Perrigo Co v. AbbVie Inc ( 2022 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
______________
No. 21-3026
______________
PERRIGO CO; PERRIGO ISRAEL PHARMACEUTICALS, LTD, NKA Padagis Israel
Pharmaceuticals LTD; PERRIGO COMPANY OF SOUTH CAROLINA, INC, NKA
Padagis Israel Pharmaceuticals LTD,
Appellants
v.
ABBVIE INC; ABBOTT LABORATORIES; UNIMED PHARMACEUTICALS LLC;
BESINS HEALTHCARE INC
______________
On Appeal from the United States District Court
for the District of New Jersey
(No. 2:20-cv-17560)
U.S. District Judge: Honorable Brian R. Martinotti
______________
Submitted Under Third Circuit L.A.R. 34.1(a)
July 5, 2022
______________
Before: SHWARTZ, KRAUSE, and ROTH, Circuit Judges.
(Filed: July 21, 2022)
______________
OPINION ∗
______________
∗
This disposition is not an opinion of the full court and pursuant to I.O.P. 5.7 does
not constitute binding precedent.
SHWARTZ, Circuit Judge.
Plaintiffs Perrigo Co. and its corporate relatives sued Defendants Abbvie Inc.,
Abbott Laboratories, and others for violating the Sherman Act. Because the District
Court correctly held that the parties’ 2012 settlement agreement released Plaintiffs’
claim, we will affirm the order dismissing the complaint.
I
A
AndroGel is a brand-name topical gel used to treat hypogonadism.
Defendants Unimed and Besins hold U.S. Patent No. 6,503,894 (‘894 patent), which
claims a pharmaceutical composition that treats this condition. 1 Fed. Trade Comm’n v.
AbbVie, Inc., 976 F.3d 327, 341 (3d Cir. 2020). Defendants AbbVie and Abbott sell and
distribute two types of AndroGel covered by the ‘894 patent, including AndroGel 1%. In
2000, the Food and Drug Administration (“FDA”) approved AndroGel 1% and
Defendants launched the brand-name product.
B
Plaintiffs produce a generic version of AndroGel 1% (the “1% generic”). In 2011,
Plaintiffs filed a hybrid New Drug Application (“NDA”) seeking FDA approval to
produce the 1% generic. Pursuant to the Hatch-Waxman Act, 2 21 U.S.C.
1
The ‘894 patent expired in August 2020. AbbVie, 976 F.3d at 342.
2
A generic pharmaceutical manufacturer may apply for FDA approval using a
hybrid New Drug Application under § 505(b)(2) of the Food, Drug, and Cosmetics Act,
21 U.S.C. § 355(b)(2); 21 C.F.R. § 314.54(a). Under that section, the generic
manufacturer must submit a paragraph IV notice in which it certifies that “manufacture,
2
§ 355(b)(2)(A)(iv), Plaintiffs sent Defendants a “paragraph IV notice[],” which stated
that the 1% generic does not infringe the ‘894 patent, App. 51, and that “a lawsuit
asserting the ‘894 patent against [Plaintiffs] would be objectively baseless and a sham . . .
for the improper purpose of, inter alia, delaying [Plaintiffs’] NDA approval,” D. Ct. ECF
No. 70-7 at 55. Within 45 days of receiving the notice, Defendants sued Plaintiffs for
patent infringement. Abbott Prods., Inc. v. Perrigo Co., No. 3:11-cv-06357 (D.N.J. 2011)
(“the Litigation”). The Litigation triggered the Hatch-Waxman Act’s automatic 30-
month stay on the FDA’s ability to approve the 1% generic. 21 U.S.C.
§ 355(j)(5)(B)(iii).
