`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
`
`Case No. 2:15-cv-1455-WCB
`
`§§§§§§§§§
`
`ALLERGAN, INC.,
`
`Plaintiff,
`
`v.
`
`TEVA PHARMACEUTICALS USA, INC.,
`et al.,
`
`Defendants.
`
`MEMORANDUM OPINION AND ORDER
`
`Before the Court is the motion of defendant Teva Pharmaceuticals USA, Inc., (“Teva”) to
`
`amend its answer and counterclaims to raise the issues of inequitable conduct and unclean hands.
`
`Dkt. No. 189. The motion was briefed by the parties and argued during a telephonic hearing
`
`conducted on January 11, 2017. The Court DENIES the motion.
`
`BACKGROUND
`
`This case was filed on August 15, 2015. Dkt. No. 1. Teva filed its original answer and
`
`counterclaims on October 26, 2015. Dkt. No. 40. Teva did not at that time assert the defenses of
`
`inequitable conduct and unclean hands, nor did it assert a counterclaim for a declaratory
`
`judgment of inequitable conduct.
`
`On February 18, 2016, the plaintiff, Allergan, Inc., filed an amended complaint adding a
`
`newly issued patent. Dkt. No. 96. Teva filed an amended answer and counterclaims in response
`
`to the amended complaint on March 11, 2016. Dkt. No. 99. Again, however, Teva did not add
`
`the defenses of inequitable conduct and unclean hands, or a counterclaim for a declaratory
`
`judgment of inequitable conduct.
`
`1
`
`ALL 2076
`MYLAN PHARMACEUTICALS V. ALLERGAN
`IPR2016-01130
`
`
`
`Case 2:15-cv-01455-WCB Document 250 Filed 01/12/17 Page 2 of 16 PageID #: 9796
`
`The deadline for amending pleadings set forth in the Docket Control Order, Dkt. No. 76,
`
`was June 9, 2016. Teva did not file an amended answer and counterclaim by that date seeking to
`
`add defenses of inequitable conduct and unclean hands, or a counterclaim of inequitable conduct.
`
`Four months after that deadline, on October 21, 2016, Teva filed the present motion seeking
`
`leave to amend its answer and counterclaims to add the defense of unclean hands and the defense
`
`and counterclaim of inequitable conduct. Dkt. No. 189. Defendants Akorn, Inc.; Mylan
`
`Pharmaceuticals, Inc.; Mylan, Inc.; Innopharma, Inc.; and Famy Care Limited have joined
`
`Teva’s motion. Dkt. Nos. 224, 229, 232, and 234. Allergan opposes that motion on the ground
`
`that the motion is untimely and that no adequate justification has been given for the amendment.
`
`Dkt. No. 194.
`
`
`
`Teva’s assertions of inequitable conduct and unclean hands are predicated on what it
`
`describes as its recent discovery of “strong evidence that Allergan defrauded the U.S. Patent and
`
`Trademark Office in order to obtain allowance of the patents in suit.” Teva’s Motion for Leave
`
`to Amend Answer and Counterclaims (“Teva’s Motion to Amend”), Dkt. No. 189, at 1. In late
`
`2013, the inventors filed a set of continuation applications that claimed, inter alia, the ophthalmic
`
`emulsion at issue in this case. The examiner rejected four of the applications as obvious over
`
`U.S. Patent No. 5,474,979 to Ding.
`
`In response to the examiner’s rejection of the applications’ claims as obvious in light of
`
`Ding, the inventors submitted argument and declarations purporting to show that the claimed
`
`ophthalmic emulsion produced surprising and unexpected results. The
`
`two declarations on
`
`which the inventors relied in claiming that their ophthalmic emulsion had surprising and
`
`unexpected results were a declaration by Dr. Rhett M. Schiffman dated October 11, 2013
`
`
`
`2
`
`
`
`Case 2:15-cv-01455-WCB Document 250 Filed 01/12/17 Page 3 of 16 PageID #: 9797
`
`(“Schiffman Declaration”), Dkt. No. 195-3, and a declaration by Dr. Mayssa Attar, dated
`
`October 14, 2013, Dkt. No. 195-2.
