`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
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`Case No. 2:15-cv-1455-WCB
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`§§§§§§§§§
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`ALLERGAN, INC.,
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`Plaintiff,
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`v.
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`TEVA PHARMACEUTICALS USA, INC.,
`et al.,
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`Defendants.
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`MEMORANDUM OPINION AND ORDER
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`Before the Court is the motion of defendant Teva Pharmaceuticals USA, Inc., (“Teva”) to
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`amend its answer and counterclaims to raise the issues of inequitable conduct and unclean hands.
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`Dkt. No. 189. The motion was briefed by the parties and argued during a telephonic hearing
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`conducted on January 11, 2017. The Court DENIES the motion.
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`BACKGROUND
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`This case was filed on August 15, 2015. Dkt. No. 1. Teva filed its original answer and
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`counterclaims on October 26, 2015. Dkt. No. 40. Teva did not at that time assert the defenses of
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`inequitable conduct and unclean hands, nor did it assert a counterclaim for a declaratory
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`judgment of inequitable conduct.
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`On February 18, 2016, the plaintiff, Allergan, Inc., filed an amended complaint adding a
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`newly issued patent. Dkt. No. 96. Teva filed an amended answer and counterclaims in response
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`to the amended complaint on March 11, 2016. Dkt. No. 99. Again, however, Teva did not add
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`the defenses of inequitable conduct and unclean hands, or a counterclaim for a declaratory
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`judgment of inequitable conduct.
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`1
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`ALL 2076
`MYLAN PHARMACEUTICALS V. ALLERGAN
`IPR2016-01127
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`Case 2:15-cv-01455-WCB Document 250 Filed 01/12/17 Page 2 of 16 PageID #: 9796
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`The deadline for amending pleadings set forth in the Docket Control Order, Dkt. No. 76,
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`was June 9, 2016. Teva did not file an amended answer and counterclaim by that date seeking to
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`add defenses of inequitable conduct and unclean hands, or a counterclaim of inequitable conduct.
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`Four months after that deadline, on October 21, 2016, Teva filed the present motion seeking
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`leave to amend its answer and counterclaims to add the defense of unclean hands and the defense
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`and counterclaim of inequitable conduct. Dkt. No. 189. Defendants Akorn, Inc.; Mylan
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`Pharmaceuticals, Inc.; Mylan, Inc.; Innopharma, Inc.; and Famy Care Limited have joined
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`Teva’s motion. Dkt. Nos. 224, 229, 232, and 234. Allergan opposes that motion on the ground
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`that the motion is untimely and that no adequate justification has been given for the amendment.
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`Dkt. No. 194.
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`Teva’s assertions of inequitable conduct and unclean hands are predicated on what it
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`describes as its recent discovery of “strong evidence that Allergan defrauded the U.S. Patent and
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`Trademark Office in order to obtain allowance of the patents in suit.” Teva’s Motion for Leave
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`to Amend Answer and Counterclaims (“Teva’s Motion to Amend”), Dkt. No. 189, at 1. In late
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`2013, the inventors filed a set of continuation applications that claimed, inter alia, the ophthalmic
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`emulsion at issue in this case. The examiner rejected four of the applications as obvious over
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`U.S. Patent No. 5,474,979 to Ding.
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`In response to the examiner’s rejection of the applications’ claims as obvious in light of
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`Ding, the inventors submitted argument and declarations purporting to show that the claimed
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`ophthalmic emulsion produced surprising and unexpected results. The
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`two declarations on
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`which the inventors relied in claiming that their ophthalmic emulsion had surprising and
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`unexpected results were a declaration by Dr. Rhett M. Schiffman dated October 11, 2013
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`2
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`Case 2:15-cv-01455-WCB Document 250 Filed 01/12/17 Page 3 of 16 PageID #: 9797
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`(“Schiffman Declaration”), Dkt. No. 195-3, and a declaration by Dr. Mayssa Attar, dated
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`October 14, 2013, Dkt. No. 195-2.
