Case 2:15-cv-01455-WCB Document 455 Filed 08/25/17 Page 1 of 11 PageID #: 23153
`
`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 are the parties’ submissions regarding the declaratory judgment claims
`
`under 35 U.S.C. § 271(a), (b), and (c), Dkt. Nos. 405 and 406, and regarding the request of
`
`plaintiff Allergan, Inc., for notice before any at-risk launch by any defendant, Dkt. Nos. 407 and
`
`408. After consideration of the briefs filed by the parties, the Court will not at this time order the
`
`defendants to give Allergan seven days’ advance notice of any at-risk launch. As for the
`
`declaratory judgment claims, the Court will not dismiss or sever those claims, but will retain
`
`them as part of the case to be tried.
`
`Also before the Court is the defendants’ Notice of Stipulation of Infringement and
`
`Motion to Modify the Order of Proof at Trial, Dkt. No. 415, and Allergan’s Brief in Response to
`
`Defendants’ Notice of Stipulation of Infringement and Motion to Modify the Order of Proof at
`
`Trial, Dkt. No. 433. While the defendants are free to concede or not contest any particular issue
`
`at trial, the proposed stipulation does not, in the Court’s view, take the issue of infringement out
`
`of the case and does not warrant changing the order of proof at trial. The motion to modify the
`
`Order of Proof at Trial is therefore DENIED.
`
`1
`
`

`

`Case 2:15-cv-01455-WCB Document 455 Filed 08/25/17 Page 2 of 11 PageID #: 23154
`
`1. Advance Notice of At-Risk Launch.
`
`Arguing that it would face irreparable harm if any of the defendants launch a generic
`
`version of Allergan’s Restasis product during the pendency of this litigation, Allergan requests
`
`that the Court order the defendants to provide Allergan with seven days’ advance notice of any
`
`plan to launch such a product. The defendants object, arguing that the Court lacks authority to
`
`issue such an order, that Allergan’s request for such an order is unripe, that Allergan has not
`
`made a showing of irreparable harm that would justify such an order, and that such an order
`
`would harm them competitively.
`
`None of the defendants is free at this point to launch their generic versions of Restasis,
`
`because the federal Food and Drug Administration has not yet approved any of their Abbreviated
`
`New Drug Applications (“ANDAs”). However, the parties have advised the Court that the FDA
`
`is expected to act on at least some of the defendants’ ANDAs shortly. Allergan notes that it is at
`
`least open to question whether the 30-month stay that normally applies to generic manufacturers
`
`in Hatch-Waxman litigation would apply to several of the defendants in this case. Therefore,
`
`according to Allergan, there is a substantial risk that those defendants might conduct an at-risk
`
`launch before the expiration of the 30-month period.
`
`Four of the five defendants—Akorn, InnoPharma, Mylan, and Teva—have advised the
`
`Court that they have agreed not to launch before the trial is complete. The remaining defendant,
`
`Famy Care Ltd., is subject to a 30-month stay of approval and therefore is not free to launch
`
`before the time that this Court is likely to enter its judgment in this case. See Dkt. No. 407, at 2
`
`& n.1.
`
`The defendants argue that the Court lacks the authority to enter an order requiring them
`
`to provide Allergan with seven days’ notice of their intent to launch. There is very little
`
`
`
`2
`
`

