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Case 1:06-cv-00041-JJF

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Case 1:06-cv-00041-JJF

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Not Reported in F.Supp.2d Not Reported in F.Supp.2d, 2004 WL 315269 (S.D.N.Y.) (Cite as: 2004 WL 315269 (S.D.N.Y.))

Motions, Pleadings and Filings Only the Westlaw citation is currently available.

question of whether parent was liable for subsidiary's actions turned on factual considerations beyond scope of pleadings, such as degree of control it exercised over subsidiary. [3] Patents 310.1(5) 291k310.1(5) Most Cited Cases Complaint provided competitor with fair notice of infringement claims, relating to patent on system that enabled transmission of channel logs, over nondedicated telephone lines, chronicling television channels viewed by subscriber; even though complaint did not identify which of competitor's television monitoring devices infringed upon the patent, complaint specifically stated that competitor "infringed, induced and/or contributed" to infringement of patent by "importing, making, using and/or selling products which use and/or encompass store and forward technology with the use of a telephone line for data transmission in the television industries and continued to do so." Fed.Rules Civ.Proc.Rule 8(a), 28 U.S.C.A. 313 [4] Patents 291k313 Most Cited Cases Competitor's laches argument at motion to dismiss stage was premature, since such relief turned upon whether patent holder unreasonably delayed filing of lawsuit despite having actual or constructive knowledge of competitor's infringing products and whether that delay resulted in material prejudice to competitor, and those inquiries could not be resolved on face of complaint. Patents 328(2) 291k328(2) Most Cited Cases 4,361,851. Cited. Robert Rando, Levy & Stopol, LLP, Uniondale, New York, for Plaintiffs. Lee F. Grossman, Eric P. Martin, Grossman & Flight, LLC, Chicago, Illinois, Steven H. Bazerman, Ramsaran Maharajh Jr., Bazerman & Drangel, PC, New York, New York, for Defendants. OPINION AND ORDER SCHEINDLIN, J. *1 William Asip and Miklos Bartha bring this action against VNU, Inc. ("VNU") and Nielsen Media Research ("Nielsen") (collectively "defendants") alleging patent infringement. VNU now moves to dismiss the Complaint for failure to state a claim, and

United States District Court, S.D. New York. William F. ASIP and Miklos L. Bartha, Plaintiffs, v. NIELSEN MEDIA RESEARCH, INC. and VNU, Inc., Defendants. No. 03 Civ. 5866(SAS). Feb. 18, 2004. Background: Patent holder brought infringement action against subsidiary and parent company over patent on system that enabled transmission of channel logs, over non-dedicated telephone lines, chronicling television channels viewed by subscriber. Holdings: On holder's motion to dismiss, the District Court, Scheindlin, J., held that: (1) patent holder stated claim for infringement; (2) question of whether parent was liable for subsidiary's actions turned on factual considerations beyond scope of pleadings; (3) complaint provided subsidiary with fair notice of infringement claims; and (4) subsidiary's laches argument was premature. Motion denied. West Headnotes [1] Patents 310.1(1) 291k310.1(1) Most Cited Cases Patent holder stated claim for infringement, on allegations that stated its joint ownership interest in particular patent, named particular defendants, cited patent as basis for action, described means by which defendants allegedly infringed patent, and indicated that its claims were based on defendants' willful acts of direct and indirect infringement. Fed.Rules Civ.Proc.Rule 8(a), 28 U.S.C.A. [2] Patents 310.1(1) 291k310.1(1) Most Cited Cases Patent holder stated infringement claim against parent company, even though parent owned stock in subsidiary for only 69 days before expiration of patent, where complaint otherwise provided parent with fair notice as to claims asserted against it, and

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Not Reported in F.Supp.2d Not Reported in F.Supp.2d, 2004 WL 315269 (S.D.N.Y.) (Cite as: 2004 WL 315269 (S.D.N.Y.)) Nielsen moves for a more definite statement under Rule 12(e). For the reasons that follow, both motions are denied. I. BACKGROUND FN7. Id. Plaintiffs are New York residents and holders of Patent No. 4,361,851 (" '851 Patent"). [FN1] Defendants are owners and operators of television audience measurement estimating systems and devices. [FN2] Both defendants conduct business in New York [FN3] and Nielsen is a "division" of VNU. [FN4] FN1. Complaint ("Compl.") ¶ ¶ 1, 2, 9. FN2. See Plaintiffs' Memorandum of Law in Opposition to VNU's Rule 12(b)(6) Motion ("Pl.12(b)(6) Mem.") at 1; Plaintiffs' Memorandum of Law in Opposition to Nielsen's Rule 12(e) Motion ("Pl.12(e) Mem.") at 1. FN3. Compl. ¶ ¶ 3-5; see also VNU's Memorandum of Law in Support of Its Rule 12(b)(6) Motion ("Def.12(b)(6) Mem.") at 2. FN4. Compl. ¶ 5. The '851 patent was issued to plaintiffs on November 30, 1982 for their invention of a system that "automatically monitor[s] the selection of a Program Source made by a Subscriber." [FN5] Specifically, this system enables the transmission (over nondedicated telephone lines) of channel logs chronicling those channels a subscriber has viewed. [FN6] Plaintiffs envisioned use of this invention with "cable television systems or over-the-air pay television scrambled systems." [FN7] But they also noted that the possible applications of this invention "are not restricted to [those relating to] Pay-TV" and could include deployment in activities such as "[o]pinion polling and preference sampling." [FN8] FN5. '851 Patent, Ex. 1 to Compl. In considering a motion to dismiss, courts may not consider matters outside the pleadings. See Chambers v. Time Warner, Inc., 282 F.3d 147, 152 (2d Cir.2002). The complaint includes " 'any written instrument attached to it as an exhibit or any statements or documents incorporated in it by reference." ' Id. (quoting International Audiotext Network, Inc. v. American Tel. & Tel. Co., 62 F.3d 69, 72 (2d Cir.1995)); see also FN8. Id.

Fed.R.Civ.P. 10(c). Accordingly, the '851 Patent is treated as part of the Complaint. FN6. See '851 Patent.