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`According to Teva, “the data and statements used to demonstrate unexpected results
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`were, in fact, plagiarized from an article that had appeared in a well-known medical journal over
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`a decade earlier, and those data and statements from the article were themselves derived from
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`Allergan’s own clinical trial data.” Teva’s Motion to Amend at 1 (emphasis in original). The
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`article from which Teva claims Allergan plagiarized data is Sall et al., Two Multicenter,
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`Randomized Studies of the Efficacy and Safety of Cyclosporine Ophthalmic Emulsion in
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`Moderate to Severe Dry Eye Disease, 107 Ophthalmology 631 (April 2000) (“Sall Article”), Dkt.
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`No. 195-1. According to Teva, because the data and statements relied on by the inventors were
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`taken from that 13-year-old article, the results Allergan presented to the PTO “were not
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`‘unexpected’ at all—and Allergan knew it.” Teva’s Motion to Amend at 1.
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`Following Allergan’s submission of the declarations and the arguments of the
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`prosecuting attorney based on those declarations, the examiner found that the inventors had
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`overcome the obviousness rejection. The examiner then issued a notice of allowance for the
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`claims of the four applications that had previously been rejected. Those applications issued as
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`U.S. Patent Nos. 8,629,111; 8,633,162; 8,642,556; and 8,648,048. The examiner later issued a
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`notice of allowance for a fifth application, which issued as U.S. Patent No. 8,685,930. Two
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`years later, the PTO issued the last of the six related patents in suit, U.S. Patent No. 9,248,191.
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`Teva argues that the misleading declarations and argument regarding unexpected results were
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`plainly material to patentability, because it was those declarations and arguments that caused the
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`examiner to withdraw the rejection and allow the six patents at issue in this case.
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`3
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`Case 2:15-cv-01455-WCB Document 250 Filed 01/12/17 Page 4 of 16 PageID #: 9798
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`Allergan responds that the inventors and the prosecution counsel did not engage in
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`deceptive conduct in dealing with the PTO. Allergan explains that the data set forth in the
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`Schiffman Declaration were derived from Allergan’s Phase 3 Study for Restasis, which was
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`conducted in the late 1990s. The Sall Article was also based on that Phase 3 Study. Therefore,
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`according to Allergan, it is not surprising that both the Schiffman Declaration and the Sall
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`Article contained the same data and used some of the same Figures.
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`Allergan argues that there is no evidence that it attempted to deceive the examiner by
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`concealing the relationship between the Sall Article and the Schiffman Declaration. The Sall
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`Article was cited in the common specification of the six patents in suit and produced for the
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`examiner during prosecution. In fact, the Sall Article was incorporated by reference in each of
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`the patents and is cited in the “Background of the Invention” as “Two Multicenter, Randomized
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`Studies of the Efficacy and Safety of Cyclosporine Ophthalmic Emulsion in Moderate to Severe
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`Dry Eye Disease. CsA Phase 3 Study Group.” See, e.g., U.S. Patent No. 8,629,111, col. 1, ll. 48-
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`52 (emphasis added).. Moreover, Allergan argues, a simple comparison of the data in the
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`Schiffman Declaration and the Sall Article makes clear that Schiffman and Sall both report the
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`same data, and that four of the figures attached as exhibits to the Schiffman Declaration are
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`essentially identical to the four figures found in the Sall Article. Compare Sall Article, Dkt. No.
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`195-1, at 635-36, Figures 1-4, with Schiffman Declaration, Dkt. No. 195-3, Exhibit D, Figures 1-
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`4. Accordingly, it would have been apparent to the examiner that the data came from the same
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`source.
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`Allergan argues that documents in the case record show that Teva was aware of the
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`similarities between the Sall Article and the Schiffman Declaration—and that both were based
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`on the Allergan Phase 3 Study for Restasis—at least as early as a year ago. Nonetheless, Teva
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`4
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`Case 2:15-cv-01455-WCB Document 250 Filed 01/12/17 Page 5 of 16 PageID #: 9799
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`waited until well after the deadline for amending the pleadings to move to amend its answer and
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`counterclaims. Allergan argues that Teva’s motion should be denied in light of that unjustified
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`delay.