`

`Case 2:15-cv-01455-WCB Document 455 Filed 08/25/17 Page 3 of 11 PageID #: 23155
`
`authority on this point, and what authority there is shows up mainly in the form of terse
`
`observations by district courts without extended analysis. A few courts have issued such orders,
`
`often when they are agreed to, at least in part. See, e.g., Aziende Chimiche Riunite Angelini
`
`Francesco A.C.R.A.F. S.p.A. v. Actavis S. Atl. LLC, No. 1:12-cv-1061, Dkt. No. 21 (D. Del.
`
`Jan. 9, 2013); Medeva Pharma Suisee A.G. v. Roxane Labs, Inc., No. 3:07-cv-5165, Dkt. No.
`
`119, at 1 (D.N.J. Nov. 30, 2009); Eli Lilly & Co. v. Sicor Pharms., Inc., Case No. 1:06-cv-238,
`
`Dkt. No. 171 (S.D. Ind. June 20, 2008).
`
`A greater number of courts have refused to issue such orders, often expressing doubt as to
`
`their authority to do so. See Otsuka Pharm. Co. v. Torrent Pharms. Ltd., 99 F. Supp. 3d 461,
`
`471-72 (D.N.J. 2015) (recognizing “the principle that the generic defendants would not be
`
`required to provide notice of intent to launch at risk”); Hoffman-LaRoche, Inc. v. Teva Pharms.
`
`USA, Inc., No. 2:11-cv-3635, Dkt. No. 124 (Feb. 5, 2013) (“[T]he Court is not persuaded by
`
`Roche’s arguments that the Court has the authority to order advance notice of its intent to launch
`
`in the absence of an agreement by Teva.”); Teva Pharms. USA, Inc. v. Sandoz, Inc., No. 08 Civ.
`
`7611, 2010 WL 8760315, at *1 (S.D.N.Y. Oct. 12, 2010) (“Plaintiff’s request amounts, in
`
`essence, for the Court to order Defendants to provide Plaintiffs with confidential business
`
`information, which for all intent and purposes, would function as an injunction by prohibiting
`
`Defendants from launching their product even if they have FDA approval and the thirty-month
`
`statutory stay period has expired.”); Astrazeneca LP v. Breath Ltd., No. 08-cv-1512, Dkt. No. 86,
`
`at 2 (D.N.J. Sept. 8, 2009) (request for order to provide advance notice of launch “is denied for
`
`the reasons set forth in the record of these proceedings, including because the Court does not
`
`believe it has legal authority to grant such relief.”); Novartis Pharms. Corp. v. Mylan Pharms.,
`
`No. 3:06-cv-2885, Dkt. No. 98, at 6 (D.N.J. Sept. 22, 2008) (“I’ve been reluctant and have
`
`
`
`3
`
`

`

`Case 2:15-cv-01455-WCB Document 455 Filed 08/25/17 Page 4 of 11 PageID #: 23156
`
`refused to require that Mylan state when they would launch . . . [b]ecause frankly I am not
`
`comfortable in determining that that is within my power to do.”).
`
`Allergan asserts that entering such an order is within the Court’s discretionary power to
`
`manage its docket. The Court is not persuaded that the matter is that simple. Imposing an
`
`obligation on four of the five the defendants to provide advance notice to Allergan as to when
`
`they will launch their competing products goes well beyond a mere matter of docket control; as
`
`recognized by Judge Jones in the Teva v. Sandoz case cited above, it constitutes an injunction
`
`that can be justified if and only if (1) the court has jurisdiction to issue the injunction and (2) the
`
`court has made the requisite findings to warrant imposing such relief.
`
`As to the first, the Court is satisfied that, under the proper circumstances, an order to
`
`provide advance notice of a planned launch would not lie beyond the Court’s jurisdiction. The
`
`Court’s equitable powers in a case such as this one extend to ancillary orders that may be
`
`necessary to protect the protect the plaintiff against the risk that the defendants will take action
`
`that will effectively defeat the plaintiff’s right to relief.
`
`While recognizing that the Court’s jurisdiction may extend to matters such as orders for
`
`advance notice of launch plans, the Court is cognizant of the prudential limitations on the
`
`exercise of that jurisdiction. Launch dates are highly confidential and important commercial
`
`information. The Court should not lightly order parties to disclose such information to their
`
`competitors. Moreover, before entering such a mandatory injunction, the Court would have to be
`
`confident that the equitable considerations that govern the issuance of injunctions require the
`
`grant of the requested relief. At this point, the Court is not satisfied that those equitable
`
`considerations justify the entry of the requested injunction, for several reasons.
`
`
`
`4
`
`

`

`Case 2:15-cv-01455-WCB Document 455 Filed 08/25/17 Page 5 of 11 PageID #: 23157
`
` First, the Court is not currently prepared to conclude that Allergan has shown a
`
`likelihood of success on the merits that would warrant the requested relief. The Court is aware at
`
`this point only of the outlines of the parties’ cases. After sitting through the trial, the Court will
`
`have a much better sense of Allergan’s likelihood of success, which will bear importantly on
`
`how the Court will adjudicate Allergan’s various claims to temporary and permanent relief
`
`thereafter.
`
`Second, the defendants have agreed not to launch their generic versions of Restasis
`
`during the trial. There is therefore no urgency for the Court to act prior to trial. Instead, the
`
`Court will be able to reassess the need, if any, for the requested injunctive relief after hearing the
`
`evidence in the case.
`
`Third, Allergan’s claim of irreparable harm is predicated on an affidavit by one of its
`
`employees and some citations to court decisions. Dkt. No. 408-1. Allergan’s claim is disputed
`
`by the defendants, who contend that Allergan’s assertions regarding the damage that any at-risk
`
`launch would cause to Allergan is greatly exaggerated. Dkt. No. 407, at 5-6. If Allergan
`
`continues to desire some form of interim relief, it can move for a preliminary injunction and, in
`
`support of that motion, can offer evidence regarding the injury that would be caused by an at-risk
`
`launch. The defendants will be free at that point to offer contrary evidence if they choose. The
`
`parties can also present evidence and argument regarding whether the harm to Allergan from an
`
`at-risk launch would be compensable in damages, assuming Allergan were ultimately to prevail
`
`in the lawsuit. That procedure will likely provide the Court with a much sounder evidentiary
`
`basis for making a determination as to whether Allergan has shown irreparable harm.
`
`
`
`5
`
`