Before Plaintiffs filed an answer, the parties settled. 3 Among other things, the
parties agreed to a mutual release, which states:
[T]he respective Parties and parents . . . hereby fully, finally and forever
release . . . the other Parties and each of their respective Affiliates . . . from
any and all claims, demands, damages, liabilities, obligations, and causes of
action accruing prior to the Effective Date (including without limitation,
costs, expenses, and attorneys’ fees, and those capable of being asserted in
any complaint, answer, affirmative defenses, counterclaims and amendments
thereto or any other filings that were or could have been filed in the
Litigation), arising out of, related to, or in connection with: (i) the Litigation,
. . . and/or (iv) for acts, transactions, activities, facts, matters or omissions
use, or sale” of the generic will not infringe patents relating to the brand-name drug. 21
U.S.C. § 355(b)(2)(A)(iv). Upon receipt of a paragraph IV notice, the patent holder has
45 days to decide whether to sue for patent infringement. 21 U.S.C. § 355(c)(3)(C). “If
the patentee sues within the time limit, the FDA cannot approve the company’s
application for a generic drug until . . . (1) a court holds that the patent is invalid or has
not been infringed; (2) the patent expires; or (3) 30 months elapse, as measured from the
date the patentee received the paragraph IV notice.” AbbVie, 976 F.3d at 340 (citing 21
U.S.C. § 355(j)(5)(B)(iii)).
3
The agreement granted Plaintiffs a license to begin marketing the 1% generic no
later than December 27, 2014—more than five years before the ‘894 patent would
expire—and $2 million for avoided litigation expenses.
3
that are or could have been the subject matter of the Litigation, whether
known or unknown, and in each case arising before the Effective Date[.]
App. 112. The “Effective Date” is March 27, 2012.
In 2013, the FDA approved Plaintiffs’ 1% generic and issued a favorable
therapeutic equivalence (TE) 4 rating for the product in 2014. Plaintiffs launched the 1%
generic on December 27, 2014. 5
C
In 2020, Plaintiffs sued Defendants for violating Section 2 of the Sherman Act, 15
U.S.C. § 2. Plaintiffs allege that the Litigation was a “sham” that “delayed [Plaintiffs’]
launch of its generic version of AndroGel 1%.” App. 41 ¶ 2. They further allege that
because of the sham lawsuit, Defendants “were able to maintain monopoly power” by
4
Certain TE ratings trigger state law requirements that pharmacists “dispense a
therapeutically equivalent, lower-cost generic drug in place of a brand drug.” AbbVie,
976 F.3d at 340 (quotation marks, citations, and alterations omitted).
5
Plaintiffs also sought FDA approval in 2013 to market the 1.62% generic, and
Defendants again sued for patent infringement. Unimed Pharms. LLC v. Perrigo Co.,
No. 1:13-cv-00236 (D. Del. Feb. 15, 2013). Plaintiffs asserted in a counterclaim that the
2013 litigation was a sham. As in 2012, the parties settled, and this second agreement
granted Plaintiffs a license to market the 1.62% generic beginning in October 2018 and
included a similar release of claims. Because Plaintiffs’ instant suit is based only on
allegations that the 2011 litigation about the 1% generic was a sham—and because the
2013 litigation concerned only the 1.62% generic—the 2013 litigation is irrelevant.
4
“delaying the entry of much less expensive competitive generic products.” App. 63 ¶ 79.
In their answer, Defendants asserted, in relevant part, an affirmative defense that
Plaintiffs’ claim is barred by the 2012 settlement agreement, which Defendants attached
as an exhibit.
Defendants moved for judgment on the pleadings, which the District Court granted
with prejudice. Perrigo Co. v. AbbVie Inc., No. 2:20-cv-17560, 2021 WL 4551397, at
*10-11 (D.N.J. Sept. 30, 2021). The Court found that the release barred Plaintiffs’ claim
because (1) the claim accrued before the Effective Date of the settlement agreement, id.;
(2) the absence of FDA approval on the 1% generic did not preclude Plaintiffs from
establishing an injury when the Litigation was filed, id. at *8; and (3) the speculative
damages exception to the general accrual rule did not apply because Plaintiffs faced only
uncertainty that related to “the scope of [their] damages, not whether [they] had, in fact,
suffered an injury,” id. at *9.
Plaintiffs appeal.
