Indivior Inc. v. Dr. Reddy's Labs. S.A.

INDIVIOR INC., INDIVIOR UK LIMITED, and AQUESTIVE THERAPEUTICS, INC., Plaintiffs, v. DR. REDDY'S LABORATORIES S.A., AND DR. REDDY'S LABORATORIES, INC., Defendants.

INDIVIOR INC., INDIVIOR UK LIMITED, and AQUESTIVE THERAPEUTICS, INC., Plaintiffs, v. ALVOGEN PINE BROOK, INC., AND ALVOGEN PINE BROOK LLC, Defendants.

Civ. No. 17-7111 (KM) (CLW)

Civ. No. 18-1775 (KM) (CLW)

Civ. No. 18-5288 (KM) (CLW)

Civ. No. 17-7106 (KM) (CLW)

Civ. No. 18-8285 (KM) (CLW)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY

August 24, 2020

OPINION

KEVIN MCNULTY, U.S.D.J.:

These consolidated patent infringement cases are brought by Indivior Inc., Indivior UK Limited (collectively, "Indivior"), and Aquestive Therapeutics, Inc. ("Aquestive"), against Dr. Reddy's Laboratories S.A. and Dr. Reddy's Laboratories, Inc. (collectively, unless otherwise specified, "DRL") and Alvogen Pine Brook, Inc. and Alvogen Pine Brook LLC (collectively, unless otherwise specified, "Alvogen").

The patents-in-suit are Patent Nos. 9,931,305 ("the '305 Patent"), issued to Aquestive on April 3, 2018, and 9,687,454 ("the '454 Patent"), issued to Indivior on June 27, 2017. Indivior's Suboxone film is also covered by Patent No. 8,603,514 ("the '514 Patent"). The '514 Patent shares the same specification with the '305 Patent. As a result, the '305 Patent was filed with a terminal disclaimer to synchronize its expiration with that of the '514 Patent. Likewise, the '454 Patent shares the same specifications with another patent, U.S. Patent No. 8,475,832 ("the '832 Patent"). This '514 Patent and the '832 Patent are not directly at issue here, but were at issue in a related litigation involving similar parties filed in the United States District Court for the District of Delaware ("the Delaware Litigation").

Collectively, these patents describe formulations of Suboxone film¹, a "rapidly dissolving film that adheres to the underside of a patient's tongue" or cheek. Indivior's Suboxone film is used to treat opioid dependency; it works to decrease a patient's need for opioids while also deterring abuse. Defendants are manufacturers and developers of generic competitors to Suboxone film.

This matter has been extensively litigated for a number of years. Currently before the Court are several motions: (1) Plaintiffs' appeal of Magistrate Judge Waldor's Opinion and Order granting Defendants' motion to amend their answer to add counterclaims; (2) Aquestive's motion to dismiss Alvogen's and DRL's counterclaims; and (3) Defendants' motion for a Rule 54(b) entry of a partial final judgment of noninfringement.²

For the reasons outlined herein, I will:

1. Deny Plaintiffs' appeal of Judge Waldor's Opinion and Order;

2. Deny Aquestive's motion to dismiss; and3. Deny Defendants' motion for a Rule 54(b) entry of partial final judgment.

I. Relevant Procedural History³

I write for the parties and assume they are familiar with the key facts of this matter. Nevertheless, I will first briefly review the relevant procedural history surrounding the litigation of the at-issue patents, both in this district and elsewhere.

In 2014, Indivior's predecessor, Reckitt Benckiser, brought suit in the District of Delaware against a number of parties alleging infringement of several patents, including the '832 Patent and the '514 Patent. After two bench trials, the Delaware district court held that Indivior had failed to meet its burden of showing that DRL's and Alvogen's generic versions infringed the claims of the '514 Patent for Suboxone film and found the '832 patent invalid for obviousness and indefiniteness. Reckitt Benckiser Pharm. Inc. v. Watson Labs., Inc., No. CV 13-1674-RGA, 2016 WL 3186659, at *27 (D. Del. June 3, 2016); Reckitt Benckiser Pharm. Inc. v. Dr. Reddy's Labs. S.A., Nos. 14-1451, 14-1573, 14-1574, 2017 WL 3837312 (D. Del. Aug. 31, 2017); Reckitt Benckiser Pharm. Inc. v. Dr. Reddy's Labs. S.A., No. CV 14-1451-RGA, 2017 WL 3782782(D. Del. Aug. 31, 2017); Indivior Inc. v. Mylan Techs. Inc., 298 F. Supp. 3d 775 (D. Del. 2018). Indivior then appealed to the Federal Circuit.

While the Delaware Litigation was proceeding, in 2016, dozens of states filed antitrust lawsuits against Indivior concerning its Suboxone products.

Plaintiffs responded to the Delaware rulings by applying for two additional patents. First, the '454 Patent issued to Indivior on June 27, 2017. Second, the '305 Patent⁴ issued to Aquestive on April 3, 2018. Following the issuance of these patents, on September 14, 2017, Plaintiffs filed the 7106 and 7111 Actions, alleging infringement of the '454 Patent.⁵ On April 3, 2018, Plaintiffs then filed suit against DRL and Alvogen claiming infringement of the new '305 Patent. (See 2:18-cv-5288 at DE 1; 2:18-cv-5285 at DE 1). Ultimately all of these actions were consolidated.