`

`Case 2:15-cv-01455-WCB Document 455 Filed 08/25/17 Page 6 of 11 PageID #: 23158
`
`For now, the Court sees no need to issue an order directing the defendants to give
`
`Allergan seven days’ notice of their intent to launch; that issue can be revisited at trial, when the
`
`issues bearing on Allergan’s entitlement to any such relief will presumably be clearer.
`
`2. The Disposition of Allergan’s Claims Under 35 U.S.C. § 271(a), (b), and (c).
`
`In its complaint, Allergan has not only brought claims for infringement under the Hatch-
`
`Waxman Act infringement provision, 35 U.S.C. § 271(e)(2), but also has sought a declaratory
`
`judgment that any launch by the defendants would result in infringement under the more
`
`conventional direct and indirect infringement statutes, 35 U.S.C. § 271(a), (b), and (c).1 Because
`
`the Court was concerned that the proof for the latter claims would complicate the case
`
`unnecessarily, the Court asked the parties to brief the question whether the declaratory judgment
`
`claims should be severed, or dismissed without prejudice, while the Hatch-Waxman claims were
`
`tried. The defendants requested that the Court sever the declaratory judgment claims; Allergan
`
`requested that the Court not sever or dismiss those claims, but try them alongside the section
`
`271(e)(2) claims.
`
`Allergan has put to rest the Court’s principal concern regarding the section 271(a), (b),
`
`and (c) claims by representing to the Court that the evidence in support of those claims will be
`
`the same as the evidence in support of the section 271(e)(2) claims, and that the judgment on the
`
`section 271(e)(2) claims will also resolve the declaratory judgment claims. Dkt. No. 405, at 1.
`
`Therefore it makes sense to retain those claims as part of the case to be tried along with the
`
`section 271(e)(2) claims.
`
`
`1 In this setting, where it is clear that the defendants intend to sell their generic products
`if they prevail in this section 271(e)(2) action, the Court has jurisdiction to address Allergan’s
`declaratory judgment claim brought under sections 271(a), (b), and (c). See Glaxo, Inc. v.
`Novopharm, Ltd., 110 F.3d 1562, 1570-71 (Fed. Cir. 1997); Cephalon, Inc. v. Watson Pharms.,
`Inc., 629 F. Supp. 2d 338, 351 (D. Del. 2009).
`
`
`
`6
`
`

`

`Case 2:15-cv-01455-WCB Document 455 Filed 08/25/17 Page 7 of 11 PageID #: 23159
`
`As a practical matter, the difference between severing the claims and retaining all the
`
`pending claims in the same case may not be significant. However, it may be useful to facilitate
`
`the consideration of the section 271(a), (b), and (c) claims along with the 271(e)(2) claims, if that
`
`appears advisable in the course of the proceedings rather than having the two sets of claims
`
`segregated for purposes of trial. Accordingly, the Court will retain the section 271(a), (b), and
`
`(c) claims as part of the case to be tried and will neither dismiss nor sever those claims.
`
`3. The Defendants’ Notice of Stipulation of Infringement and Motion to Modify the
` Order of Proof at Trial.
`
`On August 18, 2017, the defendants filed a “notice of stipulation” in which they stated
`
`that they “do not intend to dispute at trial infringement under § 271(e)(2) under the present claim
`
`construction” of the claims that are before the Court for trial. Dkt. No. 415, at 1. They also
`
`moved to change the order of proof at trial, so that the order of proof would “begin with the
`
`Defendants’ case on invalidity, then proceed to Allergan’s rebuttal of validity, and end with
`
`Defendants’ reply.” Dkt. No. 415, at 2.
`
`Allergan has objected to the defendants’ proposal on several grounds. Dkt. No. 433.
`
`First, Allergan has scheduled several third-party witnesses to appear on the first day of trial, and
`
`modifying the order of proof would significantly inconvenience them. Second, Allergan objects
`
`to the qualifications attached to the defendants’ stipulation as to infringement—both that it is
`
`limited to conceding infringement “under the present claim construction,” and that it is limited to
`
`conceding infringement under 35 U.S.C. § 271(e)(2), and not necessarily under 35 U.S.C.
`
`§ 271(a), (b), and (c), which are also pleaded in Allergan’s complaint. Allergan also expresses
`
`concern that the stipulation might not have preclusive effect in later proceedings.
`
`The Court shares Allergan’s reservations about the defendants’ proposed stipulation. For
`
`one thing, as the Court explained in its order denying the defendants’ motion for invalidity based
`
`
`
`7
`
`

`

`Case 2:15-cv-01455-WCB Document 455 Filed 08/25/17 Page 8 of 11 PageID #: 23160
`
`on lack of enablement, Dkt. No. 393, the Court anticipates that in light of the parties’ positions as
`
`revealed in the brief of that motion, it will likely be necessary to construe the term
`
`“acrylate/C10-30 alkyl acrylate cross-polymer” at trial, and that the Court expects the parties to
`
`provide additional evidence on that issue at trial. Because that issue bears on infringement as
`
`well as invalidity, the defendants’ stipulation to infringement under the “the present claim
`
`construction” is no real stipulation at all.2
`
`
`
`The defendants are free to stipulate to particular facts or legal issues at trial, which could
`
`have the desired effect of shortening the proceedings. In addition, the defendants are free not to
`
`challenge Allergan’s proof of infringement if they so choose, which presumably would also have
`
`the effect of shortening the trial. But in the particular circumstances of this case, the Court is
`
`wary of accepting a stipulation conditioned on the claim construction being correct.3 That is not
`
`to cast doubt on either (1) the frequent practice of parties that enter an unconditional stipulation
`
`to infringement in order to contest validity, see, e.g., Millennium Pharms., Inc. v. Sandoz, Inc.,
`
`862 F.3d 1356 (Fed. Cir. 2017); Cumberland Pharms Inc. v. Mylan Institutional LLC, 846 F.3d
`
`1213 (Fed. Cir. 2017); Merck & Cie v. Watson Labs., Inc., 822 F.3d 1347 (Fed. Cir. 2016), or
`
`(2) the occasional practice, by a party who has received an unfavorable claim construction, of
`
`
`2 In its order denying the defendants’ motion for partial summary judgment of non-
`infringement, Dkt. No. 394, the Court also indicated that in light of the parties’ positions
`expressed in the briefing on that motion, it might be necessary to conduct further claim
`construction of the “treating” limitations found in several of the claims of the patents in suit.
`
` 3
`
` It is not clear to the Court whether the limitation on the stipulation to infringement
`under section 271(e)(2) might make the stipulation less than fully effective to remove the issue
`of infringement from the case. The Court understands Allergan’s position to be that, absent an
`at-risk launch by one or more of the defendants, Allergan’s proof will be the same for its claims
`under section 271(a), (b), and (c) as for its claims under section 271(e)(2). The Court also
`understands that the defendants did not intend to limit the scope of their stipulation so that fails
`to remove the issue of infringement under section 271(a), (b), and (c) from the trial. However,
`the scope of the stipulation, as currently framed, leaves that matter unresolved.
`8
`
`
`
`

`

`Case 2:15-cv-01455-WCB Document 455 Filed 08/25/17 Page 9 of 11 PageID #: 23161
`
`stipulating to infringement under that claim construction to put the case in a posture for an
`
`immediate appeal, see, e.g., Augme Techs., Inc. v. Yahoo! Inc., 755 F.3d 1326 (Fed. Cir. 2014);
`
`Seachange Int’l, Inc. v. C-COR, Inc., 413 F.3d 1361 (Fed. Cir. 2005); Durel Corp. v. Osram
`
`Sylvania, 256 F.3d 1298 (Fed. Cir. 2001).
`
`In the former category of cases, the issue of infringement is removed from the case for
`
`good, allowing the district court and the court of appeals to focus exclusively on the issue of
`
`invalidity. Because the invalidity issue is typically discrete, factually and legally, from the issue
`
`of infringement, the stipulation procedure ordinarily results in a clear gain in efficiency for the
`
`courts and the parties.
`
`In the second category of cases, the benefits of the stipulation process are not so self-
`
`evident. In those cases, the parties are able to obtain what amounts to interlocutory review of a
`
`claim construction without having to obtain permission from the appellate court, as would be
`
`required if the parties sought formal interlocutory review under 28 U.S.C. § 1292(c). And while
`
`the stipulation process may be efficient in some cases, it sometimes has significant costs. First,
`
`the district court is denied the opportunity to shape its claim construction in light of information
`
`obtained in the course of the trial. Second, and relatedly, the appellate court does not have the
`
`benefit of a factual context in which to consider the claim construction issue. See Jang v. Boston
`
`Sci. Corp., 532 F.3d 1330, 1337-38 (Fed. Cir. 2008); Lava Trading, Inc. v. Sonic Trading Mgmt.,
`
`LLC, 445 F.3d 1348, 1350 (Fed. Cir. 2006); Superior Indus., Inc. v. Masaba, Inc., 553 F. App’x
`
`986 (Fed. Cir. 2014). Third, the appellate court is denied the opportunity to decide whether, in
`
`light of the evidence at trial, any claim construction error would not have affected the judgment.
`
`Jang, 532 F.3d at 1336-37.
`
`
`
`9
`
`

