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Horatio Washington Depot Technologies LLC v. Tolmar, Inc.

United States District Court, D. Delaware

November 1, 2018




         Presently before the Court is Defendants TOLMAR, Inc., TOLMAR Pharmaceuticals, Inc., and TOLMAR Therapeutics, Inc.'s (collectively "Defendants" or "TOLMAR") motion to dismiss for failure to state a claim (the "Motion"), filed pursuant to Federal Rule of Civil Procedure 12(b)(6). (D.I. 12) Defendants argue that Plaintiff Horatio Washington Depot Technologies LLC's ("Plaintiff' or "Horatio") Complaint, (D.I. 1), which alleges infringement of United States Patent Nos. 5, 932, 547 (the "'547 patent"), 6, 124, 261 (the "'261 patent"), and 6, 235, 712 (the "712 patent") (together the "asserted patents" or "patents-in-suit"), should be dismissed for various reasons. For the reasons that follow, the Court recommends that Defendants' Motion be GRANTED-IN-PART and DENIED-IN-PART.

         I. BACKGROUND

         A. Factual Background

         Plaintiff is the owner of the asserted patents by assignment and has the right to sue for past damages. (Id. at ¶¶ 17-19) The asserted patents are all titled "Non-Aqueous Polar Aprotic Peptide Formulations[, ]" and were issued between 1999 and 2001. (Id.) The '547 and '261 patents (the "formulation patents") "are directed to stable, non-aqueous formulations of a peptide compound and solvent," while "the 712 patent is directed to methods of preparing those formulations and treating prostate cancer using those formulations." (D.I. 13 at 4) At the time of the filing of this action in August 2017, the three asserted patents had already expired on June 13, 2017. (Id. at 3) Further information about the patents and products reading on the patents is set forth in Section III.

         According to the Complaint, Defendant "TOLMAR Pharmaceuticals, Inc. holds approved New Drug Applications ('NDA')" for various doses of its branded drug Eligard® (the "accused product"). (D.I. 1 at ¶ 23) "Eligard is indicated for use in the palliative treatment of advanced prostate cancer" and "contains leuprolide acetate, a luteinizing hormone-release hormone (LH-RH) related compound as its active pharmaceutical ingredient." (Id.) Plaintiff alleges that Defendants directly, indirectly and willfully infringed the patents-in-suit relating to the making, using, selling or offering for sale of Eligard. (Id. at ¶¶ 29-109)

         B. Procedural Background

         On August 3, 2017, Plaintiff filed this action against Defendants. (D.I. 1) On August 11, 2017, Chief Judge Leonard P. Stark referred the case to the Court to resolve any and all matters with regard to scheduling, as well as any motions to dismiss, stay, or transfer venue. (D.I. 8)

         On September 27, 2017, Defendants filed the instant Motion, (D.I. 12), and briefing was completed on November 15, 2017, (D.I. 21). The Court heard oral argument on the Motion at the request of all parties on May 9, 2018. (D.I. 59 ("Tr.")) Thereafter, Defendants filed two notices of subsequent authority, (D.I. 49; D.I. 57), and Plaintiff filed a statement in response to the second notice, (D.I. 58).


         Pursuant to Rule 12(b)(6), a party may move to dismiss the plaintiffs complaint based on the failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). The sufficiency of pleadings for non-fraud cases is governed by Federal Rule of Civil Procedure 8, which requires "a short and plain statement of the claim showing that the pleader is entitled to relief[.]" Fed.R.Civ.P. 8(a)(2). In order to survive a motion to dismiss pursuant to Rule 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks and citation omitted). In assessing the plausibility of a claim, first the court separates the factual and legal elements of a claim, accepting "all of the complaint's well-pleaded facts as true, but [disregarding] any legal conclusions." Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009). Second, the court determines "whether the facts alleged in the complaint are sufficient to show that the plaintiff has a 'plausible claim for relief" Id. at 211 (quoting Iqbal, 556 U.S. at 679).

         A plausible claim does more than merely allege entitlement to relief; it must also demonstrate the basis for that "entitlement with its facts." Id. Thus, a claimant's "obligation to provide the 'grounds' of his 'entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do[.]" Bell Ail. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations omitted). In assessing the plausibility of a claim, the court must '"construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.'" Fowler, 578 F.3d at 210 (quoting Phillips v. Cnty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008)).


