Par Pharmaceutical, Inc. v. Luitpold Pharmaceuticals, Inc. (D.N.J. 2017)

by McDonnell Boehnen Hulbert & Berghoff LLP

District Court Awards Attorney Fees for Plaintiff's Use of Discovery to Police Defendants' Future Conduct

Last month, in Par Pharmaceutical, Inc. v. Luitpold Pharmaceuticals, Inc., Senior District Judge William H. Walls of the U.S. District Court for the District of New Jersey issued an amended opinion granting the motion for attorney fees of Defendants Luitpold Pharmaceuticals, Inc., Daiichi Sankyo, Inc., and Daiichi Sankyo Co., Ltd. ("Luitpold").  The District Court also awarded Luitpold $207,482.50 in fees and $4,580.93 in costs.

The decision arose out of a patent dispute between Plaintiffs Par Pharmaceutical, Inc., Par Sterile Products, LLC, and Endo Par Innovation Company, LLC ("Par") and Luitpold.  Par is the assignee of patents for Adrenalin®, a product containing epinephrine for use in treating allergic reactions.  Luitpold filed an ANDA seeking approval to market a generic version of Par's Adrenalin® product, and Par responded by filing suit against Luitpold.

In Luitpold's Answer to Par's Complaint, Defendants sought declaratory relief that, inter alia, it had not infringed Par's Adrenalin® patents and that the case was exceptional under 35 U.S.C. § 285.  The District Court granted Luitpold's counterclaim of non-infringement, finding that Luitpold's ANDA formulations did not infringe Par's Adrenalin® patents.  Luitpold then moved for attorney fees, contending, in part, that the Court should award fees because Par's theory of infringement was "objectively baseless" and Par had abused discovery to attempt to monitor Luitpold's competitive activities.  Par argued that the case was not exceptional because, inter alia, Par had reason to believe Luitpold would change its drug formulation and Plaintiffs did not abuse discovery and received almost no substantive discovery in the case.

The District Court noted that to satisfy 35 U.S.C. § 285, Luitpold had to establish that Defendants were the prevailing party, the case was exceptional, and the requested fees were reasonable.  With regard to the first inquiry, the Court noted that it had granted Luitpold's motion for judgment on the pleadings, resulting in the dismissal of Counts I-IV of Par's Complaint, and issued a declaration that Luitpold had not infringed Par's Adrenalin® patents.  The Court noted that "[b]ecause Defendants 'receive[d] at least some relief on the merits, which alter[ed] the legal relationship of the parties,' they are prevailing parties under 35 U.S.C. § 285."

With regard to the second inquiry, the Court noted that Luitpold's argument was based on the contention that Par's legal theory was baseless, and that Par abused discovery in an attempt to monitor Luitpold's competitive activities.  Par countered that it had good reason to bring the lawsuit because it believed Luitpold would change its formulation, and that it had not abused discovery because it received virtually no substantive discovery.  With regard to Par's first contention, the Court indicated that:

Even if Par's intention was limited to anticipated patent infringement by a possible future formulation of Luitpold's product, Par's claims were meritless because Par provided no basis for its allegations that absent declaratory relief, Par faced irreparable harm from Defendants' infringing activities.  Par's claims for declaratory relief rested only on its own experience of the FDA approval process and speculation that the FDA would require Defendants to change their drug formulation in a manner that would infringe Par's patents.  . . .  Par failed to allege that Defendants were engaged in any specific activities to alter their drug formulation to infringe the patents-in-suit and even acknowledged in briefing that the focus of the case was to determine through discovery how Par intended to proceed through the FDA approval process.

With regard to Par's second contention, the Court noted that "upon filing of the Complaint, Par vigorously attempted to engage in overbroad discovery of highly confidential, competition information," requesting, inter alia, "all documents and information relating to Defendants' injectable epinephrine compositions, including past, current, and 'contemplated' formulations whether or not they contained ingredients that would infringe Par's patents."  The Court also noted that Par had pursued "this overbroad information" despite Luitpold's testimony that it had not changed its drug formulation.  According to the Court, "Par's conduct is not mitigated by Par's argument that it pursued this discovery mostly unsuccessfully."  The Court therefore found the case to exceptional, stating that "Plaintiffs' unjustified maintenance of this suit and attempts to use discovery to police Defendants' future conduct makes an award of fees appropriate to the extent Defendants' fee request is reasonable."

The remainder of the opinion concerns the Court's calculation of fees, which were reduced for the reasons outlined in the opinion, and award of costs, which were awarded as requested.

Amended Opinion by Senior District Judge Walls

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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