`

`Case 2:15-cv-01455-WCB Document 455 Filed 08/25/17 Page 10 of 11 PageID #: 23162
`
`Notwithstanding those concerns, such stipulations have been approved by district courts,
`
`and appeals predicated on such stipulations have frequently been permitted. In this case,
`
`however, there is uncertainty as to the scope of the stipulation and as to the ultimate claim
`
`construction. As a result, the offered stipulation in its current form has the potential to make the
`
`proceedings—and particularly any appeal that may be taken from the ultimate judgment—more
`
`complicated, not less.
`
`
`
`During an August 23, 2017, telephonic conference at which the Court heard from the
`
`parties regarding the pending motions, counsel for the defendants stated that the defendants’
`
`intention was to take the issue of infringement out of the case and not to do so in a qualified
`
`manner that would fail to achieve the purpose of the defendants’ stipulation. The Court urged
`
`the parties to discuss the possibility of a stipulation that would not have the problems that
`
`Allergan complained of (and the Court found to be present) in the defendants’ initial offered
`
`stipulation. The parties agreed to do so and to advise the Court of the outcome of their
`
`discussions.
`
`
`
`As for the order of proof at trial, Allergan intends to offer some background evidence at
`
`trial regarding the development of Restasis through the witnesses who are now scheduled to
`
`testify at the beginning of the trial. Having that evidence come in at the beginning of the trial is
`
`more logical than postponing it until after the defendants have presented their case-in-chief on
`
`invalidity. Moreover, the convenience of the third-party witnesses is a factor that bears on the
`
`Court’s decision as to the order of proof at trial. The defendants made their proposal to modify
`
`the order of proof only ten days before the beginning of the trial. By then, it is understandable
`
`that Allergan’s witnesses had made arrangements to be present at the beginning of the trial, and
`
`that altering the order of proof could be highly inconvenient for them.
`
`
`
`10
`
`

`

`Case 2:15-cv-01455-WCB Document 455 Filed 08/25/17 Page 11 of 11 PageID #: 23163
`
`When infringement has been conceded, courts have on occasion acquiesced in the request
`
`of the accused infringer to present its case first at trial. In several of those instances, however,
`
`the courts have allowed the patentee to present background information at the outset before the
`
`accused infringer begins its invalidity challenge. See Novartis Pharms. Corp. v. Teva Pharms.
`
`USA, Inc., No. 05-cv-1887, 2009 WL 3334850, at *2 (D.N.J. Oct. 14, 2009); Pfizer Inc. v. Ivax
`
`Pharms., Inc., No. Civ. A 07-cv-174, 2009 WL 2905454, at *9 (D.N.J. Sept. 9, 2009); Merck
`
`Sharp & Dohme Pharms., SRL v. Teva Pharms. USA, Inc., No. 07-1596 (D.N.J. Nov. 5, 2008).
`
`That sequence seems fair to the Court in this case, particularly in light of Allergan’s having
`
`organized the appearance of its background witnesses around the assumption that it would go
`
`first at trial. The Court therefore will not accept the current version of defendants’ stipulation as
`
`a basis for treating the issue of infringement as being removed from the case and will deny the
`
`defendants’ motion to alter the order of proof.
`
`IT IS SO ORDERED.
`
`SIGNED this 25th day of August, 2017.
`
`_____________________________
`WILLIAM C. BRYSON
`UNITED STATES CIRCUIT JUDGE
`
`11
`
`