Sanofi–aventis v. Apotex Inc.

659 F.3d 1171

100 U.S.P.Q.2d 1756

SANOFI–AVENTIS, Sanofi–Synthelabo, Inc., and Bristol–Myers Squibb Sanofi Pharmaceuticals Holding Partnership, Plaintiffs–Appellees,

v.APOTEX INC. and Apotex Corp., Defendants–Appellants.

No. 2011–1048.

United States Court of Appeals, Federal Circuit.

Oct. 18, 2011.Rehearing and Rehearing En Banc Denied Jan. 13, 2012.

Evan R. Chesler, Cravath, Swaine & Moore, LLP, of New York, NY, argued for plaintiffs-appellees. With him on the brief were Richard J. Stark and David Greenwald. Of counsel on the brief were Robert L. Baechtold, John D. Murnane and William E. Solander, of Fitzpatrick, Cella, Harper & Scinto, of New York, NY.Robert B. Breisblatt, Katten Muchin & Rosenman, LLP, of Chicago, IL, argued for defendants-appellants. With him on the brief was Eric C. Cohen. Of counsel was Stephen P. Benson.Before NEWMAN, SCHALL, and MOORE, Circuit Judges.Opinion for the court filed by Circuit Judge MOORE. Circuit Judge NEWMAN dissents-in-part.

MOORE, Circuit Judge.

Apotex Inc. and Apotex Corp. (collectively, Apotex) appeal the United States District Court for the Southern District of New York's award of prejudgment interest to Sanofi–Aventis, Sanofi–Synthelabo, Inc., and Bristol–Myers Squibb Sanofi Pharmaceuticals Holding Partnership (collectively, Sanofi) and its holding that Apotex Inc. is jointly and severally liable for damages. Sanofi–Aventis v. Apotex Inc., 748 F.Supp.2d 293 (S.D.N.Y.2010). Apotex also appeals the district court's denial of its motion for leave to file a supplemental answer, affirmative defenses, and counterclaims pleading patent misuse and breach of contract. J.A. 2.1–2.22. Because the district court erred by awarding prejudgment interest in addition to Sanofi's “actual damages” specified in the parties' settlement agreement, we reverse-in-part. We affirm the district court's holding that Apotex Inc. is jointly and severally liable for all damages and its denial of Apotex's motion for leave to file a supplemental answer, affirmative defenses, and counterclaims.

Background

This is the third appeal we have heard in this nearly decade old Hatch–Waxman dispute regarding clopidogrel bisulfate tablets, sold by Sanofi under the brand name Plavix®. In the first appeal, we affirmed the district court's grant of a preliminary injunction. Sanofi–Synthelabo v. Apotex, Inc., 470 F.3d 1368 (Fed.Cir.2006) ( Plavix I ). In the second appeal, we affirmed the district court's judgment that the patent-in-suit is not invalid, infringed, and not unenforceable. Sanofi–Synthelabo v. Apotex, Inc., 550 F.3d 1075 (Fed.Cir.2008) ( Plavix II ). The facts most relevant to this appeal are set forth as follows.

On November 21, 2001, Apotex Inc., through its U.S. agent, Apotex Corp., filed an Abbreviated New Drug Application (ANDA) with the United States Food and Drug Administration (FDA) seeking approval for the sale of generic clopidogrel bisulfate tablets prior to the expiration of U.S. Patent No. 4,847,265 (the '265 patent). Plavix I, 470 F.3d at 1372–73. The submission included a paragraph IV certification pursuant to 21 U.S.C. § 355(j)(2)(A)(vii)(IV) asserting that the '265 patent is invalid. Id. at 1373. In response to the submission, Sanofi filed suit on March 21, 2002, alleging that the filing of the ANDA constituted an act of infringement under 35 U.S.C. § 271(e)(2). Id. Although Apotex admitted that its proposed generic product would infringe claim 3 of the '265 patent, Apotex counterclaimed seeking a declaration that the '265 patent is invalid and unenforceable. Id. Sanofi's filing of the suit within forty-five days of receiving notice of Apotex's paragraph IV certification triggered a thirty-month stay of FDA approval for the ANDA pursuant to 21 U.S.C. § 355(j)(5)(B)(iii). Id.

The stay expired on May 17, 2005, and on January 20, 2006, the FDA gave Apotex final approval to sell its generic product. Id. Prior to the FDA's approval, the parties initiated settlement negotiations that culminated in a tentative agreement on March 17, 2006 (the March 2006 agreement). Id. In the March 2006 agreement, Sanofi granted Apotex a future license under the ' 265 patent, which would allow Apotex to begin sale of its generic product several months before the patent expired. J.A. 683. Sanofi also expressly agreed, inter alia, that during the pendency of the license it would not launch an authorized generic. Id.