Plaintiffs allege that defendants have infringed, induced, and/or contributed to the infringement of "at least" Claim One of the '851 Patent. [FN9] Claim One covers: FN9. Compl. ¶ ¶ 11, 14. The '851 Patent covers six claims. See '851 Patent. A television-use monitoring device for direct electrical connection to a telephone line, comprising: (a) coupling means coupled to said television for detecting when said television is actively receiving a predetermined channel and producing, in response thereto a program selection signal indicating the active reception of a particular program selection; (b) timer means for providing timing information; (c) transient memory means responsive to said coupling means to store, in response to a first control signal, said program selection signal associated with a particular program whose active reception has been detected; (d) second memory means responsive to said transient memory means to receive the output of said transient memory means in response to a second control signal and produce the same at its output in response to a third control signal; (e) control means responsive to said timer for periodically causing said transient memory means to store any program selection signal present in the system, and reading the contents of said transient memory means, and responsive to said transient memory means to cause said transient memory means to transfer its contents to said second memory means in response to the detection of said program selection at one point in time and a second detection of the same program selection a predetermined period of time thereafter; (f) interface means, responsive to said control means and said second memory means to encode said program selection signal for transmission; and *2 (g) transmission coupling means, responsive to said interface means, to couple the output of said interface means to conventional telephone lines and transmit said program selection to a central

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Not Reported in F.Supp.2d Not Reported in F.Supp.2d, 2004 WL 315269 (S.D.N.Y.) (Cite as: 2004 WL 315269 (S.D.N.Y.)) billing facility. [FN10] FN10. '851 Patent. Defendants allegedly knew of and intentionally infringed the '851 Patent by "importing, making, using and/or selling products which use and/or encompass [,] store[,] and forward technology with the use of a telephone line for data transmission in the television industries." [FN11] Plaintiffs contend that defendants' unlawful conduct began prior to and continued through the '851 Patent's expiration date in January 2000. [FN12] FN11. Compl. ¶ 10; see also id. ¶ ¶ 14-16. FN12. Id. ¶ ¶ 10-11, 15. II. APPLICABLE LAW A. Legal Standard 1. Rule 12(b)(6) FN16. Fed.R.Civ.P. 12(e). A motion to dismiss pursuant to Rule 12(b)(6) should be granted only if " 'it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." ' [FN13] "A court's task 'in ruling on a Rule 12(b)(6) motion is merely to assess the legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof." ' [FN14] Accordingly, courts must construe the complaint liberally, accept all factual allegations in the complaint as true, and draw all reasonable inferences in the plaintiff's favor. [FN15] FN13. Swierkiewicz v. Sorema, N.A., 534 U.S. 506, 514, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002) (quoting Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984)); see also Cargo Partner AG v. Albatrans, Inc., 352 F.3d 41, 44 (2d Cir.2003). FN14. Levitt v. Bear Stearns & Co., Inc., 340 F.3d 94, 101 (2d Cir.2003) (quoting Cooper v. Parsky, 140 F.3d 433, 440 (2d Cir.1998)). FN15. See Chambers, 282 F.3d at 152; Levitt, 340 F.2d at 101. 2. Rule 12(e)

Under Rule 12(e), if a complaint is "so vague or ambiguous that a party cannot reasonably be required to frame a responsive pleading, the party may move for a more definite statement before interposing a responsive pleading." [FN16] Rule 8(a) provides that a plaintiff need only plead "a short and plain statement of the claim" that will provide the defendant with fair notice of what the plaintiff's claim is and the grounds upon which it rests. [FN17] " '[I]f [a] complaint complies with the liberal pleading requirements of [Rule 8(a) ], then the Rule 12(e) motion should be denied." ' [FN18] Notably, because the purpose of the Rule is to "strike at unintelligibility rather than want of detail and ... allegations that are unclear due to a lack of specificity are more appropriately clarified by discovery rather than by an order for a more definite statement." [FN19] Therefore, "the tendency under the Federal Rules is to discourage motions to compel more definite complaints and to encourage the use of discovery procedures to apprise the parties of the basis for the claims made in the pleadings." [FN20]

FN17. Fed.R.Civ.P. 8(a); see also Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). FN18. Vapac Music Publ'g, Inc. v. Tuff'N'Rumble Mgmt., No. 99 Civ. 10656, 2000 WL 1006257, at *6 (S.D.N.Y. July 19, 2000) (quoting Tom Kelley Studios Inc. v. International Collectors Soc'y Inc., No. 97 Civ. 0056, 1997 WL 598461, at *1 (S.D.N.Y. Sept. 25, 1997)). FN19. Markovic v. New York City Sch. Constr. Auth., No. 99 Civ. 10339, 2000 WL 1290604, at *3 (S.D.N.Y. Sept.13, 2000) (quotation marks and citation omitted). FN20. Id.; see also Vapac Music Publ'g, 2000 WL 1006257, at *6 (noting that Rule 12(e) motions are disfavored). B. Patent Infringement To state a claim for patent infringement, "a patentee need only plead facts sufficient to place the alleged infringer on notice. This requirement ensures that the accused infringer has sufficient knowledge of the facts alleged to enable it to answer the complaint and defend itself." [FN21] A complaint for patent infringement need only meet the following

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Not Reported in F.Supp.2d Not Reported in F.Supp.2d, 2004 WL 315269 (S.D.N.Y.) (Cite as: 2004 WL 315269 (S.D.N.Y.)) requirements: "[ (1) allege] ownership of the asserted patent, [ (2) ] name[ ] each individual defendant, [ (3) ] cite[ ] the patent that is allegedly infringed, [ (4) ] describe[ ] the means by which the defendants allegedly infringe, and [ (5) ] point[ ] to the specific sections of the patent law invoked." [FN22] FN21. Phonometrics, Inc. v. Hospitality Franchise Sys., Inc., 203 F.3d 790, 794 (Fed.Cir.2000); accord DigiGAN, Inc. v. iValidate, Inc., No. 02 Civ. 0420, 2004 WL 203010, at *4 (S.D.N.Y. Feb.3, 2004). FN22. Phonometrics, 203 F.3d at 794; accord DigiGAN, 2004 WL 203010, at *4. III. DISCUSSION [FN23] FN25. See id. ¶ ¶ 3, 5, 10, 11. FN23. As an initial matter, I note plaintiffs' argument that both Rule 12 motions should be rejected because of defendants' failure to abide by my Individual Rules and Procedures. See Pl. 12(b)(6) Mem. at 9; Pl. 12(e) Mem. at 7. Because parties are expected to be familiar with these rules, defendants are reminded that the rules are available at this Court's website. See Individual Rules and Procedures, http://www.nysd. uscourts.gov/Individual_Practices/Scheindli n.pdf. The rules clearly state that, prior to bringing a motion to dismiss, "the parties must exchange letters" and "must certify that premotion letters were exchanged." Id. at 3 (emphasis added). "The parties should attempt to eliminate the need for these motions based on this exchange of letters," while recognizing that leave to amend will be freely granted. Id. Defendants' failure to follow these rules has led them to engage in what appears to be unnecessary motion practice. This highlights precisely those consequences that the rule is intended to avoid, e .g., needlessly delayed litigation and wasted judicial resources. A. VNU's Rule 12(b)(6) Motion *3 [1][2] The Complaint satisfies the pleading requirements of Rule 8 because it: (1) alleges plaintiffs' joint ownership of the '851 Patent, [FN24] (2) names VNU and Nielsen as defendants, [FN25] (3) cites the '851 Patent as the basis for the action, [FN26] (4) describes the means by which defendants FN26. See id. ¶ ¶ 9-15. FN27. See id. ¶ ¶ 9-11.