`
`According to Teva, “the data and statements used to demonstrate unexpected results
`
`were, in fact, plagiarized from an article that had appeared in a well-known medical journal over
`
`a decade earlier, and those data and statements from the article were themselves derived from
`
`Allergan’s own clinical trial data.” Teva’s Motion to Amend at 1 (emphasis in original). The
`
`article from which Teva claims Allergan plagiarized data is Sall et al., Two Multicenter,
`
`Randomized Studies of the Efficacy and Safety of Cyclosporine Ophthalmic Emulsion in
`
`Moderate to Severe Dry Eye Disease, 107 Ophthalmology 631 (April 2000) (“Sall Article”), Dkt.
`
`No. 195-1. According to Teva, because the data and statements relied on by the inventors were
`
`taken from that 13-year-old article, the results Allergan presented to the PTO “were not
`
`‘unexpected’ at all—and Allergan knew it.” Teva’s Motion to Amend at 1.
`
`
`
`Following Allergan’s submission of the declarations and the arguments of the
`
`prosecuting attorney based on those declarations, the examiner found that the inventors had
`
`overcome the obviousness rejection. The examiner then issued a notice of allowance for the
`
`claims of the four applications that had previously been rejected. Those applications issued as
`
`U.S. Patent Nos. 8,629,111; 8,633,162; 8,642,556; and 8,648,048. The examiner later issued a
`
`notice of allowance for a fifth application, which issued as U.S. Patent No. 8,685,930. Two
`
`years later, the PTO issued the last of the six related patents in suit, U.S. Patent No. 9,248,191.
`
`Teva argues that the misleading declarations and argument regarding unexpected results were
`
`plainly material to patentability, because it was those declarations and arguments that caused the
`
`examiner to withdraw the rejection and allow the six patents at issue in this case.
`
`
`
`3
`
`
`
`Case 2:15-cv-01455-WCB Document 250 Filed 01/12/17 Page 4 of 16 PageID #: 9798
`
`Allergan responds that the inventors and the prosecution counsel did not engage in
`
`deceptive conduct in dealing with the PTO. Allergan explains that the data set forth in the
`
`Schiffman Declaration were derived from Allergan’s Phase 3 Study for Restasis, which was
`
`conducted in the late 1990s. The Sall Article was also based on that Phase 3 Study. Therefore,
`
`according to Allergan, it is not surprising that both the Schiffman Declaration and the Sall
`
`Article contained the same data and used some of the same Figures.
`
`Allergan argues that there is no evidence that it attempted to deceive the examiner by
`
`concealing the relationship between the Sall Article and the Schiffman Declaration. The Sall
`
`Article was cited in the common specification of the six patents in suit and produced for the
`
`examiner during prosecution. In fact, the Sall Article was incorporated by reference in each of
`
`the patents and is cited in the “Background of the Invention” as “Two Multicenter, Randomized
`
`Studies of the Efficacy and Safety of Cyclosporine Ophthalmic Emulsion in Moderate to Severe
`
`Dry Eye Disease. CsA Phase 3 Study Group.” See, e.g., U.S. Patent No. 8,629,111, col. 1, ll. 48-
`
`52 (emphasis added).. Moreover, Allergan argues, a simple comparison of the data in the
`
`Schiffman Declaration and the Sall Article makes clear that Schiffman and Sall both report the
`
`same data, and that four of the figures attached as exhibits to the Schiffman Declaration are
`
`essentially identical to the four figures found in the Sall Article. Compare Sall Article, Dkt. No.
`
`195-1, at 635-36, Figures 1-4, with Schiffman Declaration, Dkt. No. 195-3, Exhibit D, Figures 1-
`
`4. Accordingly, it would have been apparent to the examiner that the data came from the same
`
`source.
`
`Allergan argues that documents in the case record show that Teva was aware of the
`
`similarities between the Sall Article and the Schiffman Declaration—and that both were based
`
`on the Allergan Phase 3 Study for Restasis—at least as early as a year ago. Nonetheless, Teva
`
`
`
`4
`
`
`
`Case 2:15-cv-01455-WCB Document 250 Filed 01/12/17 Page 5 of 16 PageID #: 9799
`
`waited until well after the deadline for amending the pleadings to move to amend its answer and
`
`counterclaims. Allergan argues that Teva’s motion should be denied in light of that unjustified
`
`delay.
`
`DISCUSSION
`
`
`
`Under Rule 15(a)(1), Fed. R. Civ. P., a party may amend a pleading once as a matter of
`
`course more than 21 days after service of the original pleading or a responsive pleading or a
`
`motion under Fed. R. Civ. P. 12(b), (e) or (f). After that, a party may amend a pleading only
`
`with the opposing party’s consent or leave of court. Fed. R. Civ. P. 15(a)(2). Leave of court is
`
`to be freely granted “when justice so requires.” Fed. R. Civ. P. 15(a)(2).
`
`Once a scheduling order has been entered in the case and a deadline has been set for
`
`filing amended pleadings, the decision whether to permit a post-deadline amendment is governed
`
`by Fed. R. Civ. P. 16(b). See Squyres v. Heico Cos., L.L.C., 782 F.3d 224, 237 (5th Cir. 2015);
`
`EEOC v. Serv. Temps Inc., 679 F.3d 323, 333-34 (5th Cir. 2012); S&W Enters., LLC v.
`
`Southtrust Bank of Ala, N.A., 315 F.3d 533, 535 (5th Cir. 2003); L.G. Motorsports, Inc. v.
`
`NGMCO, Inc., No. 4:11-cv-112, 2013 WL 2543398, at *6 (E.D. Tex. June 6, 2013). Under
`
`Rule 16(b)(4), Fed. R. Civ. P., a motion to modify the scheduling order by permitting the filing
`
`of an amended pleading after the deadline in the scheduling order may be granted “only for good
`
`cause and with the judge’s consent.”
`
`The party seeking to modify the scheduling order has the burden to show good cause.
`
`Squyres, l782 F.3d at 237; Self v. Quinn’s Rental Servs. (USA), LLC, Civil Action No. H-15-
`
`1569, 2016 WL 6835093, at *1 (S.D. Tex. Nov. 21, 2016). The Fifth Circuit has held that Rule
`
`16 gives trial courts “broad discretion to preserve the integrity and purpose of the pretrial order”
`
`in making the “good cause” determination. Geiserman v. MacDonald, 893 F.2d 787, 790 (5th
`
`
`
`5
`
`
`
`Case 2:15-cv-01455-WCB Document 250 Filed 01/12/17 Page 6 of 16 PageID #: 9800
`
`Cir. 1990) (quoting Hodges v. United States, 597 F.2d 1014, 1018 (5th Cir. 1979)).1 The Fifth
`
`Circuit, moreover, has directed that in deciding whether to permit amendments to the pleadings
`
`after the deadline for such amendments, district courts should consider “(1) the explanation for
`
`the party’s failure to [timely move for leave to amend]; (2) the importance of the [amendment];
`
`(3) potential prejudice in allowing the [amendment]; and (4) the availability of a continuance to
`
`cure such prejudice.” United States ex rel. Bias v. Tangipahoa Parish Sch. Bd., 816 F.3d 315,
`
`328 (5th Cir. 2016) (quoting S&W Enters., 315 F.3d at 536 (alterations in original)); Filgueira v.
`
`U.S. Bank Nat’l Ass’n, 734 F.3d 420, 422 (5th Cir. 2013); Ciena Corp. v. Nortel Networks, Inc.,
`
`233 F.R.D. 493, 494 (E.D. Tex. 2006). The Court will consider each of those factors in
`
`exercising its discretion whether to grant the motion to amend.