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`DISCUSSION
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`
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`Under Rule 15(a)(1), Fed. R. Civ. P., a party may amend a pleading once as a matter of
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`course more than 21 days after service of the original pleading or a responsive pleading or a
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`motion under Fed. R. Civ. P. 12(b), (e) or (f). After that, a party may amend a pleading only
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`with the opposing party’s consent or leave of court. Fed. R. Civ. P. 15(a)(2). Leave of court is
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`to be freely granted “when justice so requires.” Fed. R. Civ. P. 15(a)(2).
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`Once a scheduling order has been entered in the case and a deadline has been set for
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`filing amended pleadings, the decision whether to permit a post-deadline amendment is governed
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`by Fed. R. Civ. P. 16(b). See Squyres v. Heico Cos., L.L.C., 782 F.3d 224, 237 (5th Cir. 2015);
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`EEOC v. Serv. Temps Inc., 679 F.3d 323, 333-34 (5th Cir. 2012); S&W Enters., LLC v.
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`Southtrust Bank of Ala, N.A., 315 F.3d 533, 535 (5th Cir. 2003); L.G. Motorsports, Inc. v.
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`NGMCO, Inc., No. 4:11-cv-112, 2013 WL 2543398, at *6 (E.D. Tex. June 6, 2013). Under
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`Rule 16(b)(4), Fed. R. Civ. P., a motion to modify the scheduling order by permitting the filing
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`of an amended pleading after the deadline in the scheduling order may be granted “only for good
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`cause and with the judge’s consent.”
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`The party seeking to modify the scheduling order has the burden to show good cause.
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`Squyres, l782 F.3d at 237; Self v. Quinn’s Rental Servs. (USA), LLC, Civil Action No. H-15-
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`1569, 2016 WL 6835093, at *1 (S.D. Tex. Nov. 21, 2016). The Fifth Circuit has held that Rule
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`16 gives trial courts “broad discretion to preserve the integrity and purpose of the pretrial order”
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`in making the “good cause” determination. Geiserman v. MacDonald, 893 F.2d 787, 790 (5th
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`5
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`Case 2:15-cv-01455-WCB Document 250 Filed 01/12/17 Page 6 of 16 PageID #: 9800
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`Cir. 1990) (quoting Hodges v. United States, 597 F.2d 1014, 1018 (5th Cir. 1979)).1 The Fifth
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`Circuit, moreover, has directed that in deciding whether to permit amendments to the pleadings
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`after the deadline for such amendments, district courts should consider “(1) the explanation for
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`the party’s failure to [timely move for leave to amend]; (2) the importance of the [amendment];
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`(3) potential prejudice in allowing the [amendment]; and (4) the availability of a continuance to
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`cure such prejudice.” United States ex rel. Bias v. Tangipahoa Parish Sch. Bd., 816 F.3d 315,
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`328 (5th Cir. 2016) (quoting S&W Enters., 315 F.3d at 536 (alterations in original)); Filgueira v.
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`U.S. Bank Nat’l Ass’n, 734 F.3d 420, 422 (5th Cir. 2013); Ciena Corp. v. Nortel Networks, Inc.,
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`233 F.R.D. 493, 494 (E.D. Tex. 2006). The Court will consider each of those factors in
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`exercising its discretion whether to grant the motion to amend.
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`1. Teva’s Explanation for Its Untimely Motion to Amend
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`The most important factor bearing on the “good cause” inquiry under Rule 16(b)(4) is
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`whether the party seeking to modify the scheduling order can show that it has been diligent in
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`pressing its claims but despite its diligence could not reasonably have met the scheduling
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`deadline. See Wachovia Bank, Nat’l Ass’n v. Schlegel, Civil Action No. 3:09-cv-1322, 2010
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`WL 2671316, at *2 (N.D. Tex. June 30, 2010). The Wright and Miller treatise notes that “many
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`more motions seeking modification of scheduling orders are denied than are granted,” and that
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`“the good-cause standard will not be satisfied if the court concludes that the party seeking relief
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`(or that party’s attorney) has not acted diligently in compliance with the schedule.” 6A Charles
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`1 Although this case is subject to the appellate jurisdiction of the Federal Circuit, the
`issue of whether to grant an untimely motion to amend the complaint is a procedural question not
`specific to patent law or bearing on substantive patent law issues, so the law of the regional
`circuit—in this case the Fifth Circuit—applies to this issue. See Creative Compounds, LLC v.