allegedly infringed the '851 Patent, [FN27] and (5) indicates that their claims are based on defendants' willful acts of direct and indirect infringement. [FN28] However, VNU argues that the action against it should be dismissed because it has never "engaged in any of the allegedly infringing activities." [FN29] Rather, VNU contends that those acts were committed by its subsidiary, Nielsen, which was acquired on October 27, 1999, sixty-nine days prior to the expiration of the '851 patent. [FN30] As VNU puts it, "[its] sole relationship with [Nielsen] as relates to this case is this 69 day period during which it owned the stock of [Nielsen] but had no direct involvement in its operations." [FN31] FN24. See Compl. ¶ 9.

FN28. See id. ¶ ¶ 10-12. Specifically, patent infringement claims are governed by 35 U.S.C. § 271. Direct infringement occurs when a person, without authority, infringes a patent by making, using, offering to sell, or selling any patented invention. See 35 U.S.C. § 271(a). Indirect infringement occurs when a person induces the infringement of a patent by another or contributes to a patent's infringement through its activities. See 35 U.S.C. § 271(b)-(c). FN29. Def. 12(b)(6) Mem. at 2. FN30. See id. FN31. Id. at 2-3 (alternation in original). VNU has not demonstrated that plaintiffs cannot prove any set of facts in support of their patent infringement claims. First, plaintiffs' allegations as pled are sufficient because they provide VNU with fair notice as to the claims asserted against it. As plaintiffs correctly point out, VNU's motion is "merely a statement of its belief that it has not engaged in any direct infringement which is more appropriately stated as a denial in answer to the [Complaint]." [FN32] Second, even if plaintiffs' infringement claims against VNU are premised solely on its status as "a holding company" for subsidiary Nielsen, whether VNU is liable for Nielsen's actions

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Not Reported in F.Supp.2d Not Reported in F.Supp.2d, 2004 WL 315269 (S.D.N.Y.) (Cite as: 2004 WL 315269 (S.D.N.Y.)) turns on factual considerations (e.g., the degree of control that VNU exercised over Nielsen) that are beyond the scope of the pleadings. [FN33] Thus, contrary to VNU's argument that "[t]he timing of the dismissal is irrelevant," [FN34] the fact that VNU brings this motion at the pleading stage is critical. FN32. Pl. 12(b)(6) Mem. at 8. FN33. Not surprisingly VNU submitted a Joint Declaration in an attempt to factually support its arguments. See Joint Declaration of Michael E. Elias and David A. SchwartzLeeper, Ex. A to Def. 12(b)(6) Mem. But for purposes of a motion brought under Rule 12(b)(6), a court cannot consider documents outside of the pleadings. See Chambers, 282 F.3d at 152. FN34. VNU's Reply Memorandum of Law in Further Support of Its Rule 12(b)(6) Motion at 4. B. Nielsen's Rule 12(e) Motion [3] Nielsen argues that because plaintiffs' " 'bearbones' [sic] Complaint" does not identify which of Nielsen's television monitoring devices infringe the '851 Patent, the Complaint fails to satisfy Rule 8's pleading requirements. [FN35] But the Complaint specifically states that Nielsen "infringed, induced and/or contributed" to the infringement of the '851 Patent by "importing, making, using and/or selling products which use and/or encompass store and forward technology with the use of a telephone line for data transmission in the television industries and continued to do so to, and including, January 2000." [FN36] These allegations are not "so vague or ambiguous" that Nielsen cannot be "reasonably ... required to frame a responsive pleading" to the Complaint. [FN37] As the Complaint provides fair notice of plaintiffs' patent infringement claims, it comports with the pleading requirements set forth in Rule 8. [FN38] FN35. Nielsen's Memorandum of Law in Support of Its Rule 12(e) Motion ("Def.12(e) Mem.") at 2. FN36. Compl. ¶ 11. FN37. Fed.R.Civ.P. 12(e). FN38. See supra Part III.A. Moreover, Form 16 of the Appendix of Forms to the Federal

Rules of Civil Procedure, which provides a sample patent infringement complaint, states simply that "[d]efendant has for a long time past been and still is infringing [plaintiff's] Letters Patent by making, selling, and using electric motors embodying the patented invention, and will continue to do so unless enjoined by this court." Courts have found that a complaint providing at least as much information as this sample complaint is sufficient to withstand a Rule 12(e) motion. See Dome Patent L .P. v. Permeable Techs., Inc., 190 F.R.D. 88, 90-91 (W.D.N.Y.1999) (citing OKI Elec. Indus. Co. v. LG Semicon Co., No. 97 Civ. 20310, 1998 WL 101737, at *3-4 (N.D.Cal. Feb.25, 1998), and SoliTech, Inc. v. Halliburton Co., No. 97 Civ. 10232, 1993 WL 315358, at *3 (E.D.Mich. Jan.26, 1993)). Plaintiffs' allegations of infringement by "products which use and/or encompass store and forward technology with the use of a telephone line for data transmission in the television industries" are at least as specific as those involving "electric motors embodying the patented invention." Compl. ¶ 11. [4] Nielsen also contends that the doctrine of laches requires plaintiffs to "specifically identify [Nielsen's] allegedly infringing products." [FN39] In particular, Nielsen argues that plaintiffs' allegations either (1) cover activities that Nielsen has undertaken for the twenty years since the '851 patent was issued and "[b]y definition" the doctrine of laches applies; or (2) Nielsen "must have some new product, or must have modified an old product in a way [ ] that allegedly infringes the '851 Patent" and must identify that product. [FN40] But, at this stage of the proceedings, Neilsen's laches argument is premature. Relief pursuant to the doctrine of laches turns on (1) whether a plaintiff unreasonably delayed the filing of her lawsuit despite having actual or constructive knowledge of the defendant's infringing products and (2) whether that delay resulted in material prejudice to defendant. [FN41] Where these inquiries cannot be resolved on the face of the complaint, they are questions properly reserved for summary judgment, after discovery has concluded. Here, the laches defense cannot be resolved solely from a review of the Complaint. FN39. Def. 12(e) Mem. at 3. FN40. Id. at 4 (citing A.C. Aukerman Co. v. R.L. Chaides Contr. Co., 960 F.2d 1020

