviated New Drug Application ("ANDA") seeking FDA approval to sell generic versions of Original OPANA ("Generic Impax Tablets"). Compl. at ¶ 20-21. Thus, in 2008 Plaintiff instituted an action in the District of Delaware, which was later transferred to the District of New Jersey, alleging the Generic Impax Tablets would infringe on Plaintiff's Original OPANA Patents which were set to expire on September 9, 2013. ("Prior DNJ Action"). Compl. at ¶¶ 22 and 25. The parties settled the aforesaid litigation in June of 2010. Compl. at ¶ 23.

C. The Settlement Agreement

As a part of their settlement, the parties entered into a settlement and license agreement ("Agreement"). Compl. at ¶ 23; ECF No. 1-1. The Agreement permitted Defendant to sell its Generic Impax Tablets beginning on January 1, 2013 and required Defendant to pay a contingent royalty during a 180-day exclusivity period following the launch of the Generic Impax Tablets. Compl. at ¶ 26. However, at the time of settlement in June of 2010, Plaintiff had several patentapplications pending before the United States Patent and Trademark Office ("USPTO"), which covered Original OPANA and the Generic Impax tablets. These are the Patents in Suit herein and pertain to a tablet-hardening technology which was designed to prevent abuse by consumers. Compl. at ¶ 17. Plaintiff is the sole owner and assignee of the Patents in Suit. Compl. at ¶ 27. If granted, patent protection would be extended until at least the year 2023³. Plaintiff claims that it was considerably uncertain as to whether those patents would issue. Id.

During the course of negotiations to settle the Prior DNJ Action, Defendant repeatedly demanded that it be granted a license to future-issued patents relating to Original OPANA, including the Patents in Suit, if same were ever issued by the USPTO. Compl. at ¶ 28. Plaintiff initially refused to succumb to Defendant's request, as it had significant uncertainty regarding whether any of the pending patent applications would ever issue. Compl. at ¶ 30. Accordingly, the parties were at an impasse.

In order to facilitate consummation of the settlement, the parties entered into a compromise. Compl. at ¶ 32. Under the compromise, Plaintiff granted Defendant "a license to any patents issuing from the pending patent applications and other patents [Plaintiff] might acquire." Id.; see also Agreement § 4.1(a). Specifically, the Agreement granted defendant

a non-tranferable ..., non-sublicensable and royalty-free (except as set forth in Section 4.3) license ..., under the Opana® ER Patents, any continuations, continuations in part, or divisionals thereof, and any patents and patent applications owned by [Plaintiff] ... that cover or could potentially cover the manufacture, use, sale, offer for sale, importation, marketing or distributions of products (or any components thereof) that are the subject of [Defendant's AND A] (the issued patents being "Existing Patents" and the patentapplications (and any patents issued thereunder) being the "Pending Applications" and the Existing Patents and Pending Applications being collectively the "Licensed Patents"), during the License Term, to make, have made, offer to sell, sell, have sold, market, distribute, import and use the Impax Products solely in or for the Territory.

Compl. at ¶ 34; see also Agreement § 4.1(a).

Additionally, the Agreement by the parties in 2010 included a provision that each party agreed to negotiate in good faith to amend the terms of said Agreement if and when a patent or patents issued from the pending patent applications. Compl. at ¶ 35. Section 4.1(d) of the Agreement states that the parties "agree[] to negotiate in good faith an amendment to the terms of the License to any patents which issue from any Pending Applications for the time period following the Exclusivity Period." Agreement § 4.1(d).

D. The Prior Southern District of New York Action

In February 2012, Plaintiff began manufacturing, marketing and selling its newly formulated crush-resistant version of OPANA ("OPANA CRF"). Compl. at ¶ 19. As of May 2012, Plaintiff was only selling its OPANA CRF tablets, not Original OPANA. Id. Defendant, also desiring to sell a generic version of OPANA CRF, filed an ANDA with the FDA seeking approval for same ("Impax CRF Tablet"). Compl. at ¶ 45.