`Starmark Labs., 651 F.3d 1303, 1309 (Fed. Cir. 2011); Ultimax Cement Mfg. Corp. v. CDTS
`Cement Mfg. Corp., 587 F.3d 1339, 1354 (Fed. Cir. 2009); Optivus Tech., Inc. v. Ion Beam
`Applications S.A., 469 F.3d 978, 985 (Fed. Cir. 2006); Kalman v. Berlyn, 914 F.2d 1473, 1480
`(Fed. Cir. 1990).
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`6
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`Case 2:15-cv-01455-WCB Document 250 Filed 01/12/17 Page 7 of 16 PageID #: 9801
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`Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice & Procedure § 1522.2, at 322
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`(3d ed. 2010) (citing numerous cases); see also, e.g., Cub USA Servs., LLC v. Jetta Operating
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`Co., Civil Action No. 3:14-cv-2508-D, 2016 WL 1028128, at *2 (S.D. Tex. Mar. 15, 2016) (“the
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`court usually denies motions to amend the scheduling order when the moving party fails to
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`demonstrate that, despite its diligence, it could not have reasonably met the scheduling
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`deadline”).
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`Teva’s explanation for its untimely amendment is insufficient to justify its belated filing.
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`Although Teva contends that it did not have critical information about Allergan’s allegedly
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`fraudulent conduct until recently, the evidence does not support that contention.
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`As Allergan points out, Teva was aware of the facts underlying its motion at least four
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`months before the deadline to amend its pleadings. Allergan points to the following evidence of
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`Teva’s knowledge:
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`In its invalidity contentions, dated January 29, 2016, Teva noted that
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`the same clinical trial presented by the Schiffman Declaration and
`the purported “unexpected” results were reported in Sall, which
`was published more than three years before the earliest priority
`date of the ’556 patent. A comparison of Figures 1-4 of the
`Schiffman Declaration Exhibit D with Sall’s Figures 1-4
`demonstrates that Sall reported the same data presented in the
`Schiffman Declaration. The near identity of Sall’s Figures and the
`Exhibit D Figures demonstrates that both Sall and the Schiffman
`Declaration set forth results from the same Phase 3 clinical trial.
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`Defendants’ Preliminary Joint Invalidity Contentions, Dkt. No. 196-1, at 51. See also id. at 137
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`(“[T]he [Schiffman] data appear to be taken directly from the prior art Sall publication, because
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`the data provided show the exact same numerical results arranged in the exact same way as the
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`data in Sall Figures 1-4.”). Teva made the same representations in its Abbreviated New Drug
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`Application notice sent to Allergan on February 24, 2016. Dkt. No. 194-1, at 35.
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`7
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`Case 2:15-cv-01455-WCB Document 250 Filed 01/12/17 Page 8 of 16 PageID #: 9802
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`In light of those representations, there is no force to Teva’s statement in its motion that it
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`only “recently discovered that the data in Dr. Schiffman’s declaration was plagiarized from [the
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`Sall Article] and that [the Sall Article] in turn sourced those data from Allergan’s own clinical
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`trials conducted in the late 1990s.” Dkt. No. 189, at 6. In its reply brief, Teva argues that it
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`knew in early 2016 of the Schiffman Declaration and Sall Article, and it therefore had a basis to
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`contend that Sall anticipated the patents’ claims and that the results in the Schiffman Declaration
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`“were not in fact unexpected.” Teva’s Reply in Support of Motion for Leave to Amend Answer
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`and Counterclaim, Dkt. No. 201, at 2. However, Teva claims that what it did not know in early
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`2016 was that Allergan’s New Drug Application (“NDA”) for Restasis, when compared to the
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`Sall Article and Schiffman Declaration, revealed that Dr. Schiffman “copied the figures” from
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`the Sall Article “and then nonetheless represented that those results were unexpected in view of
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`the prior art.” Id. Teva contends that it was this comparison to “the underlying data from
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`Allergan’s NDA (which was produced during discovery) . . . that gave Teva the basis for its
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`inequitable conduct claims.” Id.