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Not Reported in F.Supp.2d Not Reported in F.Supp.2d, 2004 WL 315269 (S.D.N.Y.) (Cite as: 2004 WL 315269 (S.D.N.Y.)) (Fed.Cir.1992) and Ecolab, Inc. v. Envirochem, Inc., 264 F.3d 1358 (Fed.Cir.2001). Notably, both cases upon which Nielsen relies involve the application of the doctrine of laches at the summary judgment stage. FN41. See Ecolab, 264 F.3d at 1371; A.C. Aukerman Co., 960 F.2d at 1032. IV. CONCLUSION *4 For the foregoing reasons, both VNU's motion to dismiss and Nielsen's motion for a more definite statement are denied. The Clerk of the Court is directed to close these motions (numbers 13 and 17 on the docket sheet). A conference is scheduled for February 26, 2004, at 2:45 p.m. SO ORDERED: Not Reported in F.Supp.2d, 2004 WL 315269 (S.D.N.Y.) Motions, Pleadings and Filings (Back to top) · 1:03cv05866 (Docket) (Aug. 06, 2003) END OF DOCUMENT

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2005 U.S. Dist. LEXIS 21557, * JOHN GAMMINO, Plaintiff, v. CELLCO PARTNERSHIP d/b/a VERIZON WIRELESS VERIZON COMMUNICATIONS, INC. VODAPHONE GROUP PLC, and AT&T CORPORATION, Defendants. NO. 04-4303 UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA 2005 U.S. Dist. LEXIS 21557 September 27, 2005, Filed CASE SUMMARY PROCEDURAL POSTURE: Two defendants, cellular telephone companies, filed motions to dismiss plaintiff patentee's action for the infringement of two patents. OVERVIEW: The patentee filed an action against defendants, alleging that they had, and continued to, directly infringe upon and/or actively induce the infringement of two patents that he registered and owned. The patents covered techniques for blocking fraudulent international telephone calls. Two defendants filed motions to dismiss. As to defendant one, the court found that by alleging that defendants actively infringed upon, and induced others to infringe upon, his patents by using them, the patentee satisfied the pleading requirements of Fed. R. Civ. P. 8(a)(2). Defendant one's other arguments could appropriately be advanced after discovery and upon summary judgment. The patentee's action did not duplicate prior litigation between the parties. None of the claims against defendants in the earlier matter involved allegations of patent infringement relating to wireless telephone services. Finally, the court was unable to determine whether it could lawfully exercise personal jurisdiction over defendant two, a foreign company. An opportunity for jurisdictional discovery had to be granted in order to permit the patentee to demonstrate that jurisdiction over defendant two was warranted. OUTCOME: The court denied defendant one's motion to dismiss. The court deferred a decision on defendant two's motion to dismiss pending the completion of discovery limited to the issues raised. CORE TERMS: patent, discovery, partner, notice, infringed, infringe, infringement, completion, motion to dismiss, summary judgment, patent infringement, wireless, actively, induced, required to provide, infringer, patentee, failed to state, general partner, jurisdictional, duplicative, correctly, reinstate, duplicate, reply LexisNexis(R) Headnotes Hide Headnotes

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Civil Procedure > Pleading & Practice > Defenses, Objections & Demurrers > Failure to State a Cause of Action HN1 A court may dismiss a complaint for failure to state a cause of action only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations. The court must take all the well pleaded allegations as true and construe the complaint in the light most favorable to the plaintiff. More Like This Headnote Civil Procedure > Pleading & Practice > Pleadings > Interpretation HN2 Fed. R. Civ. P. 8(a)(2) only requires a short and plain statement of a claim showing that the pleader is entitled to relief. The statement of facts must simply give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests. More Like This Headnote Civil Procedure > Pleading & Practice > Pleadings > Interpretation HN3 Notice pleading is all that is required even when it may appear on the face of the pleadings that a recovery is very remote and unlikely. The issue is not whether a plaintiff will ultimately prevail but whether the plaintiff is entitled to offer evidence to support the claims. More Like This Headnote Civil Procedure > Pleading & Practice > Pleadings > Interpretation HN4 The notice pleading standard relies on liberal discovery rules and summary judgment motions to define disputed facts and issues and to dispose of unmeritorious claims. The pleading standard is a liberal one and is adopted to focus litigation on the merits of a claim. More Like This Headnote Civil Procedure > Pleading & Practice > Pleadings > Interpretation HN5 Fed. R. Civ. P. 8(a) establishes a pleading standard without regard to whether a claim will succeed on the merits. More Like This Headnote Civil Procedure > Pleading & Practice > Pleadings > Interpretation Patent Law > Infringement Actions > General Overview HN6 A patentee need only plead facts sufficient to place an alleged infringer on notice. This requirement ensures that an accused infringer has sufficient knowledge of the facts alleged to enable it to answer the complaint and defend itself. More Like This Headnote Civil Procedure > Pleading & Practice > Pleadings > Interpretation Patent Law > Infringement Actions > General Overview HN7 Pleading requirements do not require a patentee to amend its claims to include specific allegations about each limitation once a court has construed the claims of the patent. To impose such requirements would contravene the notice pleading standard, and would add needless steps to the already complex process of patent litigation. More Like This Headnote Civil Procedure > Jurisdiction > Personal Jurisdiction & In Rem Actions > Personal Jurisdiction HN8 A plaintiff bears the burden of establishing that a defendant has sufficient contacts with the forum state to warrant a court's exercise of either general or specific personal jurisdiction over the defendant. More Like This Headnote

COUNSEL: [*1] For JOHN R. GAMMINO, Plaintiff: WILLIAM M. MULLINEAUX, FLAMM BOROFF & BACINE, BLUE BELL, PA; FRANK SCHWARTZ, FLAMM BOROFF & BACINE PC, BLUE BELL, PA; RICHARD J. JOYCE, FLAMM, BOROFF & BACINE, PC, BLUE BELL, PA.

