UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION

Transcription

1 SHIRE DEVELOPMENT, LLC, SHIRE PHARMACEUTICAL DEVELOPMENT, INC., COSMO TECHNOLOGIES LIMITED and NOGRA PHARMA LIMITED, Plaintiffs, UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION v. Case No: 8:12-cv-1190-T-36AEP MYLAN PHARMACEUTICALS, INC. and MYLAN, INC., Defendants. / ORDER This matter comes before the Court upon the Defendants' Motion for Reconsideration Pursuant to Rules 59(e) and 60(b) (Doc. 507), Plaintiffs response in opposition (Doc. 515), Defendants Motion to Reopen Case (Doc. 508), Plaintiffs Motion to Strike (Doc. 531) and Defendants response in opposition (Doc. 533). The Court, having considered the motions, having heard argument from counsel, and otherwise being fully advised in the premises, will grant the Motion for Reconsideration Pursuant to Rules 59(e) and 60(b), grant Defendants Motion to Reopen the Case, and deny Plaintiffs Motion to Strike. Because Mylan has demonstrated that there has been an intervening change in controlling law, the Court has reconsidered its Opinion and Order and will vacate its Opinion and Order and Final Judgment and Permanent Injunction. I. BACKGROUND On January 27, 2017, the Court entered an Opinion and Order finding that Defendant Mylan Pharmaceuticals, Inc. and Mylan, Inc. s ( Mylan ) Abbreviated New Drug Application

2 ( ANDA ) literally infringed on Claims 1 and 3 of U.S. Patent No. 6,773,720 ( 720 Patent ). 1 Doc Thereafter, the Court entered judgment in favor of Plaintiffs Shire Development, LLC, Shire Pharmaceutical Development, Inc., Cosmo Technologies Limited, and Nogra Pharma Limited ( Plaintiffs or Shire ) and entered a permanent injunction against Mylan. Doc Two weeks after the entry of these orders, the Federal Circuit issued an opinion in Shire Dev., LLC v. Watson Pharm., Inc., 848 F.3d 981 (Fed. Cir. 2017) ( Watson II ), which involved the same plaintiffs and pertained to the same patent at issue here. Like Mylan, the Watson defendants sought to market a generic version of Shire s mesalamine drug Lialda. In Watson II, the Federal Circuit found that Watson s ANDA product does not satisfy the Markush group 2 requirements in claim 1(b) of the patent and therefore remanded the case to the district court for entry of a judgment of non-infringement. The Federal Circuit addressed issues presented to this Court by Mylan during the September 2016 bench trial, but rejected by the Court, specifically, the scope of the Markush group limitations that appear in claim elements 1(a) and (b) of the 720 patent. In its Opinion and Order, the Court found that Mylan s ANDA product satisfied the Markush group limitations, and that Shire met its burden by demonstrating that the stearic and palmitic acid when found in the outer matrix, and the other excipients besides stearic acid and palmitic acid when found in the inner matrix are unrelated to the properties of the respective matrix. Doc. 503 at 31. In Watson II, the Federal Circuit determined that the presence of lipophilic components in the outer volume literally violate[s] claim element 1(b), and that the unrelated exception to the exclusionary nature 1 The Court also found that Shire established secondary liability by Mylan Pharmaceuticals Inc. on the theory of induced and contributory infringement. Doc. 503 at A Markush group is a listing of specified alternatives of a group in a patent claim. Abbott Labs v. Baxter Pharm. Prods., 334 F.3d 1274, 1280 (Fed. Cir. 2003) 2

3 of Markush group limitations is inapplicable in this context. See Shire Dev., LLC v. Watson Pharm., Inc., 848 F.3d at 985. Like Mylan s ANDA product, Watson s ANDA product contained lipophilic material in its outer volume. Both products add the lipophilic excipients as lubricants. See Shire Dev. LLC v. Watson Pharm., Inc., CIV, 2016 WL at *15(S.D. Fla. Mar. 28, 2016); Doc. 503 at 28. Mylan s ANDA product also contains hydrophilic material in its inner volume. Doc. 503 at 19. As the Federal Circuit discussed, the presence of these materials in the respective volumes literally removes the ANDA from infringement liability because they violate the Markush group limitations of claim elements 1(a) and (b). Shire s argument that the non-compliant excipients may exist in the respective matrix because they are unrelated to the properties of the respective matrix was also rejected by the Federal Circuit in Watson II. See 848 F.3d at ; 985 ( We disagree with the district court's interpretation of Norian [Corp. v. Stryker Corp., 363 F. 3d 1321, 1331 (Fed. Cir. 2004)] and what constitutes a component unrelated to the invention. ). The Court concludes that the Federal Circuit s decision in Watson II constitutes binding precedent on this Court, and is therefore an intervening change in law justifying reconsideration of its Opinion and Order. II. LEGAL STANDARD A motion for reconsideration must demonstrate why the court should reconsider its prior decision and set forth facts or law of a strongly convincing nature to induce the court to reverse 3 The Federal Circuit noted that the district court also determined that Watson's ANDA product satisfied the Markush limitations because the excipients falling outside the respective Markush groups were unrelated to the invention since they did not drive the water-affinity property of their respective matrices. Shire Dev., LLC, 848 F.3d at 984 (citing Shire Dev., LLC, 2016 WL , at *15). 3