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`Teva’s attempt to show diligence by tying its knowledge to its examination of the NDA
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`does not work. For one thing, Teva admits that, independent of the NDA, it “recognized in early
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`2016 that (1) Allergan overcame the PTO’s obviousness rejections using Dr. Schiffman’s
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`declaration and (2) that Sall contained conclusions very similar to those found in the
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`declaration.” Id. Teva’s preliminary invalidity contentions, recited above, establish that it also
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`knew in early 2016 that the data in the Schiffman Declaration, like the data in the Sall Article,
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`were drawn from the same Allergan Phase 3 Study and that several of the figures in the
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`Schiffman Declaration were almost identical to corresponding figures in the Sall Article. Teva
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`therefore did not need the information in Allergan’s NDA to allege that Dr. Schiffman “copied
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`8
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`Case 2:15-cv-01455-WCB Document 250 Filed 01/12/17 Page 9 of 16 PageID #: 9803
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`the figures” from the Sall Article, or at least the figures were based on data from the same
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`source.
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`While acknowledging that in early 2016, it was aware that the data in the Sall Article and
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`in the Schiffman Declaration came from the same source, Teva contends that it did not know at
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`that time that Dr. Schiffman “plagiarized” several of the figures used in his declaration from the
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`Sall article. But it remains unclear to the Court why it matters whether Dr. Schiffman took his
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`data from the Sall article or from the Allergan Phase 3 Study from which the Sall Article also
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`derived its data. In either case, it is clear that some, but not all, of the information relied on by
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`Dr. Schiffman in his declaration was disclosed in the Sall Article. That information was in the
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`prior art, and thus has the same effect on the issue of patentability whether Dr. Schiffman took
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`the information directly from the Sall Article or not.
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`The Court is also skeptical of Teva’s claim that it was improper for Dr. Schiffman’s to
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`“plagiarize” the figures from the Sall Article without revealing the source of those figures to the
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`PTO. Dr. Schiffman was listed in the Sall Article as a member of the Cyclosporin A Phase 3
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`Study Group, and the Study Group was listed among the co-authors of the Sall Article. See Dkt.
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`No. 195-1, at 631, 638. Accordingly, it hardly seems accurate to charge Dr. Schiffman with
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`plagiarizing data from an article he is credited with co-authoring.
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`Moreover, even if Teva’s statements in January and February 2016 had not already made
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`clear that Teva recognized the relationship between the Phase 3 Study, the Sall Article, and the
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`Schiffman Declaration, that relationship was obvious on its face, and was not hidden from the
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`examiner. In fact, like Poe’s purloined letter, the evidence that Teva claims to have extracted
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`through great effort from a complex tangle of prosecution history was actually sitting in plain
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`view all along.
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`9
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`Case 2:15-cv-01455-WCB Document 250 Filed 01/12/17 Page 10 of 16 PageID #: 9804
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`As noted, the Sall Article was incorporated by reference in each of the applications and
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`was cited with the title “Two Multicenter, Randomized Studies . . . CsA Phase 3 Study Group,”
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`so it was hardly concealed from the examiner. The article made clear that the Cyclosporin A
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`Phase 3 Study on which the article reported was sponsored by Allergan, and as noted, Dr.
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`Schiffman was involved in its authorship. The Schiffman Declaration, moreover, made clear that
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`it was based on Allergan’s Phase 2 and Phase 3 Studies for Restasis. Thus, the links between the
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`Phase 3 Study, the Sall Article, and the Schiffman Declaration were obvious.
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`As for the figures in the Schiffman Declaration, the near identity between Figures 1-4 of
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`the Sall Article (which were the only four figures in the Article), Dkt. No. 195-1, at 635-36, and
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`Figures 1-4 of Exhibit D of the Schiffman Declaration, Dkt. No. 195-3, Exh. D, at 21-22, is
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`immediately apparent upon even the most cursory examination of the two documents. Even
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`without the evidence that Teva had already made those connections, a reasonably diligent
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`examination of the important materials in the case would have made that connection evident.