         Defendants assert various grounds for dismissing some or all of the Counts in the Complaint. One of those grounds is the argument that all claims of infringement of the two formulation patents should be dismissed because Plaintiff failed to plead compliance with the marking statute, 35 U.S.C. § 287(a) ("Section 287(a)" or "the marking statute"). (D.I. 13 at 3, 17-20) At oral argument, the parties spent most of their time addressing that issue. (See Tr. at 23-25, 31 (the Court explaining that the marking issue was at the top of its decision tree, and both sides agreeing that it should be)) Therefore, the Court will address the marking issue first, and will address the other alleged pleading deficiencies thereafter.

         A. Failure to Plead Compliance with the Marking Statute

         Under Section 287(a):

Patentees, and persons making, offering for sale, or selling within the United States any patented article for or under them . .. may give notice to the public that the same is patented, either by fixing thereon the word "patent" or the abbreviation "pat.", together with the number of the patent, or by fixing thereon the word "patent" or the abbreviation "pat." together with an address of a posting on the Internet, accessible to the public without charge for accessing the address, that associates the patented article with the number of the patent, or when, from the character of the article, this can not be done, by fixing to it, or to the package wherein one or more of them is contained, a label containing a like notice. In the event of a failure so to mark, no damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice. Filing of an action for infringement shall constitute such notice.

35 U.S.C. § 287(a). Thus, when required by the statute, notice that sales of a product may constitute patent infringement may be given to the alleged infringer in one of two ways: (1) via constructive notice, by properly marking the patentee's own product (or its packaging); or (2) via actual notice (such as by filing an infringement action against the infringer). See Lambda Optical Sols., LLC v. Alcatel-Lucent USA Inc., Civil Action No. 10-487-RGA-CJB, 2015 WL 5470175, at *3 (D. Del. July 29, 2015) report and recommendation adopted sub nom. LAMBDA Optical Sols. LLC v. Alcatel Lucent USA Inc., No. CV 10-487-RGA, 2015 WL 5458269 (D. Del. Sept. 17, 2015).

         The statute's language and related requirements set up a few different possible scenarios. For example, if a patentee (or other person mentioned in the statute) never produces or sells a patented product, then the patentee/person's ability to recover damages is not limited by the statute. Id. (citing Texas Dig. Sys., Inc. v. Telegenix, Inc., 308 F.3d 1193, 1219-20 (Fed. Cir. 2002)). On the other hand, if a patentee produces or sells a patented product, but does not mark the patented product in a manner described in Section 287(a), it forfeits the right to recover damages for the period in which it was producing or selling the unmarked product (unless and until it provides the actual notice to the potential infringer). Id. Relatedly, the Court has also concluded that if a patentee produces or sells an unmarked patented product-but then later ceases such production/sales-it may still not collect damages thereafter for infringement until it takes active steps to address the failure to mark, such as by affirmatively providing notice to a potential infringer. Id. at *5; see also Arctic Cat Inc. v. Bombardier Recreational Prods., Inc., No. 14-cv-62369-BLOOM/Valle, 2018 WL 3820610, at *7 (S.D. Fla. Aug. 10, 2018) (explaining that where the plaintiff/patentee's product was not marked for a period of time, the fact that the patentee thereafter ceased selling the unmarked product for over a year did not entitle it to damages as of the date that the product came off of the market; instead, in order to be able to recover damages thereafter, the patentee "needed to begin marking the products or provide actual affirmative notice to an alleged infringer[]" in order to cure non-compliance with the marking statute).

         Patents that contain only method claims, such as the 712 patent, are not subject to the notice provisions of Section 287(a), ActiveVideo Networks, Inc. v. Verizon Commc'ns, Inc., 694 F.3d 1312, 1334 (Fed. Cir. 2012), whereas the formulation patents, which contain only product claims, are subject to those provisions. It is plaintiffs burden to both plead and prove compliance with the marking statute. Arctic Cat Inc. v. Bombardier Recreational Prods. Inc., 876 F.3d 1350, 1366 (Fed. Cir. 2017); Sentry Prot. Prods., Inc. v. Eagle Mfg. Co., 400 F.3d 910, 918 (Fed. Cir. 2005).