As a result, Plaintiff instituted an action against Defendant, among other generic drug companies, in the Southern District of New York claiming that each of Defendant's generic versions of Original OPANA and OPANA CRF would infringe on the '122 Patent and the '216 Patent ("SDNY Action"). Compl. at ¶ 46. The SDNY Action went to trial on August 14, 2015. The Honorable Thomas P. Griesa, U.S.D.J. upheld the validity of the '122 and '216 Patents, and held that Defendant's Impax CRF Tablets did in fact infringe on claims 2, 3, 19, and 20 of the '122Patent, and claims 1, 22, 50, 54, 57, 62, 64, and 71 of the '216 Patent. Compl. at ¶ 47-48. Therefore, Judge Griesa issued an injunction against Defendant prohibiting it from any future commercial manufacture or sale of its Impax CRF Tablet. Compl. at ¶ 47.

E. The Prior District of Delaware Action

As discussed, the '737 Patent was issued on August 19, 2014. Compl. at ¶ 42. Plaintiff further claims that Defendant "has had knowledge of the '737 [P]atent since no later than November 7, 2014," which is the date Plaintiff instituted a separate action in the District of Delaware ("Prior DE Action"). Compl. at ¶ 99. There, Plaintiff alleged that Defendant Generic Impax Tablet and the filing of the ANDA for its Impax CRF Tablet infringed upon its '737 Patent. Compl. at ¶ 101. However, on November 17, 2015, the Court issued an Opinion wherein it held "that the claims of the '737 [P]atent are invalid on the grounds that they are directed to unpatentable subject matter." Compl. ¶ 103. "No final judgment has been entered" in the Prior DE Action and Plaintiff plans on challenging the ruling. Id.

F. Pertinent Facts

As contemplated by the Agreement, Defendant began selling its generic version of Original OPANA in January of 2013. Compl. at ¶ 44. Also, as discussed, Defendant had also developed its hardened generic version, Impax CRF Tablet. Compl. at ¶ 45. Thus, on or about October 1, 2015, Plaintiff approached Defendant seeking to negotiate an amendment to Defendant's License as it pertained to the, Generic Impax Tablet, the Impax CRF Tablet and the Patents in Suit, pursuant to Section 4.1(d) of the Agreement. Compl. at ¶ 51. Plaintiff provided Defendant with a term sheet that contained "customary license terms" for the Patents in Suit, including a royalty for Defendant's allegedly infringing sales during the post-Exclusivity Period. Compl. at ¶¶ 51, 53.Defendant reportedly refused to respond to this term sheet and rejected Plaintiff's request for a meeting. Compl. at ¶ 54.

Defendant took the position that it was not under the obligation to pay any royalties for the Patents in Suit because these patents were encompassed by the Agreement which granted Defendant a royalty-free license to same. Compl. at ¶¶ 54, 56. Further, Defendant advised Plaintiff that they only way it would be willing to negotiate for a payment of a royalty would be if Plaintiff expanded the license. Id. On or about April 19, 2016, Plaintiff advised Defendant that its actions in refusing to negotiate and attempting to expand the license to encompass the Patents in Suit were inconsistent with Section 4.1(d) of the agreement. Compl. at ¶ 57. Defendant did not respond. Compl. at ¶ 58.

Accordingly, Plaintiff brought this action for breach of contract (Count I), breach of the covenant of good faith and fair dealing (Count II), infringement of the '122, '216, and '737 Patents (Counts III-V), and unjust enrichment (Count VI). Defendant now moves to dismiss Plaintiff's Amended Complaint arguing it fails to state a claim up which relief can be granted. (ECF No. 22-1 ("Def. Mov. Br.")).

II. LEGAL STANDARD

To withstand a motion to dismiss for failure to state a claim, "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable...