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Pernix Ireland Pain DAC v. Alvogen Malta Operations Ltd.

United States District Court, D. Delaware

May 15, 2018

PERNIX IRELAND PAIN DAC and PERNIX THERAPEUTICS, LLC, Plaintiffs,
v.
ALVOGEN MALTA OPERATIONS LTD., Defendant.

          MEMORANDUM OPINION AND ORDER

          WILLIAM C. BRYSON UNITED STATES CIRCUIT JUDGE

         Before the Court are various pretrial motions filed by plaintiffs Pernix Ireland Pain DAC and Pernix Therapeutics (collectively, “Pernix”) and defendant Alvogen Malta Operations Ltd. (“Alvogen”). The motions include Defendant Alvogen Malta Operations Ltd.'s Motion for Summary Judgment of Invalidity Under 35 U.S.C. § 101, Dkt. No. 111; Plaintiffs' Motion for Summary Judgment of No Invalidity Under 35 U.S.C. § 101, Dkt. No. 114; Defendant Alvogen Malta Operations Ltd.'s Motion for Summary Judgment of Invalidity by Anticipation, Dkt. No. 115; Plaintiffs' Motion for Summary Judgment of Infringement, Dkt. No. 118; and Alvogen Malta Operations Ltd.'s Motion To Strike and Exclude Pernix's Late-Disclosed Infringement Theory, Dkt. No. 125. The Court heard argument on the motions on May 11, 2018. Alvogen's motion for summary judgment of invalidity under section 101 is DENIED, and Pernix's motion for summary judgment of no invalidity under section 101 is GRANTED. Alvogen's motion for summary judgment of invalidity by anticipation is DENIED. Pernix's motion for summary judgment of infringement is DENIED. Alvogen's motion to strike Pernix's late-disclosed infringement theory is GRANTED.

         BACKGROUND

         In this Hatch-Waxman Act lawsuit arising under 35 U.S.C. § 271(e)(2)(A), Pernix has accused Alvogen of patent infringement. Pernix's claims of infringement are based on Alvogen's filing of its Abbreviated New Drug Application (“ANDA”) with the United States Food and Drug Administration (“FDA”), seeking authorization to sell hydrocodone bitartrate extended release capsules as generic versions of Pernix's hydrocodone formulation, which is sold under the name Zohydro.

         For purposes of the trial in this case, Pernix has asserted nine claims from two of the patents that protect Pernix's Zohydro product. The asserted claims are claims 1-4, 11, 12, 17, and 19 of Pernix's U.S. Patent No. 9, 265, 760 (“the '760 patent”), and claim 1 of Pernix's U.S. Patent No. 9, 339, 499 (“the '499 patent”). Pernix's patents are directed to methods of treating pain in patients with hepatic impairment, i.e. comprised liver function. The patents explain that the liver is responsible for most of the body's capacity to metabolize opioids. Because of the importance of the liver in clearing opioids from the body, patients with hepatic impairment who take opioids for pain relief are often prescribed reduced dosages of the drugs so as to avoid an unsafe build-up of the opioids in the patients' systems. See '760 patent, col. 2, ll. 41-66.

         The patented invention encompasses formulations of extended release hydrocodone that have release profiles that are similar for both healthy and hepatically impaired patients. For that reason, the starting dose does not need to be adjusted for a patient with hepatic impairment relative to one without hepatic impairment.

         All nine of the claims asserted in this case recite a “method of treating pain in a patient having mild or moderate hepatic impairment, ” and all nine include the step of “administering to the patient having mild or moderate hepatic impairment an oral dosage unit having hydrocodone bitartrate as the only active ingredient, wherein the dosage unit comprises an extended release formulation of hydrocodone bitartrate.”

         While the claims generally cover the same subject matter, they differ in a few respects, and can be separated into three groups. First, in addition to the “administering” step, claim 1 of the '760 patent includes the limitation “wherein the starting dose is not adjusted relative to a patient without hepatic impairment.” Second, claims 2-4 and 11 of the '760 patent all depend on claim 1, and each of those dependent claims recites different components of the release profile, i.e., the way a patient's body breaks down the drug, as measured by the maximum concentration of drug in the patient's blood (Cmax) and the measure of total exposure of the drug over time (AUC0-inf.). Specifically, each claim adds that the dosage unit does not result in increasing the maximum or total exposure of hydrocodone in subjects with mild or moderate hepatic impairment by more than a certain amount relative to subjects not suffering from mild or moderate hepatic impairment. Finally, claims 12, 17, and 19 of the '760 patent, and claim 1 of the '499 patent, are likewise directed to methods of treating pain in a patient having mild or moderate hepatic impairment. Each of those claims includes limitations regarding the release profile of the dosing unit, but that group of claims does not include or incorporate a limitation that the starting dose is not adjusted relative to a patient without hepatic impairment.

         DISCUSSION

         I. Alvogen's Motion to Strike

         Alvogen's motion to strike is addressed to only the first two sets of claims-claims 1-4 and 11 of the '760 patent. Alvogen contends that in Pernix's recently filed motion for summary judgment of infringement, Pernix added a theory of infringement that was not disclosed in its amended infringement contentions or discussed in the report of its infringement expert. Pernix's new theory, according to Alvogen, is that a patient can directly infringe claims 1-4 and 11 of the '760 patent acting alone, and that it is not necessary for Pernix to show joint infringement by both the prescribing physician and the patient in order to prove direct infringement of those claims. Pernix contends that in addition to its theory of joint infringement by the physician and patient, it has consistently asserted the theory that the patient can infringe alone-without the need for joint action by the physician-since the outset of the case and that it should not be foreclosed from presenting that theory at trial.

         A. Pernix's Theories of Direct Infringement

         The two theories of direct infringement of claims 1-4 and 11 of the '760 patent on which Pernix seeks to rely are: (1) joint direct infringement by the physician and the patient; and (2) single-party direct infringement by the patient alone. Under the theory of joint direct infringement, Pernix contends that the physician and the patient jointly infringe claims 1-4 and 11 when the physician prescribes and directs a hepatically impaired patient to take extended release hydrocodone bitartrate, in which the starting dose is not adjusted relative to a patient without hepatic impairment, and the patient takes the drug as directed. Under the theory of single-party direct infringement, Pernix contends that the patient alone, when taking the unadjusted dose of hydrocodone bitartrate, directly infringes those claims.

         Pernix did not explicitly spell out any theory of infringement in the complaint. The complaint, however, referred to direct infringement by “physicians, health care providers, and/or patients, ” and thus was broad enough to encompass both the joint-infringement and the patient-alone theories of direct infringement. See Second Am. Compl., Dkt. No. 37, ¶ 40; id. ¶ 41 (“On information and belief, Alvogen specifically intends that physicians, health care providers, and/or patients will use the Alvogen Generic Product in accordance with the instructions provided by Alvogen to directly infringe one or more claims of the '760 [patent]”); id. ¶ 48 (“The use of the Alvogen Generic Product by physicians, health care providers, and/or patients prior to patent expiry will directly infringe one or more claims of the '760 patent.”).

         In its initial infringement claim charts, Pernix made clear that its theory of liability was based on induced infringement. However, Pernix did not explicitly state whether the direct infringement necessary to establish liability for induced infringement was the product of direct infringement by the patient alone or joint infringement by the patient and the prescribing physician. Instead, Pernix's infringement contentions focused on Alvogen's acts of inducement; Pernix asserted that “Alvogen's Draft Label provides instructions for administering its proposed generic product to treat pain in patients having mild or moderate hepatic impairment.” Dkt. No. 125-2, Ex. A, at 1. As to the requirement that the “starting dose is not adjusted relative to a patient without hepatic impairment, ” the infringement contentions stated: “Alvogen's Draft Label instructs physicians that the starting dose of Alvogen's proposed generic product is not adjusted for patients with mild or moderate hepatic impairment relative to a patient without hepatic impairment.” Id.

         During the claim construction process, the parties focused on two phrases from the claims: “administering to the patient” and “wherein the starting dose is not adjusted relative to a patient without hepatic impairment.” Pernix argued that “administering” meant “prescribing, dispensing, giving or taking (such that what is prescribed, dispensed, given or taken is actually taken into the patient's body.” See The Parties' Revised Final Joint Claim Chart, Dkt. No. 58-1, at 1. Pernix argued that the “wherein the starting dose is not adjusted” phrase was a limitation that meant “the dose prescribed to a patient with mild or moderate hepatic impairment when initiating treatment is not reduced due to that hepatic impairment relative to the dose prescribed to a patient without hepatic impairment when initiating treatment.” Id. at 2.

         In both the briefing and the argument on the claim construction dispute, Pernix made clear that it construed the “wherein the starting dose is not adjusted” limitation to be directed to the actions of the prescribing physician. For example, in its answering claim construction brief, Pernix wrote that the disputed phrase “is a step that is integral to the claimed method and its infringement, requiring action to be taken by the physician, namely administering (prescribing) the same starting dose of drug to a hepatically impaired patient that would be administered to one that is not impaired.” Dkt. No. 65, at 2. Similarly, in the claim construction oral argument before Judge Sleet, Pernix contended that the “wherein the starting dose is not adjusted” limitation “tells a physician how to dose the drug.” Dkt. No. 68, at 5:24-25; see also id. at 13:10-14 (“‘[W]herein the starting dose is not adjusted relative to a patient without hepatic impairment' tells the physician to give the same dose to a hepatically impaired patient that would be given to an unimpaired person.”); id. at 14:12-14 (“[T]his language is the only language in the claim that tells the physician what to do and tells an accused infringer why they infringe.”).

         Judge Sleet issued a claim construction order construing the two disputed terms on August 3, 2017. Dkt. No. 69. First, he construed the term “administering” to mean “delivering into the body.” Id. at 1. When adopting that construction, he rejected Pernix's argument that “administering” should include the acts of prescribing or dispensing (by a physician or health care provider). Second, he construed the phrase “starting dose is not adjusted relative to a patient without hepatic impairment” to mean that “the dose prescribed to a patient with mild or moderate hepatic impairment when initiating treatment is not reduced due to that hepatic impairment relative to the dose prescribed to a patient without hepatic impairment when initiating treatment.” Id. at 2. In so doing, Judge Sleet adopted Pernix's proposed construction of that term. He also agreed with Pernix's position that the “starting dose is not adjusted” phrase is a limitation of the claim. Id. at 2 n.2.

         Following the claim construction order, Pernix served an amended infringement claim chart for claims 1-4 and 11 of the '760 patent. Dkt. No. 125-3, at 1-2. The only change made in the new infringement contentions for those claims was the addition of the following language for both the “administering” and “starting dose is not adjusted” limitations: “Physicians direct and/or control their patients' administration of a starting dose of Alvogen's proposed generic product in such a manner as to condition the receipt of treatment on the patient's administration of the prescribed starting dose. Further, the physician establishes the manner and timing of the patients' administration of the starting dose.” Id., Ex. A, at 1-2.

         When it filed its brief in support of its motion for summary judgment of infringement in March 2018, Pernix stated for the first time that it intended to prove the direct infringement component of induced infringement either by showing direct infringement by the patient alone or by showing joint direct infringement by the patient and the prescribing physician. Dkt. No. 120. Alvogen immediately protested by filing the present motion to strike and exclude Pernix's theory that direct infringement could be shown by proof of direct infringement by the patient alone. Dkt. No. 125.

         In its motion, Alvogen argues that the amended infringement contentions effectively abandoned that theory of direct infringement and that it was too late for Pernix to attempt to revive it. Pernix responds that it never withdrew the theory of patient-only direct infringement, because it never withdrew any of the language of its original infringement contentions. Instead, Pernix contends that it merely added new language to the infringement contentions after Judge Sleet's claim construction order and thus preserved both the “patient-only” theory of direct infringement and the “patient-physician” theory of joint direct infringement. Dkt. No. 148, at 4- 6.

         B. Pernix Has Not Preserved a “Patient-Only” Theory of Direct Infringement

         The Court agrees with Alvogen that Pernix may not pursue its patient-only theory of direct infringement. Until Pernix filed its summary judgment motion in March of this year, Pernix's position as to infringement of claims 1-4 and 11 of the '760 patent was based on a theory of joint direct infringement by both the patient and the physician. Pernix's amended infringement contentions contained no reference to the patient-only theory of direct infringement. Instead, the amended contentions focused on the role of the physician in the alleged direct infringement; thus, joint infringement was the only theory of direct infringement set forth in the amended infringement contentions.

         Similarly, the arguments made by Pernix's counsel during the claim construction process make quite clear that Pernix's theory of direct infringement contemplated that the physician would be the person who would be responsible for determining that the “starting dose is not adjusted relative to a patient without hepatic impairment.” See Dkt. No. 65, at 2 (The language of the “starting dose is not adjusted” limitation requires “action to be taken by the physician, ” i.e., prescribing “the same starting dose of drug to a hepatically impaired patient that would be administered to one that is not impaired.”).

         The absence of any reference to the patient-only theory of direct infringement in the report of Dr. Gudin, Pernix's infringement expert, is particularly telling. In the portions of his report directed to the issue of direct infringement, Dr. Gudin repeatedly emphasized that the physician “will direct a patient with mild or moderate hepatic impairment to take the same starting dose . . . as a patient without hepatic impairment, ” and that “the dosage form will be self-administered by the patient as directed by the physician.” Dkt. No. 125-4 ¶ 69; see also id. ¶ 70 (“[A] physician following the Alvogen Draft Label does treat patients, and it is the physician who determines the starting dose to be given, and the physician who controls the dose that the patient will receive through writing a prescription for a particular dosage strength.”); id. ¶ 73 (“[W]hen a physician directs a patient with mild or moderate hepatic impairment to take a particular dose of the Alvogen Proposed ANDA Product, and the patient takes that dose, the physician and patient jointly practice the claimed method.”); id. ¶ 77 (“When a physician directs a patient with mild or moderate hepatic impairment to take a particular dose of the Alvogen Proposed ANDA Product, and the patient takes that dose, the physician and patient jointly practice ‘a method of treating pain in a patient having mild or moderate hepatic impairment.'”); id. ¶ 83 (“In summary, all of the elements of claim 1 of the '760 Patent are met when physicians direct patients with mild or moderate hepatic impairment to self-administer Alvogen's Proposed ANDA Product according to the instructions in the Alvogen Draft Label, and patients self-administer the Alvogen Proposed ANDA Product according to the physician's instructions.”).

         Pernix asserts that Dr. Gudin's report contains references to the patient-only theory of direct infringement, but the citations to the report on which Pernix relies do not support that assertion. Dkt. No. 148, at 5-6. Pernix first cites a section of Dr. Gudin's report in which he summarized general legal principles as he understood them. He stated that “I further understand from counsel that if no single actor performs all steps of the method of treatment claims (e.g., a physician determines the dose to be administered, but the patient self-administers the drug), direct infringement occurs if the acts of one actor are attributable to the other.” Dkt. No. 125-4 ¶ 49. Contrary to Pernix's argument, that general statement of law does not constitute a contention that in this case the patient alone is directly infringing the relevant '760 patent claims. In fact, later in that same paragraph, Dr. Gudin made clear that the application of the general principles he recited was to joint direct infringement by the physician and the patient. He wrote: “As discussed in further detail below, for the claims of the Patents-in-Suit, the patient's receipt of the prescribed dose of drug (through the doctor's prescription) is conditioned upon the understanding that the patient will use the drug as directed, and it is the physician who dictates the manner and timing of the patient's self-administration of the drug.” Id.

         Pernix also cites a portion of Dr. Gudin's report in which he stated that he understood Alvogen's argument to be that it does not infringe the claims of the '760 patent because different actors perform the separate steps of selecting a starting dose and administering the drug. Id. ¶ 72. Dr. Gudin's answer to that contention is telling. He did not respond by saying that the patient infringes through his conduct alone, but instead stated that Alvogen's argument ignores that “when a physician directs a patient with mild or moderate hepatic impairment to take a particular dose of the Alvogen Proposed ANDA Product, and the patient takes that dose, the physician and patient jointly practice the claimed method.” Id. ¶ 73. It is thus clear that, as of the time that it submitted its amended infringement contentions and Dr. Gudin's expert report, Pernix was not pursuing a patient-only theory of direct infringement, even as an alternative to the joint direct infringement theory.

         C. Pernix's Failure to Raise Its Patient-Only Theory is Not Excused

         Pernix's final argument is that, even if it did not present a patient-only direct infringement theory in its amended infringement contentions and in Dr. Gudin's expert report, it should be permitted to raise that theory now, even though discovery in the case is closed, expert reports and depositions have been completed, and trial is only a month away. In so arguing, Pernix relies on a line of cases holding that a sanction such as excluding a theory of infringement is an extreme sanction that should not lightly be imposed, and that the following factors should be considered in determining whether to bar a party from asserting a belatedly presented theory: (1) prejudice or surprise to the objecting party; (2) the ability of that party to cure the surprise; (3) whether the default would disrupt the orderly and efficient presentation of the case; and (4) bad faith or willfulness on the part of the defaulting party. Dkt. No. 148, at 3 (quoting Meyers v. Pennypack Woods Home Ownership Ass'n, 559 F.2d 894, 904-05 (3d Cir. 1977)); see also id. at 6-11.

         The first answer to Pernix's argument is that, quite apart from any default on Pernix's part, the claim language does not support a patient-only theory of direct infringement. Relying on the recent opinion from this district in Orexigen Therapeutics, Inc. v. Actavis Laboratories FL, Inc., 282 F.Supp.3d 793 (D. Del. 2017), Pernix contends that although the “wherein the starting dose is not adjusted” phrase is a limitation of claims 1-4 and 11 of the '760 patent, it merely states a background condition for the administration of the hydrocodone composition, and that identifying the starting dose “is a predicate to performing the claimed administering step, which is performed by the patient.” Dkt. No. 120, at 13; see also id. (“While a physician must determine and prescribe the dose of the drug product before a patient can administer it, as in Orexigen, that action will already have been completed prior to performance of the claimed method (i.e., prior to the patient ‘administering' the drug product).”).

         That argument goes nowhere. It is certainly true that the physician must make a determination regarding the dose that the patient should take before the patient performs the administration step. But it is commonplace for the steps in a method claim to have to be performed in a particular order in order for the method to work as intended. If the phrase “starting dose is not adjusted relative to a patient without hepatic impairment” had been drafted to read “the prescribing physician does not adjust the starting dose relative to a patient without hepatic impairment, ” there would be no question that infringement would require joint action by the physician and the patient. The fact that the claim limitation calls upon the physician to refrain from doing something (not adjusting the dosage limitation) instead of affirmatively doing something (such as directing that the dosage be cut in half for hepatically impaired patients) does not alter the fact that action by the physician is required to infringe the claim. The step is simply written in the passive voice in order not to limit the identity of the party that determines that an unadjusted dose should be given to the patient with hepatic impairment.

         The Orexigen case on which Pernix relies is inapplicable. In that case, the pertinent claim language referred to administering a compound to a person “who has been diagnosed as suffering from overweight or obesity.” 282 F.Supp.3d at 812. Judge Andrews found that the claims containing that language involved “the single step of administering the drug to a patient who has already been diagnosed, ” and that the diagnosis was not a step of the claimed methods. Id. In this case, by contrast, the step of not adjusting the starting dose relative to a patient without hepatic impairment is properly characterized as both a limitation and a step of the methods recited in the asserted claims.