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`In sum, given what Teva knew or should have known by February 2016, the Court
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`concludes that Teva did not act with reasonable diligence when it failed to amend its answer and
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`counterclaims to add the defenses of inequitable conduct and unclean hands and the counterclaim
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`of inequitable conduct by the June 2016 deadline for amending the pleadings. The materials in
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`Teva’s possession before that time should have prompted it to explore its theories of inequitable
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`conduct and unclean hands long before October 2016. See Millennium Partners, L.P. v. Colmar
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`Storage, LLC, 494 F.3d 1293, 1298-99 (11th Cir. 2007) (defendant failed to demonstrate good
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`cause for seeking to raise a defense after the district court’s scheduling order deadline when the
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`evidence showed that the defendant, “with some investigation,” could have discovered the
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`defense. “The fact that [the defendant] failed to conduct such investigation does not equate to
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`10
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`Case 2:15-cv-01455-WCB Document 250 Filed 01/12/17 Page 11 of 16 PageID #: 9805
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`‘good cause’ for leave to amend under Rule 16 . . . .”); Carrier Corp. v. Goodman Global, Inc.,
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`49 F. Supp. 3d 430, 433 (D. Del. 2014); Perfect Pearl Co. v. Majestic Pearl & Stone, Inc., 889 F.
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`Supp. 2d 453, 458-59 (S.D.N.Y. 2012); Transamerica Life Ins. Co. v. Lincoln Nat’l Life Ins.
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`Co., 590 F. Supp. 2d 1093, 1101-03 (N.D. Iowa 2008). As Judge Hittner observed in Ruiz v.
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`University of Texas M.D. Anderson Cancer Center, 291 F.R.D. 170, 172 (S.D. Tex. 2013),
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`district courts within the Fifth Circuit have repeatedly held that if a party was “previously aware
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`of the factual underpinnings of the claim she seeks to assert beyond the time allowed by a
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`scheduling order, leave to amend is improper.” See also, e.g., Info-Power Int’l, Inc. v. Coldwater
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`Tech., Inc., No. 3:07-CV-0937-P, 2008 WL 5552245, at *3 (N.D. Tex. Dec. 31, 2008) (“[T]he
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`court may deny the motion [for leave to amend] if the movant knows or should have known of
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`the facts upon which the proposed amendment is based but fails to include them in the original
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`[answer].”); Am. Tourmaline Fields v. Int’l Paper Co., No. 3:96-CV-3363-D, 1998 WL 874825,
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`at *1 (N.D. Tex. Dec. 7, 1998) (same).
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`Accordingly, the Court concludes that the “due diligence” factor cuts strongly against
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`granting the motion to amend.
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`2. The Importance of the Amendment
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`Teva argues that allowing it to amend its answer and counterclaims is of critical
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`importance because the claim and defenses of inequitable conduct and unclean hands, if
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`successful, would dispose of much if not all of the case. Of course, it is frequently true that
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`success on the defenses of inequitable conduct or unclean hands would end a patent infringement
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`action. But that is not to say that an amendment raising such defenses or counterclaims must
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`invariably be regarded as important. What is called for in assessing the importance of the
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`amendment is not just the theoretical effect of success on the claims being asserted, but a
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`11
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`Case 2:15-cv-01455-WCB Document 250 Filed 01/12/17 Page 12 of 16 PageID #: 9806
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`pragmatic judgment as to the likelihood that the newly asserted claims or defenses will succeed.