         Defendants argue that: (1) Plaintiff was obligated to and has failed to plead compliance with Section 287(a) in the Complaint; and (2) this dooms its claims of infringement of the formulation patents. Its argument takes some time to set out, and goes as follows:

(1) The Complaint contains allegations that Defendants had knowledge of the asserted patents since at least May 20, 2010. On that date, during the prosecution of TOLMAR's United States Patent No. 8, 486, 455 (the '"455 patent"), TOLMAR submitted an Information Disclosure Statement ("IDS") (attached as an exhibit to the Complaint), in which TOLMAR cited to the December 2009 edition of the United States Food and Drug Administration's ("FDA") Approved Drug Products With Therapeutic Equivalence Evaluations (the "Orange Book")-and more particularly, to the Orange Book's reference to "[Leuprolide] Acetate (12/2009)." (D.I. 1 at ¶ 26 & ex. F) Plaintiff also attaches to the Complaint what is purported to be a portion of the same December 2009 edition of the Orange Book. (Id., ex. D) In that portion of the Orange Book, ten patents-including the three asserted patents here-are listed under the heading "Leuprolide Acetate - Viadur[, ]" meaning that the patents were therein associated with the drug product Viadur®. (Id., ex. D at 13)
(2) Defendants argue that because the two formulation patents were listed in connection with Viadur in this edition of the Orange Book, this means that the patents "either cover Viadur or a method of using Viadur." (D.I. 13 at 19 (citing 21C.F.R. 314.53))
(3) Defendants then note that it is undisputed that from at least 2000 to 2008, Viadur was "commercially marketed in the U.S." by ALZA Pharmaceuticals ("ALZA"), Plaintiffs predecessor as owner of the asserted patents. (D.I. 13 at 20; see also Id. at 4; D.I. 1, ex. D at 13; D.I. 19 at 11 (Plaintiff noting that Viadur was marketed by ALZA until 2008); Tr. at 4 (Defendants' counsel noting that Viadur was sold in the United States from 2000 to 2008))
(4) Defendants further allege that "at some point prior to 2011 [, ] Viadur was discontinued, and ... there was no product covered by the Asserted Patents commercially marketed in the United States from 2011-2017." (D.I. 13 at 20; see also D.I. 1 at ¶ 21 (Plaintiff pleading that "[f]rom 2011 to 2017, there was no product for the patentees to mark with the patent numbers in the United States []"))
(5) Defendants note that ALZA later assigned the asserted patents to a third party; the "third party [] owned the patents until they expired in June of 2017." (Tr. at 5) Plaintiff then acquired the asserted patents by assignment on July 26, 2017, one week prior to filing the instant suit. (Id.; see also D.I. 13 at 4 n.2; D.I. 19 at 18)
(6) Because Viadur read on the asserted patents, Defendants argue that ALZA was required to mark the Viadur product/packaging. The Complaint, however, contains no allegations that ALZA did so. (D.I. 13 at 20; see also D.I. 1) In light of the fact that it is not pleaded that ALZA provided the required constructive notice of infringement to entities like Defendants (and in light of the fact that Defendants were not given actual notice of their own patent infringement during the damages period), Defendants argue that ALZA's failure to mark means that Plaintiff, as a later-acquiring holder of title to the formulation patents, cannot recover damages as to those patents from Defendants. (D.I. 13 at 6, 20) In other words, ALZA's failure to mark prohibited not only it from collecting patent damages until actual notice of infringement was given, but it also serves to prohibit Plaintiff' from collecting such damages as well.
(7) And since the formulation patents expired before suit here was brought against Defendants, the filing of the Complaint cannot provide actual notice of infringement to Defendants. Therefore, Defendants assert that the infringement claims as to the formulation patents should be dismissed. (D.I. 13 at 19-20)

         For its part, Plaintiff does not dispute that the formulation patents covered Viadur. (D.I. 19 at 11 ("There is no current dispute that the [formulation] patents covered . . . Viadur[]"); Tr. at 36 (Plaintiffs counsel acknowledging that one can reasonably infer from the Complaint that Viadur read on the claims of the asserted patents at issue here); id. at 61-62) Rather, Plaintiff makes two main arguments in opposition: (1) the Orange Book listing of the formulation patents for Viadur satisfied the marking requirement of Section 287(a); and/or (2) even assuming ALZA failed to mark Viadur with the formulation patents, [1] this should not prevent Plaintiff from seeking damages here, since Plaintiff only acquired the patents in July 2017, and Plaintiff was then a "good faith third party purchaser[] of [the] patents who never manufactured any patented product and who [is] not under the control of the patentee or in privity with the prior assignee[.]" (D.I. 19 at 11-19) The Court will address each argument in turn, and thereafter will take up a related argument regarding discovery.

         1. The Orange Book ...

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