`
`
`
`1. Teva’s Explanation for Its Untimely Motion to Amend
`
`The most important factor bearing on the “good cause” inquiry under Rule 16(b)(4) is
`
`whether the party seeking to modify the scheduling order can show that it has been diligent in
`
`pressing its claims but despite its diligence could not reasonably have met the scheduling
`
`deadline. See Wachovia Bank, Nat’l Ass’n v. Schlegel, Civil Action No. 3:09-cv-1322, 2010
`
`WL 2671316, at *2 (N.D. Tex. June 30, 2010). The Wright and Miller treatise notes that “many
`
`more motions seeking modification of scheduling orders are denied than are granted,” and that
`
`“the good-cause standard will not be satisfied if the court concludes that the party seeking relief
`
`(or that party’s attorney) has not acted diligently in compliance with the schedule.” 6A Charles
`
`
`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).
`
`
`
`6
`
`
`
`Case 2:15-cv-01455-WCB Document 250 Filed 01/12/17 Page 7 of 16 PageID #: 9801
`
`Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice & Procedure § 1522.2, at 322
`
`(3d ed. 2010) (citing numerous cases); see also, e.g., Cub USA Servs., LLC v. Jetta Operating
`
`Co., Civil Action No. 3:14-cv-2508-D, 2016 WL 1028128, at *2 (S.D. Tex. Mar. 15, 2016) (“the
`
`court usually denies motions to amend the scheduling order when the moving party fails to
`
`demonstrate that, despite its diligence, it could not have reasonably met the scheduling
`
`deadline”).
`
`Teva’s explanation for its untimely amendment is insufficient to justify its belated filing.
`
`Although Teva contends that it did not have critical information about Allergan’s allegedly
`
`fraudulent conduct until recently, the evidence does not support that contention.
`
`As Allergan points out, Teva was aware of the facts underlying its motion at least four
`
`months before the deadline to amend its pleadings. Allergan points to the following evidence of
`
`Teva’s knowledge:
`
`In its invalidity contentions, dated January 29, 2016, Teva noted that
`
`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.
`
`Defendants’ Preliminary Joint Invalidity Contentions, Dkt. No. 196-1, at 51. See also id. at 137
`
`(“[T]he [Schiffman] data appear to be taken directly from the prior art Sall publication, because
`
`the data provided show the exact same numerical results arranged in the exact same way as the
`
`data in Sall Figures 1-4.”). Teva made the same representations in its Abbreviated New Drug
`
`Application notice sent to Allergan on February 24, 2016. Dkt. No. 194-1, at 35.
`
`
`
`7
`
`
`
`Case 2:15-cv-01455-WCB Document 250 Filed 01/12/17 Page 8 of 16 PageID #: 9802
`
`
`
`In light of those representations, there is no force to Teva’s statement in its motion that it
`
`only “recently discovered that the data in Dr. Schiffman’s declaration was plagiarized from [the
`
`Sall Article] and that [the Sall Article] in turn sourced those data from Allergan’s own clinical
`
`trials conducted in the late 1990s.” Dkt. No. 189, at 6. In its reply brief, Teva argues that it
`
`knew in early 2016 of the Schiffman Declaration and Sall Article, and it therefore had a basis to
`
`contend that Sall anticipated the patents’ claims and that the results in the Schiffman Declaration
`
`“were not in fact unexpected.” Teva’s Reply in Support of Motion for Leave to Amend Answer
`
`and Counterclaim, Dkt. No. 201, at 2. However, Teva claims that what it did not know in early
`
`2016 was that Allergan’s New Drug Application (“NDA”) for Restasis, when compared to the
`
`Sall Article and Schiffman Declaration, revealed that Dr. Schiffman “copied the figures” from
`
`the Sall Article “and then nonetheless represented that those results were unexpected in view of
`
`the prior art.” Id. Teva contends that it was this comparison to “the underlying data from
`
`Allergan’s NDA (which was produced during discovery) . . . that gave Teva the basis for its
`
`inequitable conduct claims.” Id.