4 its prior decision. Florida Coll. of Osteopathic Med., Inc. v. Dean Witter Reynolds, Inc., 12 F. Supp. 2d 1306, 1308 (M.D. Fla. 1998) (quoting Cover v. Wal-Mart Stores, Inc., 148 F.R.D. 294, 295 (M.D. Fla. 1993)). Courts generally recognize three grounds justifying reconsideration: (1) an intervening change in controlling law; (2) the availability of new evidence; and (3) the need to correct clear error or manifest injustice. Id. A motion for reconsideration made after final judgment falls within the ambit of either Rule 59(e) (motion to alter or amend a judgment) or Rule 60(b) (motion for relief from judgment or order). Region 8 Forest Serv. Timber Purchasers Council v. Alcock, 993 F.2d 800, 906 n. 5 (11th Cir. 1993). Motions for reconsideration under Rule 59(e) are appropriate only where there is newly-discovered evidence, or a need to correct a manifest error of law or fact. See Hood v. Perdue, 300 Fed. Appx 699, 700 (11th Cir. 2008) (citing Pres. Endangered Areas of Cobb's History, Inc. v. U.S. Army Corps of Eng'rs, 916 F.Supp. 1557, 1560 (N.D. Ga. 1995), aff'd 87 F.3d 1242 (11th Cir. 1996)); Arthur v. King, 500 F.3d 1335, 1343 (11th Cir. 2007) ( The only grounds for granting [a Rule 59] motion are newly-discovered evidence or manifest errors of law or fact. ) (brackets in original). Motions for reconsideration under Rule 60(b) are appropriate only where there is mistake, inadvertence, surprise, or excusable neglect, newly discovered evidence, fraud, a void judgment, or a judgment that has been satisfied or is no longer applicable. Fed.R.Civ.P. 60(b). See also Am. Bankers Ins. Co. of Fla. v. Northwest Nat. Ins. Co., 198 F.3d 1332, 1338 n.4 (11th Cir. 1999). A motion for reconsideration should not be used to present the Court with arguments already heard and dismissed, or to offer new legal theories or evidence that could have been presented prior to the entry of judgment. See Arthur, 500 F.3d at ; O'Neal v. Kennamer, 958 F.2d 1044, 1047 (11th Cir. 1992); See also Jones v. S. Pan Servs., 450 Fed. Appx 860, 863 4

5 (11th Cir. 2012) ( A motion to alter or amend a judgment cannot be used to relitigate old matters, raise arguments, or present evidence that could have been raised prior to the entry of judgment. ); Pres. Endangered Areas, 916 F.Supp. at 1560 ( A motion for reconsideration is not an opportunity for the moving party and their counsel to instruct the court on how the court could have done it better the first time. ). Whether to grant a motion for reconsideration is committed to the sound discretion of the district judge. O'Neal, 958 F.2d at III. DISCUSSION The Federal Circuit, in Watson II, reiterated that the 720 Patent includes the mesalamine active ingredient; an inner, lipophilic matrix; an outer, hydrophilic matrix; and other optional excipients. Shire Dev., LLC, 848 F. 3d at 983 (citing 720 Patent col. II ). It also reiterated its prior ruling that the 720 [P]atent matrices are defined by mutually exclusive spatial characteristics - one inner, one outer and mutually exclusive compositional characteristics- one hydrophilic, one lipophilic. Id. (quoting Shire Dev., LLC v. Watson Pharm., Inc. 787 F. 3d 1359, 1366 (Fed. Cir. 2015) ( Watson I )). Based on the foregoing, the Federal Circuit concluded that a matrix-not just an excipient within the matrix-must exhibit the appropriate characteristic [and] that the matrix compositions are limited by the Markush groups added during prosecution. Id. (quoting Shire Dev., LLC, 787 F. 3d 1365). The Federal Circuit clarified in Watson II that the correct construction of the Markush group limitations in claim elements 1(a) and (b) requires that each volume said to contain the components that satisfy the inner and outer matrix limitations be closed to unrecited elements. Shire Dev., LLC, 848 F. 3d at 984. This construction means that the inner volume cannot contain substances not listed in claim element 1(a) and the outer volume cannot contain substances not listed in claim element 1(b). Id. at 983. The Federal Circuit further determined that because the 5

