UNITED STATES DISTRICT COURT
`DISTRICT OF NEW JERSEY
`
`Chambers of
`Joseph A. Dickson
`United States Magistrate Judge
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`Martin Luther King, Jr. Federal Bldg.
`& U.S. Courthouse
`50 Walnut Street
`Newark, New Jersey 07102
`(973-645-2580)
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`LETTER ORDER
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`January 22, 2016
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`To all counsel of record via ECF
`
`Re:
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`Jazz Pharmaceuticals, Inc. v. Amneal Pharmaceuticals LLC, et al.
`Civil Action No.: 13-391(ES) (JAD)
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`Dear Counsel:
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`This will address Plaintiff Jazz Pharmaceuticals, Inc.'s ("Jazz") informal application
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`seeking sanctions against Defendants Amneal Pharmaceuticals LLC ("Amneal"), Par
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`Pharmaceutical, Inc. ("Par"), and Wockhardt Bio AG ("Wockhardt") in connection with those
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`parties' alleged violation of the Discovery Confidentiality Order ("DCO") that the Court signed in
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`the above-referenced, consolidated matter on June 30, 2014 (entered on the docket on July 1,
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`2014). (ECF No. 73). The Court has carefully considered the parties' written submissions, (ECF
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`Nos. 198, 202, 204-208), as well as the arguments that counsel made during the conference on
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`January 13, 2016.
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`The portion of the DCO at issue in Jazz's application is Paragraph 8, which provides:
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`All Confidential Information and Highly Confidential Information
`disclosed pursuant to this Order shall be used by a recipient thereof
`solely for the purposes of this litigation and not for any business or
`competitive purposes. It shall be the duty of each party and each
`individual having notice of this [DCO] to comply with this Order
`from the time of such notice.
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`(ECF No. 73 at 11). In resolving a prior dispute regarding a different provision of the DCO, this
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`Court interpreted Paragraph 8 as requiring any person who receives information designated as
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`PETITIONERS' EXHIBIT NO. 1077 PAGE 1
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`"Confidential" or "Highly Confidential" pursuant to the DCO to "be circumspect in not using that
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`information, in any form, during [ related covered business method review or inter partes review
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`("IPR") proceedings]." (April 22, 2015 Letter Order at 8, ECF No. 126). Jazz contends that
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`Amneal, Par, and Wockhardt each violated Paragraph 8 by using confidential information that Jazz
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`produced under the DCO in connection with discovery requests issued in related IPR proceedings
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`in August 2015 and December 2015. (See generally ECF No. 198).
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`As an initial matter, it appears that none of Jazz's cases with Wockhardt were consolidated
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`into Civil Action No. 13-391 until January 14, 2016.
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`(Jan. 14, 2016 Order, ECF No. 200)
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`(consolidating Jazz Pharmaceuticals. Inc., et al. v. Wockhardt Bio AG, et al., Civil Action No. 15-
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`5619, as well as other cases, into the above-referenced matter). Wockhardt could not, therefore,
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`generally be bound under the terms of the DCO before that date. Moreover, Wockhardt represents
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`that it has not yet received any information that Jazz marked as either "Confidential" or "Highly
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`Confidential" under the DCO. (Wockhardt Letter at 2, ECF No. 204). Jazz does not suggest
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`otherwise. Therefore, while Paragraph 8 of the DCO would impose restrictions upon a non-party
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`that received confidential information and had notice of the DCO, the record does not provide a
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`basis for imposing such restrictions on Wockhardt. The Court finds that there is currently no legal
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`basis for finding that Wockhardt violated the DCO via the August 2015 and December 2015
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`contacts Jazz has identified. The Court will, therefore, deny Jazz's request for sanctions against
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`that party in its entirety, but without prejudice. The Court will focus the remainder of its analysis
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`on Amneal and Par.
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`The record reflects that, by letter dated August 20, 2015, counsel for Amneal wrote to Jazz
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`to point out that documents Jazz produced in the above-referenced matter were "inconsistent with
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`the position [on a particular issue] advanced by Jazz during the IPR proceedings. In particular,
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`2
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`Jazz has produced documents in the District Court litigation which demonstrate that Jazz had
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`[certain knowledge]." (Jazz Letter, Ex. A, ECF No. 198 at 7-8). Amneal then demanded that Jazz
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`"immediately produce in each of the IPR proceedings all documents from the District Court
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`litigation which are inconsistent with the position advanced by Jazz [on the issue in question]",
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`and provided Jazz with a list of bates-numbers, thereby specifically identifying documents that
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`Jazz produced in this case. (Id. at 8). While the record is unclear as to whether counsel initially
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`wrote the August 20, 2015 letter on behalf of both Amneal and Par, 1 the issue is academic, as
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`counsel for Par expressly adopted the contents of that letter in an e-mail that he sent mere hours
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`later. (Id. at Ex. B, ECF No. 198 at 11) ("This letter applies to [various IPR proceedings] as well.").
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`The Court finds that, in utilizing information gleaned from confidential documents that Jazz
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`produced pursuant to the terms of the DCO (e.g., using those documents as evidence of an alleged
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`inconsistency in a position that Jazz took in the IPR proceedings, and confirming the origin of that
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`position by referring to specific bates-numbered documents), both Amneal and Par unequivocally
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`violated the terms of that Order.
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`Jazz contends that Amneal and Par also violated the DCO in connection with a December
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`2015 discovery dispute. Specifically, the record reflects that, by e-mail dated December 14, 2015,
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`and in reference to certain document requests attached thereto (specifically explaining counsel's
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`position on why the requested discovery satisfied the "Garmin factors"), counsel for Par wrote, in
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`pertinent part, that the requests "seek a limited set of documents that can be culled from documents
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`and material that Jazz has already collected and produced in connection with the associated District
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`1 Jazz argues that "Defendants" sent the August 20, 2015 letter, thereby suggesting (in light of how
`Jazz defined that term in its January 12, 2016 letter), that the letter came from Amneal, Par and
`Wockhardt. (ECF No. 198 at 1, 3). While the author of that letter used the word "we" when
`referring to the demanding parties, he did not specifically state that he was writing on behalf of
`any particular parties.
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`3
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`PETITIONERS' EXHIBIT NO. 1077 PAGE 3
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`Court litigations." (Jazz Letter, Ex. D, ECFNo. 198at17). While counsel forPardidnotexpressly
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`state he was writing on Amneal' s behalf (or Par's, for that matter), he copied Amneal' s counsel on
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`that correspondence, and the rhetoric used in the e-mail suggested he was writing on behalf of
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`multiple parties. (Id.) ("Please let us know ... "). Amneal's January 19, 2016 letter in this matter
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`confirms that Par's counsel was also acting on Amneal's behalf when sending the December 14,
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`2015 e-mail. (ECF No 202) (noting that Amneal participated in a meet and confer regarding the
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`documents in question and ultimately "withdrew its request" for those documents).
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`The Court finds that, by referring to the fact that Jazz had already produced documents
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`responsive to the IPR requests in connection with this litigation (i.e., inherently relying on the
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`contents of those confidential documents as the basis for its point), and using that fact as part of
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`its argument as to why Jazz should have to provide additional discovery in the IPR proceedings,
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`Par and Amneal again violated the DCO.
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`Par essentially argues that it should not be subject to sanctions because the December 2015
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`discovery requests themselves, as opposed to letters or e-mails concerning Jazz's discovery
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`obligations, were prepared using publicly available information. (See generally ECF No. 205).
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`That may very well be true. The DCO, however, does not limit the bar on use of confidential
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`information to the preparation of discovery requests.
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`It currently prohibits the use of such
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`information, in any form, and in any way, outside of this action. (See ECF No. 73 at 11 ). The
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`Court, therefore, rejects Par's argument on this point. The Court notes that Amneal did withdraw
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`its document request, post-violation, following a meet and confer with Jazz. (Amneal Letter at 1,
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`ECF No. 202). The Court also notes that Amneal now states that it did not do so as a means of
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`rectifying its violations of the DCO, but because it "concluded that the documents simply were not
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`worth the hassle and expense of moving to modify the protective order." {Id.).