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For CELLCO PARTNERSHIP, doing business as VERIZON WIRELESS, VODAFONE GROUP PLC, Defendants: KATHERINE MENAPACE, AKIN GUMP STRAUSS HAUER & FELD, LLP, PHILADELPHIA, PA; SAMUEL W. SILVER, SCHNADER HARRISON SEGAL & LEWIS LLP, PHILADELPHIA, PA. For VERIZON COMMUNICATIONS, INC., Defendant: SAMUEL W. SILVER, SCHNADER HARRISON SEGAL & LEWIS LLP, PHILADELPHIA, PA. For AT&T CORP., Defendant: KATHERINE MENAPACE, AKIN GUMP STRAUSS HAUER & FELD, LLP, PHILADELPHIA, PA. For SPRINT CORPORATION, Defendant: WILLIAM A. JONES, SWARTZ CAMPBELL, LLC, THE FLINTKOTE COMPANY, PHILADELPHIA, PA; KATHERINE MENAPACE, AKIN GUMP STRAUSS HAUER & FELD, LLP, PHILADELPHIA, PA. For DAVEL COMMUNICATIONS, INC., Defendant: GREGORY B. LARE, DUANE MORRIS LLP, PHILADELPHIA, PA; MARK A. WATKINS, AKRON, OH; R. ERIC GAUM, HAHN, LOESER, AKRON, OH; RICHARD H. LOWE, DUANE MORRIS LLP, PHILADELPHIA, PA; KATHERINE MENAPACE, AKIN GUMP STRAUSS HAUER & FELD, LLP, PHILADELPHIA, PA. For JOHN R. GAMMINO, [*2] JOHN R. GAMMINO, Counter Defendants: WILLIAM M. MULLINEAUX, FLAMM BOROFF & BACINE, BLUE BELL, PA. For CELLCO PARTNERSHIP, Counter Claimant: SAMUEL W. SILVER, SCHNADER HARRISON SEGAL & LEWIS LLP, PHILADELPHIA, PA. JUDGES: Clifford Scott Green, S.J. OPINIONBY: Clifford Scott Green OPINION: MEMORANDUM GREEN, S.J. Presently pending are Defendant Verizon Communications, Inc. ("VCI") Motion to Dismiss, and Defendant Vodaphone Group PLC's ("Vodaphone") Motion to Dismiss. Defendants Cellco Partnership ("Cellco" will be referred to as "Verizon Wireless"), Davel Communications, Inc., Sprint Communications, and AT&T have each filed an Answer to Plaintiff's Complaint. For the reasons set forth below, Defendant VCI's motion will be denied. Defendant Vodaphone's motion will be dismissed without prejudice pending the completion of jurisdictional discovery. FACTUAL AND PROCEDURAL BACKGROUND Plaintiff filed a Complaint against Defendants alleging that Defendants have in the past, and continue to, directly infringe upon and/or actively induce the infringement of two patents Plaintiff registered and owns. The patents purportedly cover techniques for blocking fraudulent international [*3] telephone calls thereby resulting in substantial savings for Defendants. VCI argues that Plaintiff's Complaint should be dismissed against it because VCI is not a partner of Verizon Wireless. VCI also maintains that Plaintiff failed to state a claim that VCI directly infringed upon the patent or induced Verizon Wireless to infringe the patent. VCI claims that it is a holding company which only holds the stock of other companies, and that it does not conduct any other business. Secondly, VCI argues that it should be dismissed from this action because Plaintiff has already sued VCI for infringement of the same patents in a

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related matter in this court, Gammino, v. Verizon Communications, et al., Civ. Ac. No. 035579. In reply, Plaintiff responds that VCI is a general partner of Verizon Wireless as is demonstrated by many public filings. Plaintiff further responds that the instant suit against VCI is not duplicative litigation because the claims alleged against VCI herein derive from VCI's alleged infringement of the patents for wireless services only. Plaintiff states that the related case does not contain any claims for violation of the patents relating to wireless services. Therefore, [*4] Plaintiff concludes that the claims made in this action do not duplicate claims made in Gammino, v. Verizon Communications, et al., Civ. Ac. No. 03-5579. DISCUSSION A court may dismiss a complaint for failure to state a cause of action only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations. Swierkiewicz v. Sorema N.A., 534 U.S. 506, 122 S. Ct. 992, 998, 152 L. Ed. 2d 1 (2002) (quoting Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S. Ct. 2229, 81 L. Ed. 2d 59 (1984)). The court "must take all the well pleaded allegations as true and construe the complaint in the light most favorable to the plaintiff." Colburn v. Upper Darby Twp., 838 F.2d 663, 665-66 (3d Cir. 1988). In Swierkiewicz, the United States Supreme Court addressed the liberal pleading standards set forth in Fed.R.Civ.P. 8(a)(2), noting that HN2 Fed.R.Civ.P. 8(a) (2) only requires "a short and plain statement of the claim showing that the pleader is entitled to relief." Swierkiewicz 534 U.S. 506, 122 S. Ct. 992 at 998-999, 152 L. Ed. 2d 1. [*5] The Supreme Court further noted that the statement of facts must simply "give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Id. at 998. (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S. Ct. 99, 2 L. Ed. 2d 80(1957). HN3 Notice pleading is all that is required even when it may appear on the face of the pleadings that a recovery is very remote and unlikely. See Swierkiewicz at 997-998. "The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Id. at 997 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S. Ct. 1683, 40 L. Ed. 2d 90)). The Supreme Court further expounded upon the simplified notice pleading standard stating that HN4 the standard relies on liberal discovery rules and summary judgment motions to define disputed facts and issues and to dispose of unmeritorious claims. Id. at 998. The pleading standard is a liberal one and was adopted to focus litigation on the merits of a claim. Id. at 999. Therefore, HN5 Fed.R.Civ.Pro. 8(a) establishes a pleading standard without [*6] regard to whether a claim will succeed on the merits. . A. VCI's Motion to Dismiss VCI argues that dismissal is warranted because it is only a holding company, and not a partner of Verizon Wireless. VCI also argues that the instant litigation is duplicative, a waste of judicial resources, and unduly burdensome. Upon review of the Complaint the court notes that Plaintiff has alleged that VCI is a general partner of Verizon Wireless. (See Compl. at PP 35, 38,73, and 85). Plaintiff's has sufficiently alleged that VCI is Verizon Wireless' partner. Swierkiewicz, discussed supra makes it clear that pleading with particularity is not required and also that Plaintiff is not required to provide proof that his allegations are correct at the time of pleading. The pleading standard is a liberal one and was adopted to focus litigation on the merits of a claim. Id. at 999. Whether VCI actually is a partner of Verizon Wireless is a matter to be determined after the completion of discovery and upon summary judgment, if appropriate. Furthermore, Plaintiff has also alleged, albeit quite generally, that VCI has actively infringed upon, and induced Verizon Wireless to [*7] infringe upon, Plaintiff's patents. VCI asserts that Plaintiff must specify the manner in which the alleged infringement occurred and cites to Phonometrics, Inc. v. Hospitality Franchise Sys. Inc., 203 F.3d 790 (Fed. Cir 2000) in support of this position. (VCI Mot. Dismiss at 6). However, VCI has misconstrued the court's holding in that case. In Phonometrics ,the court merely stated that HN6 "a patentee need only plead facts sufficient to place the alleged infringer on notice. This
HN1