`
`Teva’s attempt to show diligence by tying its knowledge to its examination of the NDA
`
`does not work. For one thing, Teva admits that, independent of the NDA, it “recognized in early
`
`2016 that (1) Allergan overcame the PTO’s obviousness rejections using Dr. Schiffman’s
`
`declaration and (2) that Sall contained conclusions very similar to those found in the
`
`declaration.” Id. Teva’s preliminary invalidity contentions, recited above, establish that it also
`
`knew in early 2016 that the data in the Schiffman Declaration, like the data in the Sall Article,
`
`were drawn from the same Allergan Phase 3 Study and that several of the figures in the
`
`Schiffman Declaration were almost identical to corresponding figures in the Sall Article. Teva
`
`therefore did not need the information in Allergan’s NDA to allege that Dr. Schiffman “copied
`
`
`
`8
`
`
`
`Case 2:15-cv-01455-WCB Document 250 Filed 01/12/17 Page 9 of 16 PageID #: 9803
`
`the figures” from the Sall Article, or at least the figures were based on data from the same
`
`source.
`
`While acknowledging that in early 2016, it was aware that the data in the Sall Article and
`
`in the Schiffman Declaration came from the same source, Teva contends that it did not know at
`
`that time that Dr. Schiffman “plagiarized” several of the figures used in his declaration from the
`
`Sall article. But it remains unclear to the Court why it matters whether Dr. Schiffman took his
`
`data from the Sall article or from the Allergan Phase 3 Study from which the Sall Article also
`
`derived its data. In either case, it is clear that some, but not all, of the information relied on by
`
`Dr. Schiffman in his declaration was disclosed in the Sall Article. That information was in the
`
`prior art, and thus has the same effect on the issue of patentability whether Dr. Schiffman took
`
`the information directly from the Sall Article or not.
`
`The Court is also skeptical of Teva’s claim that it was improper for Dr. Schiffman’s to
`
`“plagiarize” the figures from the Sall Article without revealing the source of those figures to the
`
`PTO. Dr. Schiffman was listed in the Sall Article as a member of the Cyclosporin A Phase 3
`
`Study Group, and the Study Group was listed among the co-authors of the Sall Article. See Dkt.
`
`No. 195-1, at 631, 638. Accordingly, it hardly seems accurate to charge Dr. Schiffman with
`
`plagiarizing data from an article he is credited with co-authoring.
`
`Moreover, even if Teva’s statements in January and February 2016 had not already made
`
`clear that Teva recognized the relationship between the Phase 3 Study, the Sall Article, and the
`
`Schiffman Declaration, that relationship was obvious on its face, and was not hidden from the
`
`examiner. In fact, like Poe’s purloined letter, the evidence that Teva claims to have extracted
`
`through great effort from a complex tangle of prosecution history was actually sitting in plain
`
`view all along.
`
`
`
`9
`
`
`
`Case 2:15-cv-01455-WCB Document 250 Filed 01/12/17 Page 10 of 16 PageID #: 9804
`
`As noted, the Sall Article was incorporated by reference in each of the applications and
`
`was cited with the title “Two Multicenter, Randomized Studies . . . CsA Phase 3 Study Group,”
`
`so it was hardly concealed from the examiner. The article made clear that the Cyclosporin A
`
`Phase 3 Study on which the article reported was sponsored by Allergan, and as noted, Dr.
`
`Schiffman was involved in its authorship. The Schiffman Declaration, moreover, made clear that
`
`it was based on Allergan’s Phase 2 and Phase 3 Studies for Restasis. Thus, the links between the
`
`Phase 3 Study, the Sall Article, and the Schiffman Declaration were obvious.