         Even setting aside the legal flaw in Pernix's patient-only direct infringement theory, the Court would reject Pernix's argument that it should be allowed, at this late juncture, to present a new patient-only theory of direct infringement. In light of Pernix's consistent reliance on the theory joint direct infringement by patient and physician, and in particular in light of Pernix's expert's failure to present a theory of patient-only direct infringement, it would be unfair to require Alvogen to respond to that theory at trial. Alvogen's expert did not address that theory, and Alvogen (understandably) did not conduct discovery directed at that theory, which it otherwise could have done, such as by examining Pernix's expert on that issue and having its own expert address the issue.

         Pernix argues that it is inconsequential that Alvogen's expert has not had the opportunity to address the patient-only theory of direct infringement, since that theory raises only an issue of law. As Alvogen points out, however, there are important factual components to that theory that Alvogen might well have wanted its expert to address, such as whether the patient ever sets the dose amount when taking a drug such as extended release hydrocodone and whether Alvogen's Draft Label for its proposed ANDA product encourages the patient-as opposed to the physician-to carry out the dosing step of the asserted claims.

         The need for additional discovery, including in all likelihood a supplemental report from Alvogen's infringement expert, would be burdensome to Alvogen and would potentially disrupt the trial schedule. While Alvogen could likely do the work necessary to prepare a supplemental report and conduct whatever further investigation and discovery would be necessary to prepare for the patient-only theory of direct infringement, it would be able to do so only by diverting resources from trial preparation at a critical point in the pretrial process. The Court accordingly finds that allowing Pernix to raise the patient-only theory belatedly would be prejudicial to Alvogen, would potentially disrupt the trial, and would be curable, if at all, only through the expenditure of time and resources by Alvogen that it should not have to bear at this point in the process. While the Court does not find bad faith or willful disregard of a court order by Pernix, the Court nonetheless regards the balance of factors as favoring Alvogen, particularly in light of the fact that Pernix will still be able to press its joint direct infringement theory, which has been its main theory of liability on claims 1-4 and 11 of the '760 patent since the outset of the case.

         Alvogen's motion to strike Pernix's late-disclosed patient-only infringement theory as to infringement of claims 1-4 and 11 of the '760 patent, Dkt. No. 125, is therefore GRANTED.

         II. Pernix's Motion for Summary Judgment of Infringement

         Pernix has moved for summary judgment of infringement on both the first and second sets of claims that are at issue in this case. Dkt. No. 118. Pernix argues that Alvogen is liable for infringement under 35 U.S.C. § 271(e)(2)(A) on the ground that Alvogen has submitted an application to the FDA for a drug the use of which is claimed in a patent.

         In order to prove that Alvogen will be liable for induced infringement, Pernix must show that Alvogen will induce a party or parties to directly infringe the asserted claims. Limelight Networks, Inc. v. Akamai Techs., Inc., 134 S.Ct. 2111, 2117 (2014); Vanda Pharm. Inc. v. West-Ward Pharm. Int'l Ltd., 887 F.3d 1117 (Fed. Cir. 2018). To make that showing, Pernix must prove that Alvogen will possess “specific intent to encourage another's infringement and not merely that the defendant [will have] knowledge of the acts alleged to constitute infringement.” Vanda, 887 F.3d at 1129 (quoting DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1306 (Fed. Cir. 2006) (en banc in relevant part)).

         In order to prove the direct infringement of a method claim that is a necessary component of an inducement case, the plaintiff must show that all steps of the claimed method have been (or, in the Hatch-Waxman context, will be) performed by or attributable to a single entity. Akamai Techs., Inc. v. Limelight Networks, Inc., 797 F.3d 1020, 1022 (Fed. Cir. 2015) (en banc). Where no single actor performs all the steps of a method claim, joint direct infringement occurs if “the acts of one are attributable to the other such that a single entity is responsible for the infringement.” Eli Lilly & Co. v. Teva Parenteral Meds., Inc., 845 F.3d 1357, 1364 (Fed. Cir. 2017) (quoting Akamai, 797 F.3d at 1022). In that setting, the plaintiff must show either that the parties are (or will be) engaged in a joint enterprise or that one party directed and controlled the infringing activity of the other (or will do so). Id. To show that one party directed and controlled the infringing activity of another, the ...


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