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requirement ensures that an accused infringer has sufficient knowledge of the facts alleged to enable it to answer the complaint and defend itself." Phonometrics, 203 F.3d at 794. Notably the court specifically held that: [Pleading] requirements do not require a patentee to amend its claims to include specific allegations about each limitation once a court has construed the claims of the patent. To impose such requirements would contravene the notice pleading standard, and would add needless steps to the already complex process of patent litigation. Instead. . . [the] complaint alleges ownership of the asserted patent, names each individual defendant, cites [*8] the patent that is allegedly infringed, describes the means by which the defendants allegedly infringe, and points to the specific sections of the patent law invoked.
HN7

Id. Therefore, Plaintiff is only required to provide Defendants with notice of his claims. By alleging that Defendants have actively infringed upon, and induced others to infringe upon, his patents by using them, Plaintiff has satisfied the pleading requirements of Fed.R.Civ.P. 8 (a)(2). VCI's motion to dismiss largely relies on its assertions that Plaintiff cannot prove that VCI is Verizon Wireless' partner. VCI's motion for dismissal also asserts that VCI cannot and has not infringed upon any patents because it is only a holding company. Again, these arguments are appropriately advanced after discovery has been completed and upon summary judgment. Defendant VCI's motion to dismiss for failure to state a claim will be dismissed VCI's final argument favoring dismissal is that the instant matter duplicates litigation. Plaintiff has filed a complaint against VCI in a related matter. See, Gammino v Verizon Communications, Inc., et al., Civ. Ac. No. 03-5579. However, [*9] as Plaintiff correctly notes, none of Plaintiff's claims against any of the Defendants in that matter involve allegations of patent infringement relating to wireless telephone services. The claims against all Defendants herein involve wireless service. The court recognizes that VCI will be required to simultaneously litigate two cases involving the same patent. However, the court will attempt to minimize this burden by coordinating scheduling and other deadlines in the related case. Accordingly, Defendant VCI's motion to dismiss Plaintiff's Complaint will be denied. B. Vodaphone's Motion to Dismiss Vodaphone moves for dismissal pursuant to Fed.R.Civ.P. 12(b)(2) asserting that this court does not have jurisdiction over Vodaphone, a UK-based company. Vodaphone asserts that it has no Pennsylvania contacts and that in Pennsylvania it: does not do any business; has never sold any goods or services; does not own any property; does not pay any tax, or employ any personnel. As Vodaphone correctly points out, HN8 Plaintiff bears the burden of establishing that Vodaphone has sufficient contacts with Pennsylvania to warrant this court's exercise [*10] of either general or specific personal jurisdiction over Vodaphone. See, Inamed Corp. V. Kuzmak, 249 F.3d 1356, 1360 (Fed. Cir. 2001); Akro Corp. v. Luker, 45 F.3d, 1541, 1545 (Fed. Cir. 1995). However, on the present record, the court is unable to determine whether it may lawfully exercise personal jurisdiction over Vodaphone. An opportunity for jurisdictional discovery must be granted in order to permit Plaintiff to demonstrate to this court that jurisdiction over Vodaphone is warranted. n1 - - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -

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n1 Vodaphone also moves for dismissal pursuant to Fed.R.Civ.P. 12(b)(6) maintaining that it is not a partner of Verizon Wireless and cannot be liable for any alleged infringing conduct committed by Verizon Wireless. Vodaphone further argues that Plaintiff has failed to state a claim for patent infringement because the complaint failed to allege sufficient facts to support a claim of either direct or indirect patent infringement. (See Vodaphone Mot. Dismiss at 1415, 17-19). The court will not determine whether dismissal pursuant to Fed.R.Civ.P. 12(b)(6) is appropriate until after the court decides whether it may properly exercise jurisdiction over Vodaphone. - - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [*11] An appropriate order follows. ORDER AND NOW this day of September 2005, IT IS HEREBY ORDERED that:

1. Defendant VCI's Motion to Dismiss is DENIED. Defendant VCI shall file an Answer to Plaintiff's Complaint within 10 days of the date of this Order; 2. Decision on Defendant Vodaphone's Motion to Dismiss is DEFERRED pending the completion of discovery limited to the issues raised pursuant to Fed. R. Civ. P 12(b)(2); 3. Discovery on the jurisdictional issue shall be completed on or before November 30, 2005; 4. Defendant Vodaphone may move within ten (10) days of the completion of discovery to reinstate the motion including legal memorandum; 5. Plaintiff shall have ten (10) days from the date of Defendant's letter request to reinstate his reply.

BY THE COURT: S/ Clifford Scott Green, S.J.