`
`As for the figures in the Schiffman Declaration, the near identity between Figures 1-4 of
`
`the Sall Article (which were the only four figures in the Article), Dkt. No. 195-1, at 635-36, and
`
`Figures 1-4 of Exhibit D of the Schiffman Declaration, Dkt. No. 195-3, Exh. D, at 21-22, is
`
`immediately apparent upon even the most cursory examination of the two documents. Even
`
`without the evidence that Teva had already made those connections, a reasonably diligent
`
`examination of the important materials in the case would have made that connection evident.
`
`In sum, given what Teva knew or should have known by February 2016, the Court
`
`concludes that Teva did not act with reasonable diligence when it failed to amend its answer and
`
`counterclaims to add the defenses of inequitable conduct and unclean hands and the counterclaim
`
`of inequitable conduct by the June 2016 deadline for amending the pleadings. The materials in
`
`Teva’s possession before that time should have prompted it to explore its theories of inequitable
`
`conduct and unclean hands long before October 2016. See Millennium Partners, L.P. v. Colmar
`
`Storage, LLC, 494 F.3d 1293, 1298-99 (11th Cir. 2007) (defendant failed to demonstrate good
`
`cause for seeking to raise a defense after the district court’s scheduling order deadline when the
`
`evidence showed that the defendant, “with some investigation,” could have discovered the
`
`defense. “The fact that [the defendant] failed to conduct such investigation does not equate to
`
`
`
`10
`
`
`
`Case 2:15-cv-01455-WCB Document 250 Filed 01/12/17 Page 11 of 16 PageID #: 9805
`
`‘good cause’ for leave to amend under Rule 16 . . . .”); Carrier Corp. v. Goodman Global, Inc.,
`
`49 F. Supp. 3d 430, 433 (D. Del. 2014); Perfect Pearl Co. v. Majestic Pearl & Stone, Inc., 889 F.
`
`Supp. 2d 453, 458-59 (S.D.N.Y. 2012); Transamerica Life Ins. Co. v. Lincoln Nat’l Life Ins.
`
`Co., 590 F. Supp. 2d 1093, 1101-03 (N.D. Iowa 2008). As Judge Hittner observed in Ruiz v.
`
`University of Texas M.D. Anderson Cancer Center, 291 F.R.D. 170, 172 (S.D. Tex. 2013),
`
`district courts within the Fifth Circuit have repeatedly held that if a party was “previously aware
`
`of the factual underpinnings of the claim she seeks to assert beyond the time allowed by a
`
`scheduling order, leave to amend is improper.” See also, e.g., Info-Power Int’l, Inc. v. Coldwater
`
`Tech., Inc., No. 3:07-CV-0937-P, 2008 WL 5552245, at *3 (N.D. Tex. Dec. 31, 2008) (“[T]he
`
`court may deny the motion [for leave to amend] if the movant knows or should have known of
`
`the facts upon which the proposed amendment is based but fails to include them in the original
`
`[answer].”); Am. Tourmaline Fields v. Int’l Paper Co., No. 3:96-CV-3363-D, 1998 WL 874825,
`
`at *1 (N.D. Tex. Dec. 7, 1998) (same).
`
`Accordingly, the Court concludes that the “due diligence” factor cuts strongly against
`
`granting the motion to amend.
`
`2. The Importance of the Amendment
`
`
`
`Teva argues that allowing it to amend its answer and counterclaims is of critical
`
`importance because the claim and defenses of inequitable conduct and unclean hands, if
`
`successful, would dispose of much if not all of the case. Of course, it is frequently true that
`
`success on the defenses of inequitable conduct or unclean hands would end a patent infringement
`
`action. But that is not to say that an amendment raising such defenses or counterclaims must
`
`invariably be regarded as important. What is called for in assessing the importance of the
`
`amendment is not just the theoretical effect of success on the claims being asserted, but a
`
`
`
`11
`
`
`
`Case 2:15-cv-01455-WCB Document 250 Filed 01/12/17 Page 12 of 16 PageID #: 9806
`
`pragmatic judgment as to the likelihood that the newly asserted claims or defenses will succeed.