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`4
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`The Court finds these violations especially troublesome in light of the position that Par and
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`Amneal took less than one year ago when they sought to use the DCO to bar Jazz's counsel from
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`participating in related CBM and IPR proceedings. (See ECF No. 98). The immediate question
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`before the Court, however, is the appropriate sanction to level against Amneal and Par for those
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`parties' violations of the DCO. The Court's authority to issue sanctions in these circumstances is
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`not in question. Federal Rule of Civil Procedure 37(b)(2)(A) provides, in pertinent part, that the
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`Court may issue sanctions against a party that "fails to obey an order to provide or permit
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`discovery." "'Discovery orders that can be enforced through Rule 37(b) include protective orders
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`issued under Federal Rule of Civil Procedure 26(c)."' Schiller v. City of New York, No. 04-7922
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`(KMK), 2007 U.S. Dist. LEXIS 40253, *9-10 (S.D.N.Y. June 5, 2007) (quoting Poliquin v. Garden
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`Way, Inc., 154 F.R.D. 29, 31 (N.D. Me. 1994)).2 The Court is mindful that "the policies supporting
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`the imposition of a Rule 37 sanction are to '(1) penalize the culpable party or attorney; (2) deter
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`others from engaging in similar conduct; (3) compensate the court and other parties for the
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`expensive caused by the abusive conduct; and (4) compel discovery and disclosure."' Jumpp v.
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`Jerkins, No. 08-6268 (RBK), 2011 U.S. Dist. LEXIS 127180, *8-9 (D.N.J. Nov. 3, 2011) (quoting
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`Wachtel v. Health Net, Inc., 239 F.R.D. 81, 99 (D.N.J.,2006)).
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`Jazz suggests that a prosecution bar would be an appropriate sanction for Par's violation of
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`the DCO. (Jazz Letter at 5, ECF No. 198).3 The Court concludes, however, that a prosecution bar
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`would fail to properly address any harm that Amneal and Par's violations actually caused.
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`Specifically, Jazz alleges that those parties used the confidential information in question during
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`2 Likewise, pursuant to Federal Rule of Civil Procedure 16(f)(l )(C), the Court may "issue any
`just orders ... if a party or its attorney ... fails to obey a scheduling or other pretrial order."
`(emphasis added).
`3 In a letter dated January 20, 2016, Jazz withdrew its request to impose a prosecution bar against
`counsel for Amneal. (ECF No. 208).
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`5
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`PETITIONERS' EXHIBIT NO. 1077 PAGE 5
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`discussions with Jazz regarding discovery issues, rather than to secure some competitive advantage
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`before the Patent Trial and Appeal Board ("PT AB"). Furthermore, it appears that Amneal and
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`Par's violations of the DCO either have been (i.e., Amneal's withdrawal of its requests) or can be
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`rectified. While it appears that Par persists in seeking the discovery discussed in its December
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`2015 requests, it is this Court's understanding that Jazz is under no obligation to produce that
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`"additional discovery" unless Par successfully requests it from the PTAB. (Jazz Letter at 3, ECF
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`No. 198). Par is free to make such an application to the PTAB. In doing so, however, Par may
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`not rely, in any way, on confidential information that Jazz produced under the DCO. If Par makes
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`such a motion before the PT AB, it must be prepared to document how every aspect of that
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`application is based exclusively on information that is either publicly available or that Jazz has
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`previously produced to Par in the IPR proceeding. If Par violates the DCO further, Jazz should
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`make a new application to this Court, which will consider the imposition of severe sanctions
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`against Par and its counsel. Such potential sanctions may include a prosecution bar going forward,
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`revocation of pro hac vice admission before this Court, monetary sanctions, and other appropriate
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`relief. To that end, and to avoid allegations of future violations of the DCO, the Court urges the
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`parties to consider a sort of voluntary prosecution bar, whereby counsel who have been exposed
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`to another's confidential information produced under the DCO refrain from participation in post-
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`grant proceedings. 4
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`Finally, the Court has considered awarding a monetary sanction. Both Par and Amneal
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`should pay Jazz something for the trouble they have unnecessarily put Jazz through in connection
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`4 Though this portion of the Court's Order is necessarily related to Par, and though it should be
`obvious from the content of this Order, the Court emphasizes that, going forward, all persons and
`entities that incur obligations under the DCO shall carefully comply with those obligations in all
`respects.