II 6
A
Under the Noerr-Pennington doctrine, “a party who petitions the government for
redress generally is immune from antitrust liability.” Cheminor Drugs, Ltd. v. Ethyl
6
The District Court had jurisdiction under 28 U.S.C. §§ 1331 and 1337. We have
jurisdiction under 28 U.S.C. § 1291. “We review an order granting or denying a motion
for judgment on the pleadings de novo. Judgment will not be granted unless the movant
clearly establishes there are no material issues of fact, and he is entitled to judgment as a
matter of law.” Bedoya v. Am. Eagle Express Inc., 914 F.3d 812, 816 n.2 (3d Cir. 2019)
5
Corp., 168 F.3d 119, 122 (3d Cir. 1999) (citations omitted). The doctrine does not apply,
however, where a lawsuit is a “mere sham to cover what is actually nothing more than an
attempt to interfere directly with the business relationships of a competitor.” E. R.R.
Presidents Conf. v. Noerr Motor Freight, Inc., 365 U.S. 127, 144 (1961).
To determine whether a lawsuit is a “sham,” courts apply a two-part test:
First, the lawsuit must be objectively baseless in the sense that no reasonable
litigant could realistically expect success on the merits. [Second, o]nly if
challenged litigation is objectively meritless may a court examine the
litigant’s subjective motivation. Under this second part . . . , the court should
focus on whether the baseless lawsuit conceals an attempt to interfere directly
with the business relationships of a competitor through the use of the
governmental process—as opposed to the outcome of that process—as an
anticompetitive weapon.
Prof’l Real Estate Invs., Inc. v. Columbia Pictures Indus., 508 U.S. 49, 60-61 (1993)
(citations omitted). A plaintiff asserting a substantive antitrust violation arising from a
sham litigation must also prove that “the challenged lawsuit is ‘causally linked’ to an
antitrust injury.” In re Wellbutrin XL Antitrust Litig. Indirect Purchaser Class, 868 F.3d
132, 149 (3d Cir. 2017) (quoting Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S.
477, 489 (1977)). An antitrust injury is an “injury of the type the antitrust laws were
intended to prevent.” W. Penn Allegheny Health Sys., Inc. v. UPMC, 627 F.3d 85, 101
(internal quotation marks and citations omitted). In ruling on a motion for judgment on
the pleadings, a court may examine the complaint, the answer, “any matter of which the
court can take judicial notice for the factual background of the case,” L-7 Designs, Inc. v.
Old Navy, LLC, 647 F.3d 419, 422 (2d Cir. 2011), and “written instrument[s] that [are]
exhibit[s] to a pleading,” Fed. R. Civ. P. 10(c), so long as those exhibits are “indisputably
authentic documents,” Spruill v. Gillis, 372 F.3d 218, 223 (3d Cir. 2004). Because
Defendants attached the 2012 settlement agreement to their answer, and Plaintiffs do not
dispute the authenticity of the agreement, we may consider the settlement agreement.
6
(3d Cir. 2010) (quoting Brunswick, 429 U.S. at 489); see also Atl. Richfield Co. v. USA
Petroleum Co., 495 U.S. 328, 334 (1990) (“[An] injury, although causally related to an
antitrust violation, nevertheless will not qualify as ‘antitrust injury’ unless it is
attributable to . . . an anti-competitive aspect of [the defendant’s] practice under
scrutiny.”).
Plaintiffs’ complaint sets forth allegations supporting a sham litigation claim that
“could have been the subject matter of” the Litigation. App. 112. First, Plaintiffs allege
that the Litigation was “objectively baseless.” App. 60 ¶ 69. This allegation mirrors
Plaintiffs’ September 2011 paragraph IV notice, anticipating Defendants’ lawsuit, which
stated, “a lawsuit asserting the ‘894 patent against [Plaintiffs] would be objectively
baseless and a sham.” D. Ct. ECF No. 70-7 at 55.
Second, Plaintiffs allege that the Litigation was brought for an improper purpose
and thus was “subjectively baseless.” See App. 61 ¶ 72. This allegation also tracks the
paragraph IV notice, which stated that any infringement suit would be “brought in bad
faith for the improper purpose of, inter alia, delaying [Plaintiffs’] NDA approval.” D. Ct.
ECF No. 70-7 at 55.