`
`See Filgueira, 734 F.3d at 423 (“Filgueira fails to show the importance of his amendment”
`
`because “it would not have changed the outcome of the court’s ruling” on the motion to
`
`dismiss.); Sw. Bell Tel. Co. v. City of El Paso, 346 F.3d 541, 547 (5th Cir. 2003) (treating
`
`“likely failure of the proposed counterclaims on the merits” as a factor weighing against allowing
`
`untimely amendment); see also Bombardier Aerospace Corp. v. United States, 831 F.3d 268, 284
`
`(5th Cir. 2016) (futility of amendment supports decision to deny motion to amend); Tangipahoa
`
`Parish Sch. Bd., 816 F.3d at 328 (same); Nourison Rug Corp. v. Parvisian, 535 F.3d 295, 299
`
`(4th Cir. 2008) (same).
`
`Although the Court recognizes that Teva has not completed its discovery on the
`
`inequitable conduct and unclean hands issues, the outlines of Teva’s theory are nonetheless clear.
`
`Based on the evidentiary materials and arguments presented by the parties, the Court is able to
`
`conclude that the counterclaim and defenses of inequitable conduct and unclean hands would be
`
`unlikely to succeed.2 For that reason, the Court regards the amendment as not being of sufficient
`
`importance to justify overlooking Teva’s failure to meet the filing deadline.
`
`Teva’s argument is that Dr. Schiffman and the prosecuting attorney who submitted the
`
`Schiffman Declaration (and Dr. Attar’s similar declaration) to the examiner intentionally
`
`deceived the PTO and persuaded the examiner to issue five of the patents in suit as a result of the
`
`
`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.
`
`
`
`
`12
`
`
`
`Case 2:15-cv-01455-WCB Document 250 Filed 01/12/17 Page 13 of 16 PageID #: 9807
`
`falsehoods contained in the declarations.3 In particular, Teva argues that the misrepresentation
`
`in the Schiffman Declaration was that the particular cyclosporin formulation described in the
`
`patent applications produced results that were unexpected in light of the prior art. Schiffman
`
`Declaration ¶¶ 14-20. Teva contends that because the data set forth in the Schiffman Declaration
`
`were drawn from the Sall Article, which was itself prior art, the results that Dr. Schiffman
`
`highlighted, based on data from the Sall Article, could not have been “unexpected” in light of the
`
`prior art. Accordingly, Teva argues, the patents in suit were improperly obtained as a result of
`
`inequitable conduct, and that conduct in turn gives rise to a defense of unclean hands.4
`
`There are two problems with Teva’s inequitable conduct argument. First, Teva argues
`
`that the results reported by Dr. Schiffman could not have been “surprising” or “unexpected,”
`
`because they were based on data set out in the Sall Article, which was more than a decade old at
`
`the time of Dr. Schiffman’s declaration. The unexpected or surprising nature of a particular
`
`invention, however, is judged as of the time of the invention, which in this case would be the
`
`priority date of the patents, or September 15, 2003. See Bristol-Myers Squibb Co. v. Teva
`
`Pharms. USA, Inc., 752 F.3d 967, 977 (Fed. Cir. 2014).
`
`Second, and more importantly, Teva suggests that the unexpected results described in the
`
`Schiffman Declaration were disclosed in the prior art Sall Article. But Dr. Schiffman explained
`
`
`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.
`
` 4
`
` 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.