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In re Rivastigmine Patent Litig., 2005 U.S. Dist. LEXIS 7167 (Copy w/ Cite)

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2005 U.S. Dist. LEXIS 7167, * In Re RIVASTIGMINE PATENT LITIGATION (MDL No. 1661), (05 MD 1661) (HB) (JCF) UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK 2005 U.S. Dist. LEXIS 7167 April 25, 2005, Decided April 25, 2005, Filed SUBSEQUENT HISTORY: Motion granted by, Motion denied by In re Rivastigmine Patent Litig., 2005 U.S. Dist. LEXIS 20851 (S.D.N.Y., Sept. 22, 2005) DISPOSITION: [*1] Novartis' motion to amend granted. CASE SUMMARY PROCEDURAL POSTURE: Plaintiffs, a group of pharmaceutical companies, sought to amend their complaints in consolidated patent cases to include claims for induced infringement under 35 U.S.C.S. § 271(e)(2). Defendant pharmaceutical companies argued that the motion to amend should be denied because the proposed amendments were futile. OVERVIEW: Defendant pharmaceutical companies (DPCs) filed abbreviated new drug applications (ANDAs) to piggyback on the safety and effectiveness information that the plaintiff pharmaceutical companies (PPCs) submitted in their new drug application (NDA) for a drug that treated dementia associated with Alzheimer's disease. The PPCs sued the DPCs, and sought to amend the complaints to allege induced patent infringement under 35 U.S.C.S. § 271(e)(2). The PPCs initially based their infringement actions only on the filing of the ANDAs, which was not sufficient, given that they were still required to prove infringement under a traditional patent infringement analysis. Therefore, the PPCs moved to amend their complaints to add language that included patent infringement elements. The DPCs argued that the amendments were futile because they were speculative and did not set out specific intent. However, the court found that the fact that the amendments referred to what the DPCs might do in the future was not fatal given that the drugs had not been marketed yet. Also, under the notice pleading standard, the PPCs were not required to plead particular specific acts of inducement. OUTCOME: The court granted the motion to amend.

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CORE TERMS: patent, infringement, induced, patent infringement, manufacturer, amend, certification, induce, specific intent, motion to amend, new drug, pharmaceutical, collectively, manufacture, speculative, submitting, piggyback, futility, futile, affirmative conduct, required to state, deny permission, third parties, patent law, rivastigmine, expiration, inducement, infringed, infringer, dementia LexisNexis(R) Headnotes Hide Headnotes

Patent Law > Infringement Actions > Infringing Acts > Contributory, Indirect & Induced Infringement HN1 See 35 U.S.C.S. § 271(e)(2). Patent Law > Infringement Actions > Infringing Acts > Contributory, Indirect & Induced Infringement HN2 35 U.S.C.S. § 271(e)(2) merely creates an act of infringement for the purpose of forestalling the argument that no case or controversy yet exists. A plaintiff claiming induced infringement under § 271(e)(2) must still prove infringement under a traditional patent infringement analysis. More Like This Headnote Civil Procedure > Pleading & Practice > Pleadings > Amended Pleadings HN3 A motion to amend is governed by Fed. R. Civ. P. 15(a), which states that leave to amend shall be freely given when justice so requires. Notwithstanding the liberality of the general rule, it is within the sound discretion of the court whether to grant leave to amend, and for the proper reasons, a court may deny permission to amend in whole or in part. More Like This Headnote Civil Procedure > Pleading & Practice > Pleadings > Amended Pleadings HN4 Among the reasons for which a court may deny permission to amend a complaint is the futility of amendment. A motion to amend may be denied as futile if the amendment could not withstand a motion to dismiss. More Like This Headnote |
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Civil Procedure > Pleading & Practice > Pleadings > Amended Pleadings Patent Law > Jurisdiction & Review > General Overview HN5 Although the law of the U.S. Court of Appeals for the Federal Circuit governs questions of patent law, the law of the regional circuit applies to procedural questions that are not specific to patent law, such as motions to amend. More Like This Headnote Patent Law > Infringement Actions > Infringing Acts > Contributory, Indirect & Induced Infringement HN6 A claim under 35 U.S.C.S. § 271(e)(2) is, by its very nature, speculative to a certain degree. Indeed, in comparing actions brought under § 271(e)(2) and traditional infringement claims brought under § 271(a), the only difference is that the allegedly infringing drug has not yet been marketed and therefore the question of infringement must focus on what the abbreviated new drug application applicant will likely market if its application is approved, an act that has not yet occurred. Thus, while a § 271(e)(2) induced infringement claim may be speculative, it is not sufficiently so to contravene the case or controversy requirement. More Like This Headnote Patent Law > Infringement Actions > Infringing Acts > Contributory, Indirect & Induced Infringement Patent Law > Infringement Actions > Infringing Acts > Intent & Knowledge HN7 In order to succeed on an induced infringement claim under 35 U.S.C.S. § 271(e)(2),

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a plaintiff must prove infringement under a traditional patent infringement analysis. Such an analysis requires proof that if the abbreviated new drug application is approved, the accused infringer will induce a third party to directly infringe the asserted patent and that the accused infringer knows or should know that his actions will induce infringement. More Like This Headnote Patent Law > Infringement Actions > Infringing Acts > Contributory, Indirect & Induced Infringement Patent Law > Infringement Actions > Infringing Acts > Intent & Knowledge HN8 Specific intent in the induced infringement context requires that a defendant intend specifically to encourage another's infringement, as opposed to merely knowing of the acts alleged to constitute inducement. And, under the notice pleading standard provided in Fed. R. Civ. P. 8, plaintiffs are not required to plead with particularity specific acts of inducement or encouragement of third parties. More Like This Headnote

COUNSEL: For Novartis Pharmaceuticals Corporation, Novartis AG, Novartis Pharma AG, Novartis International Pharmaceutical Ltd., Plaintiffs: Christopher Michael Welling, David C. Van Dyke, Cassiday, Schade & Gloor, Chicago, IL; David M Conca, Gregory B. Sephton, Nicholas Nicholas Kallas, Robert Louis Baechtold, Diego Scambia, Fitzpatrick, Cella, Harper & Scinto, New York, NY; Edward Anthony Kmett, Jr., Michael K. O'Neill, Fitzpatrick, Cella, Harper & Scinto, Costa Mesa, CA. For Proterra AG, Plaintiff: David M Conca, Gregory B. Sephton, Nicholas Nicholas Kallas, Robert Louis Baechtold, Fitzpatrick, Cella, Harper & Scinto, New York, NY. For Dr. Reddy's Laboratories, Ltd., Dr. Reddy's Laboratories, Inc., Defendants: Maurice Newmark Ross, Budd Larner P.C., NY, NY. For Sun Pharmaceutical Industries Ltd., Defendant: David J. Doyle, Derek John Sarafa, James Francis Hurst, Winston & Strawn, LLP, Chicago, IL; Kristen G. Cowan, Winston & Strawn, Chicago, IL. For Watson Pharmaceuticals Inc., Watson Laboratories Inc., Defendants: Leonard J. Santisi, Frommer Lawrence & Haug, San Diego, CA. JUDGES: JAMES C. FRANCIS IV, UNITED STATES MAGISTRATE JUDGE. OPINIONBY: JAMES C. FRANCIS IV OPINION: MEMORANDUM AND ORDER JAMES C. FRANCIS IV UNITED STATES MAGISTRATE JUDGE Plaintiffs Novartis Pharmaceuticals Corporation, Novartis AG, Novartis Pharma AG, Novartis International Pharmaceutical Ltd. and Proterra AG (collectively "Novartis"), seek to amend their complaints in these consolidated patent cases to include claims for induced infringement under 35 U.S.C. § 271(e)(2). Defendants, Dr. Reddy's Laboratories, Ltd. and Dr. Reddy's Laboratory, Inc. (collectively "Reddy"), Watson Pharmaceuticals Inc. and Watson Laboratories, Inc. (collectively "Watson"), and Sun Pharmaceutical Ltd. ("Sun"), argue that plaintiffs' motion should be denied because the proposed amendments are futile. For the reasons set forth below, Novartis' motion is granted. Background