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`6
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`with their violations of the DCO. This is especially true in light of Amneal and Par's vociferous
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`fight to keep Jazz's counsel from participating in post-grant proceedings due to confidentiality
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`concerns. The appeal of monetary sanctions is, however, somewhat tempered by the fact that
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`Defendants engaged in one of those violations (i.e., the August 2015 letter/email) to address Jazz's
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`alleged failure to provide documents in the IPR proceedings, and because their violations came
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`during discussions with Jazz itself (i.e., the information had not been used to secure some
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`advantage before the PTAB). 5 After due consideration, the Court has decided that it will consider
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`imposing a monetary sanction against Amneal and Par at the conclusion of this litigation.
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`One of the interesting conundrums here is that it appears Par and Amneal could have
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`obtained the information and documents they seek in connection with the IPR proceedings without
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`any reliance on confidential information that Jazz produced under the DCO. It further appears that
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`those parties' December 2015 documents demands were designed to do just that. Indeed, those
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`discovery requests, standing alone, do not indicate a misuse of Jazz's confidential information.
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`Rather, it was Amneal and Par's use of that information when formulating an argument for
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`"additional discovery" under the "Garmin factors" that constituted a violation. It also bears noting
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`that, with regard to Amneal and Par's August 20, 2015 letter and e-mail, those parties only utilized
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`Jazz's confidential information as a basis for arguing (to Jazz), that Jazz had wrongfully withheld
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`certain documents in connection with the IPR proceedings. (Jazz Letter, Exs. A and B, ECF No.
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`198 at 7-11).6 While, as discussed above, Amneal and Par have unquestionably violated the DCO
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`by using Jazz's confidential information in this fashion, the situation underscores an inherent
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`5 The necessity of a monetary sanction is further reduced with regard to Amneal, given that party's
`withdrawal of its December 2015 discovery requests.
`6 In its letter dated January 19, 2016, (ECF No. 202), Amneal expressly stated its belief that Jazz
`has used the DCO "to conceal from the United States Patent and Trademark Office certain
`documents which [Jazz] was obliged to produce under regulations governing the pending [IPR]."
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`7
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`problem in the DCO and all others like it: in addition to safeguarding against misuse (e.g., using
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`the information to secure a competitive advantage), such orders also prohibit the legitimate use of
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`information in other proceedings (e.g., to establish that a party has wrongfully failed to produce
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`relevant documents, or for potentially for other legitimate purposes). The Court believes that this
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`problem is potentially as serious as the issues underlying the prosecution bar discussed in In re
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`Deutsche Bank, 605 F.3d 1373 (Fed Cir. 2010). The Court therefore directs the parties to meet
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`and confer regarding whether the DCO can be revised to allow a party to make limited use of
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`confidential information, in a CBM or IPR proceeding, in a way that would not give any party an
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`advantage in competitive decision making (e.g., to rebut a parties' representation that it does not
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`possess documents responsive to a legitimate document demand).7 Such a limited carve-out would
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`actually reduce the potential for unfair gamesmanship in post-grant proceedings. If the parties are
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`unable to reach a mutually agreeable resolution on this point, the Court may reconsider its
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`decisions (both herein and in the Court's Order dated April 22, 2015) regarding the propriety of a
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`prosecution bar.
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`SO ORDERED
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`cc:
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`Hon. Esther Salas, U.S.D.J.
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`7 The Court further notes that, in its current form, the DCO is focused on the exchange of
`documents between Jazz, Par and Amneal. (See generally ECF No. 73). The parties should also
`consider whether the DCO should be revised to account for new defendants added to this case
`through consolidation.
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`8
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`PETITIONERS' EXHIBIT NO. 1077 PAGE 8