6 magnesium stearate in the Watson ANDA product retained its lipophilic character in the extragranular space it structurally and functionally relates to the invention and its presence in the outer hydrophilic matrix violates the consisting of requirement in claim 1(b). Id. at 986. a. The Outer Hydrophilic Matrix and Claim 1(b) Watson II s holding justifies reconsideration of this Court s legal conclusions regarding the outer hydrophilic matrix. This Court made factual findings that the outer volume of Mylan s ANDA product contains SSG, CMC, two HPMCs, stearic acid, palmitic acid, Eudragit, and CSD. Doc. 503 at 27. This Court also found that the outer volume showed an affinity for water and was compositionally and spatially separate from the inner volume. Id. at 19. And the Court concluded that the presence of lipophilic substances in the outer volume does not result in a poor affinity towards aqueous fluids and the lipophilic substances in the outer volume are unrelated to the affinity for water exhibited over Mylan s outer volume. Id. at 27. Based on these findings, the Court concluded that the presence of unrelated lipophilic substances in the outer volume of Mylan s ANDA product did not violate the consisting of limitation of claim 1(b). Id. at Now that the Federal Circuit has held that the presence of lipophilic substances in the outer volume literally violate[s] the claim 1(b) consisting of limitation, 848 F. 3d at 986, 4 the Court must reconsider its Opinion and Order. Here, it is undisputed that Mylan s ANDA product has lipophilic substances in its outer volume And the Court must revisit its classification of excipients as unrelated. There is one exception to the strict application to the Markush group claim limitations and that is when the 4 Thus, we conclude that, based on the district court's findings, the magnesium stearate retains its lipophilic character in the extragranular space. Accordingly, the magnesium stearate structurally and functionally relates to the invention, and its presence in the outer matrix violates the consisting of requirement in claim 1(b). Shire Dev., LLC, 848 F.3d at

7 unlisted aspect is unrelated to the invention. 848 F. 3d at 984 (quoting Norian Corp., 363 F. 3d at 1331). That exception does not apply here according to the Federal Circuit s holding in Watson II. In its Opinion and Order, this Court adopted a posture similar to that of the district court s decision in Watson II, that the lipophilic excipients - palmitic and stearic acid - when found in the outer matrix are unrelated to the properties of the respective matrix, i.e., that they are unrelated to the affinity for water exhibited over Mylan s outer volume. Doc. 503 at 27, 31. The Federal Circuit explained in Watson II s appeal that Norian did not restrict related components to only those that advance or are intended to advance a Markush group s allegedly inventive elements. 848 F. 3d at 986. In the 720 Patent, the relatedness is properly analyzed in the context of the invention as a whole, not the characteristics of a specific matrix. See Norian, 363 F. 3d at Since the palmitic and stearic acids are related to the invention as a whole, in the sense that they are added for their lipophilic nature as lubricants, their presence in the outer hydrophilic matrix violates the claim 1(b) limitation. Shire argues that Watson II does not warrant reversal of this Court s Opinion and Order because it relies on factual findings not made by this Court. Doc. 515 at 1. Specifically, it refers to this Court s finding that the outer hydrophilic matrix consists of the recited claim element 1(b) excipients HPMC E-15 and HPMC E-50. Shire further argues that in Watson II the appellate court relied on the district court s finding that the outer hydrophilic matrix in that product was the entire outer volume, not the specific excipients. Therefore, Shire argues, the analysis in Watson II does not apply. Shire also argues that the relatedness analysis in Watson II was based on a finding of lipophilic influence in the outer matrix of Watson s product. See Shire Dev., LLC, 848 F. 3d at 985. Because this Court made no such finding, Shire argues that Watson II s relatedness argument 7