Third, Plaintiffs allege that, but for the Litigation, they could have marketed a
cheaper 1% generic sooner, and thus the lawsuit reduced competition for AndroGel. The
complaint does not allege that the antitrust injury only occurred or could only have been
7
discovered after March 27, 2012. 7 Instead, Plaintiffs explicitly rely on the “filing” of the
Litigation itself, which occurred on October 31, 2011, as blocking their market entry.
App. 63 ¶ 79.
Thus, the complaint itself and the documents integral to it show that the injury
underlying Plaintiffs’ sham litigation claim occurred when the Litigation was filed in
2011. 8 Because the settlement agreement bars “any and all claims . . . accruing prior to
[March 27, 2012], . . . arising out of, related to, or in connection with . . . the [Litigation]
. . . [or] acts . . . that are or could have been the subject matter of the Litigation . . . arising
7
Plaintiffs cite Wellbutrin for the proposition that to prove antitrust injury, a party
asserting a sham litigation claim in the generic pharmaceuticals context must prove they
“could have launched even in the absence of the 30-month stay,” 868 F.3d at 152, and
argue that they were unable to make such an allegation before March 27, 2012 because
they lacked FDA approval. Plaintiffs lacked FDA approval due, in part, to the litigation
which stayed FDA activity for thirty months. Furthermore, Wellbutrin is distinguishable
because there, the generic manufacturer “could [not] have launched” even without the
alleged sham lawsuit because of, among other things, a 180-day first-filer exclusivity
period. Id. at 152-53.
In addition, Plaintiffs argue that their complaint did not state facts showing actual
injury prior to the Effective Date of the 2012 Settlement Agreement, citing our holding in
Host International, Inc. v. MarketPlace, PHL, LLC, that a plaintiff must show “actual
injury attributable to something the antitrust laws were designed to prevent, not potential
injury.” 32 F.4th 242, 251-52 (3d Cir. 2022). Plaintiffs, however, pleaded “actual
injury” to competition from “filing sham litigation and delaying the entry of much less
expensive generic products,” App. 63 ¶ 79, and pleaded that filing occurred on October
31, 2011.
8
Some courts have held that sham litigation claims are compulsory counterclaims
under Fed. R. Civ. P. 13(a) in the patent infringement suit alleged to be a sham. See, e.g.,
Critical-Vac Filtration Corp. v. Minuteman Intern., Inc., 233 F.3d 697, 700-01 (2d Cir.
2000); U.S. Philips Corp. v. Sears Roebuck & Co., 55 F.3d 592, 595-97 (Fed. Cir. 1995).
8
before [March 27, 2012],” App. 112, and Plaintiffs’ sham litigation claim “accru[ed]”
prior to March 27, 2012, it was released. 9
B
Plaintiffs contend that their sham litigation claim could not have accrued before
the March 27, 2012 Effective Date because their damages at the time were speculative.
Plaintiffs’ argument fails for two reasons.
First, in antitrust cases, a cause of action generally “accrues and the statute [of
limitations] begins to run when a defendant commits an act that injures a plaintiff’s
business.” Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 338 (1971). In
the sham litigation context, the injury generally occurs when the lawsuit, which is alleged
to have been a sham, is filed. See, e.g., Al George, Inc. v. Envirotech Corp., 939 F.2d
1271, 1274 (5th Cir. 1991) (holding the filing of allegedly sham patent-infringement suit,
9
Plaintiffs argue that the District Court impermissibly required them to anticipate
Defendants’ release defense in their complaint, citing Wiggins v. Albert Einstein Medical
Center, No. 20-3129, 2022 WL 1197015, *2 (3d Cir. 2022) (per curiam). Wiggins is
nonbinding and inapt as it involved a motion to dismiss under Rule 12(b)(6), where
courts “generally consider only the allegations contained in the complaint, exhibits
attached to the complaint and matters of public record.” Pension Ben. Guar. Corp. v.
White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993). Here, in contrast, the
District Court ruled on a motion for judgment on the pleadings under Rule 12(c), which
permitted review of Defendants’ answer and the 2012 Settlement Agreement attached
thereto. See supra n.6.
