Novartis Pharma AG v. Incyte Corp.

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NOVARTIS PHARMA AG, Plaintiff, v. INCYTE CORPORATION, Defendant.

No. 1:20-cv-400-GHW

United States District Court, S.D. New York

July 29, 2024

MEMORANDUM OPINION & ORDER

GREGORY H. WOODS UNITED STATES DISTRICT JUDGE

The Court refers the reader to the ruling on the motions for summary judgment, filed contemporaneously with this opinion for a comprehensive overview of the background of this case. In short, Plaintiff Novartis Pharma AG (“Novartis”) and Defendant Incyte Corporation (“Incyte”) partnered to commercialize a valuable drug compound. Under the parties' Agreement, Incyte sells this drug in the United States as “Jakafi,” and Novartis sells it elsewhere as “Jakavi.”^[1] The parties agreed to pay one another royalties based on sales of the drug in their respective domains. A dispute arose when Incyte halved its royalty payments to Novartis on U.S. sales of Jakafi in 2019, based on Incyte's interpretation of Section 8.3(c) of the parties' Agreement. Novartis argues that invocation of Section 8.3(c)'s Stepdown Provision in 2019 was improper Incyte argues that it was not.

The parties have each proffered two experts to assist in understanding the parties' intent in entering into the agreement, and specifically Section 8.3(c), the agreement's royalty duration provision. This opinion addresses the motions to exclude the proposed opinions testimony, and reports of the parties' four designated expert witnesses: Novartis's Dr. Linda Pullan and Larry Tedesco, and Incyte's Peter Lankau and Dr. Mohan Rao. For the reasons that follow, each of the four motions to exclude is granted in part and denied in part.

I. PROCEDURAL HISTORY

Novartis filed its complaint on January 15, 2020, asserting that Incyte had breached the parties' contract, and seeking a declaratory judgment requiring repayment of the royalties that Novartis believes have been overdue from the 2019 calendar year “moving forward until either of the two contingencies for Step Down invocation have been satisfied.” Dkt. No. 1 (“Compl.”) ¶ 7. The contractual provision at issue-setting the duration of the parties' royalty payments-is Section 8.3(c) of the parties' November 24, 2009 Collaboration and License Agreement. See Ex. 1 (the “Agreement”).^[2]

On April 20, 2020, Incyte moved to dismiss Novartis's complaint. See Dkt. No. 32. On February 18, 2021, the Court ruled on the motion to dismiss. Dkt. Nos. 50, 52 (the “MTD Ruling”).^[3] In the MTD Ruling, the Court concluded that (1) “Incyte's ‘Regulatory Exclusivity' over Jakafi has expired,” id. at 14; and (2) “the ‘relevant' ‘Licensed Patent Rights' are not unambiguously limited to Novartis Patent Rights,” id. at 19. Thus, “[b]ecause clause (i) of Section 8.3(c) of the Agreement suggests more than one meaning,” the Court concluded that “that provision of the Agreement is ambiguous, and Incyte's motion to dismiss must be denied.” Id. at 24.

On October 21, 2022, the parties filed cross-motions for summary judgment, Dkt. Nos. 175, 176, and moved to exclude the proposed expert testimony of four designated experts: Novartis's Dr. Pullan and Mr. Tedesco, and Incyte's Mr. Lankau and Dr. Rao, Dkt. Nos. 157, 160, 167, 170.

Each motion is fully briefed.^[4]

II. LEGAL STANDARD

A. Admissibility of Expert Testimony

Federal Rule of Evidence 702, which governs the admissibility of expert testimony, provides the following:

A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if: (a) the expert's scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue; (b) the testimony is based on sufficient facts or data; (c) the testimony is the product of reliable principles and methods; and (d) the expert has reliably applied the principles and methods to the facts of the case.

Fed. R. Evid. 702.

In Daubert v. Merrell Dow Pharm's, Inc., 509 U.S. 579 (1993), the Supreme Court explained that Rule 702 requires district courts to act as gatekeepers-ensuring that expert testimony “both rests on a reliable foundation and is relevant to the task at hand.” Id. at 597. As such, the Court must make “a preliminary assessment of whether the reasoning or methodology underlying the testimony is scientifically valid and of whether that reasoning or methodology properly can be applied to the facts in issue.” Id. at 592-93. In short, the Court must “make certain that an expert, whether basing testimony upon professional studies or personal experience, employs in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field.” Kumho Tire Co. v. Carmichael, 526 U.S. 137, 152 (1999).