8 does not apply in this case. This Court made a distinction between the outer volume and the outer hydrophilic matrix. See Doc. 503 at 26. Shire relies on that distinction to argue that Watson II does not apply. The Court disagrees with Shire s analysis. It is true that the district court in Watson II did not make the same factual findings as this Court regarding what constitutes the inner and outer matrices. But the overarching theme of the Federal Circuit s decision in Watson II is that substances existing in the inner or outer matrix, however defined, that are outside of the claim 1(a) and (b) elements, literally violate the Markush group limitations. Shire was very careful in its drafting of the proposed definition of the inner and outer matrix. It proposed that the inner lipophilic matrix is the macroscopically homogeneous distribution of stearic acid and palmitic acid in the inner volume, Doc. 503 at 20-21; and the outer hydrophilic matrix is the macroscopically homogeneous distribution of HPMC E-15 and HPMC E-50 that is separate from the inner lipophilic matrix. Id. at Specifically, this Court found that the inner and outer matrices are only a combination of these components and the other components existing in the extragranular space would not technically violate the Markush groups. But the Court is not persuaded, under Watson II, that this analysis will withhold scrutiny. In examining whether an ANDA product violates the Markush groups, the Court must look at the purpose of the Markush group, specifically, the patent s purpose of defining a component (or piece of a product) in a specific way. It is the formula that the patent holder is attempting to protect. b. The Inner Lipophilic Matrix and Claim Element 1(a) The same analysis applies to the inner lipophilic matrix, since it is limited by the recited Markush group of lipophilic substances listed in claim 1(a). See 848 F. 3d at 984. Like the outer volume, which violated claim 1(b) because of the presence of lipophilic substances, the inner 8

9 volume violates claim 1(a) because it is undisputed that it contains hydrophilic substances not listed in the Markush group, i.e., SSG and CMC. See Doc. 503 at 27, Although the Court found that these hydrophilic substances existed in much lower volumes in the inner matrix, because they retained their hydrophilic nature they are related to the invention and their existence in that inner matrix violates the consisting of requirement in claim 1(a). Shire argues that Watson II does not apply to claim 1(a) because the Federal Circuit did not discuss it in Watson II and the inner lipophilic matrix satisfies the claim 1(a) Markush limitation. As with the Court s findings regarding claim 1(b), Shire argues that based on those findings the ANDA product does not literally violate claim 1(a). The Court disagrees based on the reasoning discussed above. c. The Optionally Other Excipients Claim 1(c) Claim element 1(c) does not serve as a catch-all which excuses the presence of lipophilic ingredients in the outer hydrophilic volume and vice versa. The Court found in its Order and Opinion that stearic acid and palmitic acid are optionally other excipients when they exist in the outer hydrophilic matrix. And SSG, and CMC are optionally other excipients when they exist in the inner lipophilic matrix. Doc. 503 at 31. The Court drew this conclusion based on its findings that the stearic acid when found in the outer matrix, and other excipients besides stearic and palmitic acid when found in the inner matrix are unrelated to the properties of the respective matrix. Id. 5 Shire s experts agreed that there is mesalamine, stearic acid, palmitic acid, SSG, CMC, and Eudragit in the inner volume of Mylan s granules. Doc. 503 at 30. And the Court found that SSG and CMC are hydrophilic matrix-forming compounds that do not appear in the Markush group of claim 1(a). Id. at 27. 9

10 The Federal Circuit rejected this application of unrelated as discussed above, and rejected this interpretation of claim element 1(c). The district court in Watson II relied on claim 1(c) as a way to permit the presence of substances outside of the Markush group limitation in the inner and outer matrices while still infringing on the 720 Patent. Shire, Dev., LLC, 2016 WL , at *15, n. 15. The Federal Circuit found this reasoning erroneous. See Shire Dev., LLC, 848 F.3d at 986, n. 2. The Federal Circuit held that [c]laim 1(c) plainly falls under the preamble s comprising transitional phrase and outside claim 1 s (a) and (b) Markush groups. Claim 1(c) therefore does not present a permissive catch-all to those closed Markush groups. Id. Shire argues that Watson II did not discuss claim 1(c), there was no claim construction as to optionally other excipients and the Watson II court did not construe them. The Federal Circuit adopted the plain claim language. 6 Shire Dev., LLC, 848 F.3d at 986. Therefore, it argues, the Watson II opinion has no bearing on this Court s conclusion in its Opinion and Order as to Claim 1(c). Again, the Court disagrees with this argument. Although the district court in Watson II did not construe claim 1(c) or the term optionally other excipients, it relied on it as a permissive catch-all, as this Court did in the Opinion and Order. See Doc. 503 at 31. The Federal Circuit rejected that analysis, and the Court will no longer rely on it. Upon consideration of the Federal Circuit s opinion in Shire Dev. LLC v. Watson Pharm., Inc., 848 F.3d 981 (Fed. Cir. 2017), the Court finds that Mylan s ANDA Product does not infringe Claims 1 and 3 of the 720 Patent. 6 This Court construed other excipients to mean excipients, not including coatings other than those substances forming the inner lipophilic matrix and those compounds forming the outer hydrophilic matrix. Doc. 503 at 8. 10