9
not actions in prosecuting the litigation, was the “last overt act” for statute of limitations
purposes). 10
Here, Plaintiffs were excluded from the AndroGel market as soon as Defendants
filed the Litigation. Under the Hatch-Waxman Act, an infringement suit brought within
45 days of receipt of a paragraph IV notice prevents the FDA from granting approval on a
generic pharmaceutical until 30 months elapse or the lawsuit resolves. See 21 U.S.C.
§ 355(j)(5)(B)(iii). Because Defendants filed the Litigation within 45 days of receiving
Plaintiffs’ paragraph IV notice regarding the ‘894 patent, Defendants necessarily delayed
FDA approval. That delay, in turn, prevented Plaintiffs from launching the 1% generic,
so Plaintiffs “fe[lt] the adverse impact” of the Litigation upon its filing. Zenith, 401 U.S.
at 339.
Second, while it has been said that where damages are too speculative, the cause
of action has not yet accrued, id., Plaintiffs’ damages as of the date the Litigation was
filed were not too speculative. 11 Damages are not speculative so long as the jury may
The filing of a baseless lawsuit triggers the statute of limitations for antitrust
10
claims based on that lawsuit. See Brunswick Corp. v. Rigel Textile Corp., 752 F.2d 261,
271 (7th Cir. 1984) (“Exclusion from a market is a conventional form of antitrust injury
that gives rise to a claim for damages as soon as the exclusion occurs . . . even though, in
the nature of things, the victim’s losses lie mostly in the future.”); see also Pace Indus. v.
Three Phoenix Co., 813 F.2d 234, 238 (9th Cir. 1987) (“The initiation of [the] lawsuit is
the final, immutable act of enforcement of an allegedly illegal contract”); accord Korody-
Colyer Corp. v. Gen. Motors Corp., 828 F.2d 1572, 1579 (Fed. Cir. 1987). Because the
moment when the statute of limitations runs is defined by when the claim accrues, see 15
U.S.C. § 15b, these cases teach that sham litigation claims generally accrue at the time
that the lawsuit alleged to have been a sham was filed.
11
We have applied Zenith’s speculative damages exception twice before, but each
case is distinguishable.
10
“make a just and reasonable estimate of the damages based on relevant data,” which can
take the form of “probable and inferential as well as . . . direct and positive proof.”
Bigelow v. RKO Radio Pictures, 327 U.S. 251, 264 (1946).; see also Brunswick, 752
F.2d at 271 (noting that absent “excessively speculative” damages, “the statute of
limitations is not tolled simply in order to wait and see just how well the defendant does
in the market from which he excluded the plaintiff”).
Difficulty ascertaining damages must not be “confused with right of recovery.”
Bigelow, 327 U.S. at 265; see also Pace, 813 F.2d at 240 (“[U]ncertain damages, which
prevent recovery, are distinguishable from uncertain extent of damage, which does not
In Continental-Wirt, we held that a portion of the plaintiffs’ damages—lost value
to his business, which he was forced to sell due to an alleged price-fixing scheme by his
suppliers—may have been speculative because he had not yet sold the business or had
sufficient time to attempt to sell it. Continental-Wirt Electronics Corp. v. Lancaster Glass
Corp., 459 F.2d 768, 770 (3d Cir. 1972). There, it was possible that the plaintiff suffered
no damages (e.g., if the business sold at a profit) at the time the suppliers began the
scheme, so recovery was uncertain. Here, in contrast, the Litigation delayed Plaintiffs
from receiving FDA approval because of the Hatch-Waxman Act’s 30-month stay. 21
U.S.C. § 355(j)(5)(B)(iii). Thus, they were excluded from the market for some period
and unable to profit from selling the 1% generic. It was the Litigation in the first instance
that damaged Plaintiffs because it delayed FDA approval.
In Harold Friedman, we held that lost profits from relocating a supermarket due to
alleged monopolization by competitors were not ascertainable at a certain date. Harold
Friedman Inc. v. Thorofare Markets Inc., 587 F.2d 127, 138-39 (3d Cir. 1978). Two
aspects of the case make it inapt here. First, we noted “grave reservations” there about
whether the date from which the certainty of damages was evaluated was the last time the
plaintiff suffered injury. Id. at 138. Here, in contrast, the complaint states that Plaintiffs
were injured when the Litigation was filed. Second, Plaintiffs’ complaint includes: (a)
estimates of Defendants’ profits from selling AndroGel in a market without a competing
(and cheaper) 1% generic; and (b) allegations that Defendants “were aware” that the 1%
generic would “erode [] sales.” See, e.g., App. 62 ¶ 77. Plaintiffs’ allegations thereby
show that they were capable of quantifying the value of being barred from the market,
which provides a “guidelin[e]” for calculating damages that was missing in Harold
Friedman. See 587 F.2d at 139.