1. Qualification as Expert

“Rule 702 requires a trial court to make an initial determination as to whether the proposed witness qualifies as an expert.” Baker v. Urban Outfitters, Inc., 254 F.Supp.2d 346, 352-53 (S.D.N.Y. 2003). “Courts within the Second Circuit ‘have liberally construed expert qualification requirements' when determining if a witness can be considered an expert.” Cary Oil Co. v. MG Refin. & Mktg., Inc., 2003 WL 1878246, at *1 (S.D.N.Y. Apr. 11, 2003) (quoting TC Sys. Inc. v. Town of Colonie, 213 F.Supp.2d 171, 174 (N.D.N.Y. 2002)); accord Plew v. Ltd. Brands, Inc., 2012 WL 379933, at *4 (S.D.N.Y. Feb. 6, 2012). “To determine whether a witness qualifies as an expert, the court must first ascertain whether the proffered expert has the educational background or training in a relevant field.” Crown Cork & Seal Co., Inc. Master Ret. Tr. v. Credit Suisse First Boston Corp., 2013 WL 978980, at *2 (S.D.N.Y. Mar. 12, 2013) (citation and internal quotation marks omitted). “Any one of the qualities listed in Rule 702-knowledge, skill, experience, training, or education-may be sufficient to qualify a witness as an expert.” Id. (citing Tiffany (N.J.) Inc. v. eBay, Inc., 576 F.Supp.2d 457, 458 (S.D.N.Y. 2007)).

Even if a proposed expert lacks formal training in a given area, she may still have “practical experience” or “specialized knowledge” qualifying her to give opinion testimony under Rule 702. See McCullock v. H.B. Fuller Co., 61 F.3d 1038, 1043 (2d Cir. 1995) (quoting Fed.R.Evid. 702) (internal quotation marks omitted). But “[i]f the witness is relying solely or primarily on experience, then [she] must explain how that experience leads to the conclusion reached, why that experience is a sufficient basis for the opinion, and how that experience is reliably applied to the facts.” Pension Comm. of Univ. of Montreal Pension Plan v. Banc of Am. Sec., LLC, 691 F.Supp.2d 448, 473 n.148 (S.D.N.Y. 2010) (quoting Fed.R.Evid. 702 Advisory Committee's Note). Where a witness's “expertise is too general or too deficient,” the Court “may properly conclude that [she is] insufficiently qualified.” Stagl v. Delta Air Lines, Inc., 117 F.3d 76, 81 (2d Cir. 1997).

A court must then “compare the area in which the witness has superior knowledge, education, experience, or skill with the subject matter of the proffered testimony.” United States v. Tin Yat Chin, 371 F.3d 31, 40 (2d Cir. 2004) (citing United States v. Diallo, 40 F.3d 32, 34 (2d Cir. 1994)). “The expert's testimony must be related to those issues or subjects within his or her area of expertise.” Crown Cork, 2013 WL 978980, at *2 (citing Malletier v. Dooney & Bourke, Inc., 525 F.Supp.2d 558, 642 (S.D.N.Y. 2007)). “If the expert has educational and experiential qualifications in a general field closely related to the subject matter in question, the court will not exclude the testimony solely on the ground that the witness lacks expertise in the specialized areas that are directly pertinent.” In re Zyprexa Prods. Liab. Litig., 489 F.Supp.2d 230, 282 (E.D.N.Y. 2007) (citing Stagl, 117 F.3d at 80). “Thus, an expert ‘should not be required to satisfy an overly narrow test of his own qualifications,' and the court's focus should be on ‘whether the expert's knowledge of the subject is such that his opinion will likely assist the trier of fact in arriving at the truth.'” Crown Cork, 2013 WL 978980, at *2 (quoting Johnson & Johnson Vision Care, Inc. v. CIBA Vision Corp., 2006 WL 2128785, at *5 (S.D.N.Y. July 28, 2006)). “Assertions that the witness lacks particular educational or other experiential background, ‘go to the weight, not the admissibility, of [the] testimony.'” Zyprexa Prods., 489 F.Supp.2d at 282 (quoting McCullock, 61 F.3d at 1044).

2. Expert Testimony Must Assist the Trier of Fact

To be admissible, a district court must conclude that proposed testimony will assist the trier of fact. In re Rezulin Prods. Liab. Litig., 309 F.Supp.2d 531, 540 (S.D.N.Y. 2004). “Testimony is properly characterized as ‘expert' only if it concerns matters that the average juror is not capable of understanding on his or her own.” United States v. Mejia, 545 F.3d 179, 194 (2d Cir. 2008); see also United States v. Amuso, 21 F.3d 1251, 1263 (2d Cir. 1994) (“A district court may commit manifest error by admitting expert testimony where the evidence impermissibly mirrors the testimony offered by fact witnesses, or the subject matter of the expert's testimony is not beyond the ken of the average juror.”).

“Weighing whether the expert testimony assists the trier of fact goes primarily to relevance.” Faulkner v. Arista Recs LLC, 46 F.Supp.3d 365, 375 (S.D.N.Y. 2014) (citing Daubert, 509 U.S. at 591). Relevance can be expressed as a question of “fit”-“whether expert testimony proffered in the case is sufficiently tied to the facts of the case that it will aid the jury in resolving a factual dispute.” Daubert, 509 U.S. at 591 (quoting United States v. Downing, 753 F.2d 1224, 1242 (3d Cir. 1985) (internal...