`13
`
`
`
`
`
`Case 2:15-cv-01455-WCB Document 250 Filed 01/12/17 Page 14 of 16 PageID #: 9808
`
`that the unexpected results discovered as a result of the Phase 3 Study for Restasis were the
`
`surprisingly good results obtained from the specific combination of 0.05% by weight of
`
`cyclosporin A with 1.25% by weight of castor oil. Schiffman Declaration at ¶¶ 14-20. The Sall
`
`Article did not disclose the weight percentage of the castor oil in that formulation, so the fact that
`
`Dr. Schiffman drew his data from the Phase 3 Study and may have obtained several of his figures
`
`from the Sall Article does not necessarily establish that the Sall Article anticipates (or renders
`
`obvious) the formulation that is recited in many of the claims of the patents in suit.
`
`In sum, based on the showing made by Teva, the Court is not persuaded that the
`
`inequitable conduct and unclean hands argument that Teva raises in the second amended
`
`complaint is likely to be meritorious.
`
`
`
`3. The Potential Prejudice to the Plaintiff from Allowing the Amendment
`
`In arguing that it would be prejudiced by an order permitting Teva to amend its answer
`
`and counterclaims, Allergan relies mainly on the fact that the addition of those defenses and
`
`counterclaim would inject a new layer of complexity into an already complex case at a time
`
`when the discovery deadlines are approaching. The Court agrees.
`
`Although the time for discovery has not expired, the deadline for fact discovery is
`
`February 2, 2017, a little more than a month from the date that briefing was completed on the
`
`motion to amend. Introducing the new and discrete issues of inequitable conduct and unclean
`
`hands would complicate discovery. The inquiry into issues such as specific intent to deceive
`
`would presumably require discovery of a different nature from the ongoing discovery regarding
`
`the issues already in the case. Moreover, because discovery relating to the issue of inequitable
`
`conduct could well involve inquiries into the activities of the prosecuting attorney, the expense
`
`and time required to conduct the additional discovery could be increased by issues of privilege.
`
`
`
`14
`
`
`
`Case 2:15-cv-01455-WCB Document 250 Filed 01/12/17 Page 15 of 16 PageID #: 9809
`
`The additional discovery costs imposed on the responding party are entitled to
`
`consideration in determining the issue of prejudice. See Squyres, 782 F.3d at 238-39; Marlowe
`
`Patent Holdings LLC v. Dice Elecs., LLC, 293 F.R.D. 688, 695 (D.N.J. 2013); Anderson v. La.
`
`ex rel. La. Dep’t of Pub. Safety & Corrections, Civil Action No. 09-75, 2010 WL 2545817, at *3
`
`(M.D. La. May 24, 2010). In addition, the introduction of the new legal theories raised by
`
`inequitable conduct and unclean hands would be likely to make the preparation and disposition
`
`of pretrial motions more cumbersome and time-consuming.
`
`In light of the procedural posture of this case, where fact discovery has not closed and
`
`dispositive motions have not yet been filed, the Court recognizes that this factor is not entitled to
`
`dispositive weight. However, on balance this factor favors Allergan and cuts moderately in favor
`
`of denial of the motion to amend.
`
`4. The Availability of a Continuance
`
`Finally, the question of the availability of a continuance has little pertinence here.
`
`Because the trial of this case is not scheduled to begin until August 2017, it is not likely that the
`
`issues raised in Teva’s proposed amended answer and counterclaims would require a
`
`continuance even if Teva’s motion were granted. Nonetheless, there is a related interest in
`
`proceeding expeditiously in this Hatch-Waxman Act case that cuts against adding new issues at
`
`this relatively late point in the proceedings. It is in the interest of the parties and the public that
`
`the issues in this case, as in many Hatch-Waxman Act cases, be resolved as promptly as possible.
`
`While expediting judicial proceedings is always an important consideration, it is even more so in
`
`the Hatch-Waxman Act context. Therefore, given the strong interest in not granting a
`
`continuance, the possible availability of a continuance does not cut in favor of granting the
`
`15
`
`
`
`Case 2:15-cv-01455-WCB Document 250 Filed 01/12/17 Page 16 of 16 PageID #: 9810
`
`motion to amend, an