Upon learning of DRL's plans to launch the ANDA product "at risk," in June 2018 Indivior moved to enjoin DRL from bringing its generic Suboxone film to market. (7111 Action at DE 70, 71)

On July 13, 2018, I granted the motion for a preliminary injunction, believing that Indivior had successfully "claimed around" the problem that produced the Delaware rulings. (Id. at DE 121). DRL then appealed to the Federal Circuit, which disagreed. On November 20, 2018, the Federal Circuit, over a dissent, reversed and remanded, finding that Indivior was unlikely to succeed on the merits of its infringement claim. Indivior Inc. v. Dr. Reddy's Labs., S.A., 752 F. App'x 1024 (Fed. Cir. 2018) ("Indivior I").

Meanwhile, on January 22, 2019, Indivior moved in this Court for temporary restraints and a preliminary injunction to prevent Alvogen from launching its generic product prior to the Federal Circuit's issuance of its mandate in Indivior I. (7106 Action at DE 83). I granted a temporary restrainingorder ("TRO") enjoining Alvogen from launching in order to preserve the status quo pending the issuance of the mandate. (Id. at DE 88)

On February 4, 2019, the Federal Circuit denied rehearing in Indivior I. On February 19, 2019, the Federal Circuit issued its mandate vacating the DRL preliminary injunction. The same day, I vacated the injunctive restraints. (Id. at DE 119). DRL and Alvogen then proceeded to bring to market their generic versions of Suboxone films.

On April 9, 2019, the Department of Justice announced that Indivior had been indicted for "engaging in an illicit nationwide scheme to increase prescriptions of Suboxone Film, an opioid drug used in the treatment of opioid addiction." U.S. v. Indivior Inc. et al, No. 19-cr-16 (W.D. Va. Apr. 9, 20190).

On July 11, 2019, the U.S. Federal Trade Commission ("FTC") filed a complaint against Indivior alleging anticompetitive conduct. F.T.C. v. Reckitt Benckiser Group PLC et al, No. 19-28 (W.D. Va. July 11, 2019).

On July 12, 2019, the Federal Circuit, issued its opinion on the appeals taken in the Delaware Litigation. In this opinion, here deemed Indivior II, the Federal Circuit largely upheld the Delaware district court's findings. Indivior Inc. v. Dr. Reddy's Labs., S.A., 930 F.3d 1325, 1339 (Fed. Cir. 2019) ("Indivior II"). In analyzing the '514 Patent in Indivior II, the Federal Circuit made clear that for these purposes, the claims of the '305 Patent are indistinct from those of the '514 Patent.

On November 5, 2019, I entered an Opinion construing key terms of the patents in suit here following a Markman hearing. (7106 Action at DE 215; 7111 Action at DE 294)

On November 19, 2019, Judge Waldor issued an Opinion and Order permitting Alvogen and DRL to file their first amended answer with affirmative defenses and counterclaims. (7106 Action at DE 217; 7111 Action at DE 296)

DRL's first amended answer asserts two counterclaims:

Count 1: Monopolization and Conspiracy to Monopolize in violation of Section 2 of the Sherman Act; and

Count 2: Recovery of Damages for wrongful injunction against sureties.

(7111 Action at DE 218)

Alvogen's answer asserts two counterclaims:

Count 1: Monopolization and Conspiracy to Monopolize in violation of Section 2 of the Sherman Act; and

Count 2: Monopolization and Conspiracy to Monopolize in violation of the New Jersey Antitrust Act.

(7106 Action at DE 297)

On December 4, 2019, Plaintiffs filed an appeal of Judge Waldor's Opinion and Order to this Court. Defendants oppose the appeal. (7106 Action at DE 220, DE 229; 7111 Action at DE 300, DE 311)

On January 9, 2020, I so-ordered the parties' stipulation of non-infringement as to the '305 Patent. (7106 Action at DE 240; 7111 Action at DE 323) The stipulation was entered subject to the parties' reservation of rights on appeal.

On January 17, 2020, Aquestive then moved to dismiss Defendants' counterclaims. (7106 Action at DE 250; 7111 Action at DE 330) Indivior did not join in this motion and instead filed an answer to the counterclaims. (7106 Action at DE 251; 7111 Action at DE 331)

On January 21, 2020, DRL moved for entry of partial judgment under Rule 54(b) in the 7111 Action. (DE 334) Three days later, on January 24, 2020, Alvogen filed a similar motion. (DE 261)

II. Appeal of Ruling on Motion to Amend and Motion to Dismiss

Because of the largely overlapping issues presented by Plaintiffs' appeal and by Aquestive's motion to dismiss, I will address these motions together in Section II of this Opinion. I will separately address Defendants' motion for partial judgment under Rule 54(b) in Section III.

A. Applicable Standards

i. Standard of Review of a Magistrate Judge's Decision

If a party objects to a magistrate judge's order regarding a nondispositive matter, the district court "must consider timely objections and modify or set aside any part of the order that is clearly erroneous or is contrary to law." Id.; 28 U.S.C. §636(b)(1)(A). This standard requires the District Court to review findings of fact for clear error and to review matters of law de novo. Haines v. Liggett Grp. Inc., 975 F.2d 81, 91 (3d Cir. 1992).

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