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`See Filgueira, 734 F.3d at 423 (“Filgueira fails to show the importance of his amendment”
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`because “it would not have changed the outcome of the court’s ruling” on the motion to
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`dismiss.); Sw. Bell Tel. Co. v. City of El Paso, 346 F.3d 541, 547 (5th Cir. 2003) (treating
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`“likely failure of the proposed counterclaims on the merits” as a factor weighing against allowing
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`untimely amendment); see also Bombardier Aerospace Corp. v. United States, 831 F.3d 268, 284
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`(5th Cir. 2016) (futility of amendment supports decision to deny motion to amend); Tangipahoa
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`Parish Sch. Bd., 816 F.3d at 328 (same); Nourison Rug Corp. v. Parvisian, 535 F.3d 295, 299
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`(4th Cir. 2008) (same).
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`Although the Court recognizes that Teva has not completed its discovery on the
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`inequitable conduct and unclean hands issues, the outlines of Teva’s theory are nonetheless clear.
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`Based on the evidentiary materials and arguments presented by the parties, the Court is able to
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`conclude that the counterclaim and defenses of inequitable conduct and unclean hands would be
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`unlikely to succeed.2 For that reason, the Court regards the amendment as not being of sufficient
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`importance to justify overlooking Teva’s failure to meet the filing deadline.
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`Teva’s argument is that Dr. Schiffman and the prosecuting attorney who submitted the
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`Schiffman Declaration (and Dr. Attar’s similar declaration) to the examiner intentionally
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`deceived the PTO and persuaded the examiner to issue five of the patents in suit as a result of the
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`2 If the issues in question were for a jury to determine, this Court would be less willing
`to venture a judgment at this stage as to the likelihood of Teva prevailing on its counterclaim and
`defenses. But this case will be heard by the Court without a jury, and in any event the issues of
`inequitable conduct and unclean hands are equitable issues for the Court to decide. For that
`reason, the Court is less diffident about predicting how those issues will be resolved, at least
`based on the showing that has been made at this point.
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`12
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`Case 2:15-cv-01455-WCB Document 250 Filed 01/12/17 Page 13 of 16 PageID #: 9807
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`falsehoods contained in the declarations.3 In particular, Teva argues that the misrepresentation
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`in the Schiffman Declaration was that the particular cyclosporin formulation described in the
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`patent applications produced results that were unexpected in light of the prior art. Schiffman
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`Declaration ¶¶ 14-20. Teva contends that because the data set forth in the Schiffman Declaration
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`were drawn from the Sall Article, which was itself prior art, the results that Dr. Schiffman
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`highlighted, based on data from the Sall Article, could not have been “unexpected” in light of the
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`prior art. Accordingly, Teva argues, the patents in suit were improperly obtained as a result of
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`inequitable conduct, and that conduct in turn gives rise to a defense of unclean hands.4
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`There are two problems with Teva’s inequitable conduct argument. First, Teva argues
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`that the results reported by Dr. Schiffman could not have been “surprising” or “unexpected,”
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`because they were based on data set out in the Sall Article, which was more than a decade old at
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`the time of Dr. Schiffman’s declaration. The unexpected or surprising nature of a particular
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`invention, however, is judged as of the time of the invention, which in this case would be the
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`priority date of the patents, or September 15, 2003. See Bristol-Myers Squibb Co. v. Teva
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`Pharms. USA, Inc., 752 F.3d 967, 977 (Fed. Cir. 2014).
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`Second, and more importantly, Teva suggests that the unexpected results described in the
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`Schiffman Declaration were disclosed in the prior art Sall Article. But Dr. Schiffman explained
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`3 Teva argues that the issuance of the sixth patent in suit, U.S. Patent No. 9,248,191, was
`the result of the earlier, successful efforts to persuade the examiner that the inventors’
`formulation had been found to produce surprising and unexpected results.
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` 4
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` Teva makes clear that its unclean hands argument is based entirely on its allegations of
`inequitable conduct. As the Federal Circuit explained in Therasense, Inc. v. Becton Dickinson &
`Co., 649 F.3d 1276 (Fed. Cir. 2011), the doctrine of inequitable conduct grew out of the doctrine
`of unclean hands, but “came to embrace a broader scope of misconduct” than the doctrine of
`unclean hands, which “included only egregious affirmative acts of misconduct intended to
`deceive both the PTO and the courts.” Id. at 1287. Because conduct that is insufficient to
`constitute inequitable conduct necessarily falls short of giving rise to a claim of unclean hands,
`this Court need only address Teva’s inequitable conduct claim.