11
prevent recovery.”). In other words, for Plaintiffs to invoke Zenith’s speculative
damages exception, they must show that prior to March 27, 2012, it was uncertain
whether they would suffer damages, not simply that it was uncertain how much they
would suffer. FDA approval was put on hold as soon as Defendants filed the Litigation
because of Hatch-Waxman’s automatic stay. See 21 U.S.C. § 355(j)(5)(B)(iii). The
uncertainty of when the FDA would issue approval—or a TE rating—is thus irrelevant to
whether the lawsuit caused delay in Plaintiffs’ ability to enter the market. 12
Furthermore, Plaintiffs’ complaint demonstrates that they could have reasonably
estimated damages before March 27, 2012. Plaintiffs allege that they “lost sales, lost
profits and lost the ability to market [their] version of AndroGel 1% before December 27,
2014,” App. 42 ¶ 3, and their complaint specifies Defendants’ sales and market share
before the allegedly sham lawsuit was filed, see, e.g., App. 62 ¶ 77 (sales); App. 63 ¶ 81
(market share). These figures enabled Plaintiffs to estimate the success of the 1% generic
when it reached the market. See Brunswick, 752 F.2d at 271 (holding future profits for a
12
Plaintiffs argue their damages were speculative because there was uncertainty
(1) when the FDA would approve the 1% generic and (2) when and how the FDA would
issue a TE rating, and neither were known by March 27, 2012. This assertion, however,
appears only in Plaintiffs’ briefs, not their complaint. A party may not amend their
pleadings by making factual assertions in a brief. Pennsylvania ex rel. Zimmerman v.
PepsiCo, Inc., 836 F.2d 173, 181 (3d Cir. 1988).
Plaintiffs also appear to suggest that they might not have marketed the drug at all
or made “any money” if contingencies failed, Appellants’ Br. at 48-49, but under this
reasoning, practically every generic manufacturer—each of which must obtain FDA
approval—could wait long after an infringement suit is initiated to claim the lawsuit was
a sham, which cannot be true, as that view would render the statute of limitations
meaningless. See Brunswick, 752 F.2d at 271 (noting that if the accrual rule allowed
plaintiffs to “wait and see,” the statute of limitations “would be tolled indefinitely in a
very large class of antitrust suits”).
12
competitor kept off the market by a patentee were not speculative because patentee’s
profits provided a reasonable estimate from which jury could award damages). Thus,
Plaintiffs’ damages were capable of calculation, based on Defendants’ ability to delay
competition, when the Litigation was filed. 13
Thus, based on the pleadings, the speculative damages exception does not apply,
and Plaintiffs’ claim accrued when Defendants filed the Litigation. The claim is
therefore barred by the release, and the District Court correctly granted judgment on the
pleadings for Defendants.
III
For the foregoing reasons, we will affirm the District Court’s order.
13
Moreover, courts have rejected arguments from plaintiffs claiming an inability
to calculate their lost profits because businesses routinely project future earnings. See,
e.g., Charlotte Telecasters, Inc. v. Jefferson-Pilot Corp., 546 F.2d 570, 573 (4th Cir.
1976); City of El Paso v. Darbyshire Steel Co., 575 F.2d 521, 523 (5th Cir. 1978); see
also Pace, 813 F.2d at 240. Plaintiffs allege that AndroGel brought in “hundreds of
millions of dollars in sales every year,” App. 62 ¶ 77, so any argument that they are
incapable of projecting the 1% generic’s profitability, see, e.g., Appellants’ Br. at 20
(suggesting Plaintiffs may have lacked the capacity to bring the 1% generic to market
under certain circumstances), is unpersuasive.
13