An authorized generic is a generic drug sold by the company who markets the brand name drug (or a third party licensee). See Mylan Pharm., Inc. v. U.S. Food & Drug Admin., 454 F.3d 270, 273 (4th Cir.2006). Authorized generics, like other generics, are sold at a reduced price compared to the brand name drug. Under the provisions of the Hatch–Waxman Act in effect at the time Apotex filed its ANDA, Apotex was entitled to a 180–day period of exclusivity during which the FDA would not approve other generic clopidogrel bisulfate products once Apotex received approval from the FDA. 21 U.S.C. § 355(j)(5)(B)(iv). However, the branded company may still market an authorized generic during this 180–day exclusivity period. Mylan Pharm., Inc., 454 F.3d at 273. The sale of an authorized generic benefits patients (through lower prices) and the branded company, but harms the first-to-file generic by introducing generic competition. Id.

Although Bristol–Myers Squibb Company (BMS) is not a party to this litigation, it is an owner of plaintiff Bristol–Myers Squibb Sanofi Pharmaceuticals Holding Partnership. As a result of orders entered in a previous litigation involving BMS, the March 2006 agreement was subject to approval by the Federal Trade Commission (FTC) and a consortium of state attorneys general. The FTC objected to multiple provisions of the March 2006 agreement, including the provision preventing Sanofi from launching an authorized generic during the period of Apotex's license. In view of these objections, Sanofi withdrew the agreement from administrative review and the parties reinstituted settlement negotiations.

On May 26, 2006, the parties executed a second settlement agreement—the terms of which are partially at issue in this appeal (the May 2006 agreement). Unlike the March 2006 agreement, Sanofi did not expressly agree in the May 2006 agreement not to launch an authorized generic during the pendency of Apotex's license. The BMS executive negotiating the settlement on behalf of Sanofi, however, orally promised Apotex that Sanofi would not launch an authorized generic during this time period. On May 30, 2006, BMS presented the May 2006 agreement to the FTC for approval, but failed to disclose the existence of the oral agreement regarding an authorized generic. On June 5, 2006, Apotex disclosed the oral agreement to the FTC. In light of Apotex's disclosure, the FTC requested a written certification from BMS to confirm that BMS had made no oral promise not to launch an authorized generic during the pendency of Apotex's license. The BMS executive submitted the certification as requested without disclosing the oral promise. On July 28, 2006, the state attorneys general informed the parties that they would not approve the May 2006 agreement, but promised to reconsider pending an investigation into the existence of the oral agreement between the parties.

On July 31, 2006, Apotex declared a regulatory denial pursuant to its rights under the May 2006 agreement, which provided that “[i]f Regulatory Review has not been completed by July 31, 2006, either party has the right to declare that there has been a Regulatory Denial [and] ... the litigations will be resumed....” J.A. 693. On August 8, 2006, Apotex launched its generic clopidogrel bisulfate product. Sanofi moved for a preliminary injunction, which the district court granted on August 31, 2006, Sanofi–Synthelabo v. Apotex Inc., 488 F.Supp.2d 317 (S.D.N.Y.2006), and which we affirmed in Plavix I.¹ In the few weeks that Apotex marketed its generic product it had $884,418,724 in net sales.

The district court held a bench trial regarding liability between January 22 and February 15, 2007 and on June 19, 2007 issued an opinion holding that the '265 patent was both not invalid and not unenforceable. Sanofi–Synthelabo v. Apotex Inc., 492 F.Supp.2d 353 (S.D.N.Y.2007). Infringement was not an issue at the trial: Apotex previously admitted that it infringed under § 271(e)(2) because its generic product would infringe claim 3 of the ' 265 patent. Additionally, Sanofi never amended its pleadings to specifically allege infringement under § 271(a)–(b) after Apotex began selling its generic product. The district court bifurcated the issue of damages, which was scheduled for future proceedings pursuant to § 271(e)(4)(C). Id. at 397. On December 12, 2008, we affirmed the district court's decision in Plavix II.

During the pendency of the liability trial and appeal, the government pursued charges against BMS in relation to its failure to disclose the oral agreement and its later false certification to the FTC. On May 30, 2007, after the liability trial had ended, but before the district court entered its decision, BMS pleaded guilty to making false statements to the FTC in violation of 18 U.S.C. § 1001. J.A. 1826–41. On March 26, 2009, the FTC brought a civil action against BMS, resulting in a consent judgment wherein BMS admitted it was in violation of its obligations to truthfully disclose all provisions of the May 2006 agreement. BMS agreed to pay a civil penalty of $2,100,000.

On May 22, 2009, during the damages stage of the litigation, Apotex sought leave to file a supplemental answer, affirmative defenses, and counterclaims. In the supplemental answer, Apotex alleged that the '265 patent was unenforceable for patent misuse due to BMS's failure to disclose the oral agreement to the FTC and its later false certification to the FTC. Apotex also added a counterclaim for breach of contract, alleging that BMS breached its duty to use reasonable...