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`Case 2:15-cv-01455-WCB Document 250 Filed 01/12/17 Page 14 of 16 PageID #: 9808
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`that the unexpected results discovered as a result of the Phase 3 Study for Restasis were the
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`surprisingly good results obtained from the specific combination of 0.05% by weight of
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`cyclosporin A with 1.25% by weight of castor oil. Schiffman Declaration at ¶¶ 14-20. The Sall
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`Article did not disclose the weight percentage of the castor oil in that formulation, so the fact that
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`Dr. Schiffman drew his data from the Phase 3 Study and may have obtained several of his figures
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`from the Sall Article does not necessarily establish that the Sall Article anticipates (or renders
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`obvious) the formulation that is recited in many of the claims of the patents in suit.
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`In sum, based on the showing made by Teva, the Court is not persuaded that the
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`inequitable conduct and unclean hands argument that Teva raises in the second amended
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`complaint is likely to be meritorious.
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`3. The Potential Prejudice to the Plaintiff from Allowing the Amendment
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`In arguing that it would be prejudiced by an order permitting Teva to amend its answer
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`and counterclaims, Allergan relies mainly on the fact that the addition of those defenses and
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`counterclaim would inject a new layer of complexity into an already complex case at a time
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`when the discovery deadlines are approaching. The Court agrees.
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`Although the time for discovery has not expired, the deadline for fact discovery is
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`February 2, 2017, a little more than a month from the date that briefing was completed on the
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`motion to amend. Introducing the new and discrete issues of inequitable conduct and unclean
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`hands would complicate discovery. The inquiry into issues such as specific intent to deceive
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`would presumably require discovery of a different nature from the ongoing discovery regarding
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`the issues already in the case. Moreover, because discovery relating to the issue of inequitable
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`conduct could well involve inquiries into the activities of the prosecuting attorney, the expense
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`and time required to conduct the additional discovery could be increased by issues of privilege.
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`Case 2:15-cv-01455-WCB Document 250 Filed 01/12/17 Page 15 of 16 PageID #: 9809
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`The additional discovery costs imposed on the responding party are entitled to
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`consideration in determining the issue of prejudice. See Squyres, 782 F.3d at 238-39; Marlowe
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`Patent Holdings LLC v. Dice Elecs., LLC, 293 F.R.D. 688, 695 (D.N.J. 2013); Anderson v. La.
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`ex rel. La. Dep’t of Pub. Safety & Corrections, Civil Action No. 09-75, 2010 WL 2545817, at *3
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`(M.D. La. May 24, 2010). In addition, the introduction of the new legal theories raised by
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`inequitable conduct and unclean hands would be likely to make the preparation and disposition
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`of pretrial motions more cumbersome and time-consuming.
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`In light of the procedural posture of this case, where fact discovery has not closed and
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`dispositive motions have not yet been filed, the Court recognizes that this factor is not entitled to
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`dispositive weight. However, on balance this factor favors Allergan and cuts moderately in favor
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`of denial of the motion to amend.
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`4. The Availability of a Continuance
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`Finally, the question of the availability of a continuance has little pertinence here.
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`Because the trial of this case is not scheduled to begin until August 2017, it is not likely that the
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`issues raised in Teva’s proposed amended answer and counterclaims would require a
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`continuance even if Teva’s motion were granted. Nonetheless, there is a related interest in
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`proceeding expeditiously in this Hatch-Waxman Act case that cuts against adding new issues at
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`this relatively late point in the proceedings. It is in the interest of the parties and the public that
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`the issues in this case, as in many Hatch-Waxman Act cases, be resolved as promptly as possible.
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`While expediting judicial proceedings is always an important consideration, it is even more so in
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`the Hatch-Waxman Act context. Therefore, given the strong interest in not granting a
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`continuance, the possible availability of a continuance does not cut in favor of granting the
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`Case 2:15-cv-01455-WCB Document 250 Filed 01/12/17 Page 16 of 16 PageID #: 9810
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`motion to amend, a