11 d. Prejudice to Mylan Mylan argues that it will have to undergo a lengthy appeal process, in a matter where the law is now settled, while its competitors, i.e., Watson and Zydus, are free from the obstacles of litigation as to this particular issue. Shire argues that Mylan suffers no prejudice because the appellate process is typical in these types of matters and expected. Further it argues that regulatory issues, and not litigation, are the source of Mylan s obstacles. The parties have not cited a rule or case law, and the Court has found none, requiring the Court to consider prejudice to the movant. Therefore, the Court will not specifically address whether Mylan would be prejudiced by the denial of reconsideration. In any event, the point is moot given the Court s grant of the motion. IV. Conclusion The Court concludes that the holding in Watson II compels a different outcome in this case. The Court cannot ignore the clear implication of the Federal Circuit s holding in Watson II. It has wide reaching implications in this case, essentially holding that the presence of an unlisted element in the inner or outer volume literally violates the Markush group limitations. Shire very carefully crafted its proposed matrix definitions to include the specific components in the Markush groups as opposed to the entire inner and outer volume. Although this Court implicitly adopted that careful construction by concluding that Mylan s ANDA infringed on the 720 Patent, these findings do not mean that the Federal Circuit s holding in Watson II has no precedential value. Given the overall holding in Watson II, and its implications on the interpretation of the Markush group limitations in the 720 Patent, this Court s Opinion and Order is no longer applicable. Pursuant to Rule 60(b), the Court will vacate its Opinion and Order. 11

12 V. Plaintiff s Motion to Strike Shire moves to strike Doc. 522, 523, 523-1, 527, 528, 528-1, 528-2, 529, 529-1, 529-2, and which Mylan filed during the pendency of the Motion for Reconsideration. Shire construes these documents as unauthorized supplements to the Motion for Reconsideration which violate Local Rule 1.03(c) because Mylan never sought leave to file a reply. Shire also argues that the filings are otherwise immaterial to any pleading or motion currently before the Court. As Mylan points out, these documents were either specifically reviewed, requested or are otherwise binding on the Court. The six notices relate to three documents: Watson s Response to Combined Petition for Panel Rehearing and Rehearing En Banc (Docs , 523-1) which were received and reviewed by the Court; see Doc. 524 at 27; the Federal Circuit s Affirmance in the Shire v. Zydus matter (Docs. 527, 528, 528-1, 528-2, 529, 529-1, 529-2) which is relevant to this Court s analysis and was provided for convenience; and the Federal Circuit s Denial of Shire s Combined Petition for Panel Rehearing and Rehearing En Banc in the Watson II matter (Doc. 530), which Mylan filed in response to the Court s request that the parties file a notice once the mandate issues. See Doc Because Mylan states that Doc was filed inadvertently; it will be stricken. See Doc. 533 at 2, n. 1 Accordingly, it is ORDERED: 1. Defendants Motion to Reopen Case (Doc. 508) is GRANTED. 7 The documents are Mylan s Notice of Watson s Response to Combined Petition for Panel Rehearing and Rehearing En Banc, Mylan s Notice of Filing Exhibit A, Mylan s Notice of Per Curiam Affirmance, Mylan s Notice of Per Curiam Affirmance (re-filed), Mylan s Notice of Per Curiam Affirmance (re-filed), and Mylan s Notice of Denial of Combined Petition for Panel Rehearing and Rehearing En Banc, respectively. 12

13 2. Defendants' Motion for Reconsideration Pursuant to Rules 59(e) and 60(b) (Doc. 507) is GRANTED. 3. The Opinion and Order (Doc. 503) and the Final Judgment and Permanent Injunction (Doc. 504) are hereby VACATED. 4. In a separate order, the Court will enter a judgment in favor of Defendants. 5. Plaintiff s Motion to Strike (Doc. 531) is GRANTED-IN-PART AND DENIED- IN-PART. 6. The Clerk is directed to strike Doc from the docket. DONE AND ORDERED in Tampa, Florida on June 14, Copies to: Counsel of Record and Unrepresented Parties, if any 13