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A. The Regulatory Framework

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Pursuant to the Food, Drug, and Cosmetic Act, 21 U.S.C. § 301-99 (the "FDCA"), a pharmaceutical manufacturer seeking to market a new drug must first obtain approval from the Food and Drug Administration (the "FDA") by submitting a new drug application ("NDA"). Purepac Pharm. Co. v. TorPharm, Inc., 354 F.3d 877, 879, 359 U.S. App. D.C. 319 (Fed. Cir. 2004); [*3] Allergan, Inc. v. Alcon Laboratories, Inc., 324 F.3d 1322, 1325 (Fed. Cir. 2003). If an NDA is approved, the FDA grants the manufacturer a five-year period of exclusive marketing for the drug. Allergan, 324 F.3d at 1325. The application must contain, among other things, the results of extensive testing, information regarding the drug's safety and effectiveness, and information about patents that cover the drug. 21 U.S.C. § 355(b)(1); Purepac, 354 F.3d at 879. The FDA publishes the patent information, which must be updated by the NDA owner, in a publication known generally as the "Orange Book." Allergan, 324 F.3d at 1325-26. "Method-of-use patents," that is, patents that cover a drug's specific uses, may be included in the Orange Book only if the covered uses have been approved by the FDA. Purepac, 354 F.3d at 880 (citing 21 C.F.R. § 314.53(b)). With the goal of expediting access by generic drug manufacturers to the pharmaceutical market, Congress passed the "Hatch Waxman" amendments to the FDCA in 1984. See The Drug Price Competition and Patent [*4] Restoration Act of 1984, Pub. L. No. 98-417, 98 Stat. 1585 (1984) (codified in scattered sections of titles 21, 35, and 42 of the United States Code); Purepac, 354 F.3d at 879. The amendments allow manufacturers seeking approval to market a generic version of an FDA-approved drug to file Abbreviated New Drug Applications ("ANDAs") which "piggyback on the safety-and-effectiveness information that the brandname manufacturers submitted in their NDAs." Id. Like NDA applicants, ANDA applicants must address patents that cover, or ostensibly cover, the drug for which they are seeking approval. Id. One way in which they may do this is by submitting a statement that the patents which purport to cover the drug are "invalid or will not be infringed by the manufacture, use, or sale of the new drug" (a "paragraph IV certification"). 21 U.S.C. § 355 (j)(2)(A)(vii)(IV). Upon submitting a paragraph IV certification, an ANDA applicant must notify the patent holder, as well as the company that filed the NDA on which the ANDA "piggybacks." Purepac, 354 F.3d at 879. The patent holder then has 45 days in which to file a patent-infringement [*5] suit. Id. B. The Infringed Patents This case arises out of efforts by the defendants, Reddy, Watson, and Sun to market rivastigmine tartrate, which is sold by Novartis under the brand name Exelon. On April 21, 2000, the FDA approved Exelon for "the treatment of mild to moderate dementia of the Alzheimer's type". (Amended Complaint for Patent Infringement against Reddy ("Am. Compl."), attached as Exh. A to Declaration of Simon A. Fitzpatrick dated Jan. 12, 2004 ("Fitzpatrick Decl."), P26; Exelon Product Label, attached as Exh. 5 to Declaration of Lars P. R. Taavola dated Jan. 26, 2005 ("Taavola Decl."), at 9). Novartis subsequently submitted two patents purporting to cover Exelon for publication in the Orange Book, U.S. Patent Nos. 4,948,807 ("the '807 patent") and 5,602,176 ("the '176 patent"). (Taavola Decl., Exhs. 6 & 7). Each patent contains several claims, only two of which are at issue here: claim 4 of the '807 patent and claim 5 of the '176 patent. (Plaintiffs' Memorandum in Support of their Motion to Amend the Complaints ("Pl. Memo.") at 3). Both claims address methods of using certain compounds to treat various medical conditions including Alzheimer's disease. (Pl. [*6] Memo. at 3; Taavola Decl., Exh. 6 at 14 & Exh. 7 at 4-5). As stated in the complaints, the defendants here have filed ANDAs, which attempt to "piggyback" on the plaintiffs' NDA for Exelon. (Defendants' Joint Memorandum in Opposition to Plaintiffs' Motion to Amend the Complaints ("Def. Memo.") at 6). Reddy and Watson have submitted a paragraph IV certification stating that "the '807 and '176 patents are invalid, unenforceable or will not be infringed." (Am. Compl., P27; Answer and Counterclaim of Dr.

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Reddy's Laboratories, Ltd. and Dr. Reddy's Laboratories, Inc., attached as Exh. 3 to Taavola Decl., P27; Amended Complaint for Patent Infringement against Watson, attached as Exh. B to Fitzpatrick Decl., P27). Sun has submitted the same certification pertaining only to the '176 patent. (Amended Complaint for Patent Infringement against Sun, attached as Exh. C to Fitzpatrick Decl., P19). Novartis subsequently filed a declaratory judgment action against Reddy, Watson, and Sun. The initial complaints against each defendant alleged infringement based only on the filing of the ANDAs "for the purpose of obtaining approval to engage in the commercial manufacture, use, or sale" of rivastigmine [*7] tartrate capsules before the expiration of the '807 and/or '176 patents. (Am. Compl., PP23-24). 35 U.S.C. § 271(e)(2) provides that:

It shall be an act of infringement to submit-(A) an [ANDA] . . . for a drug claimed in a patent or the use of which is claimed in a patent, . . . if the purpose of such submission is to obtain approval under [Title 21 of the United States Code] to engage in the commercial manufacture, use, or sale of a drug . . . claimed in a patent or the use of which is claimed in a patent before the expiration of such patent.

HN1

The plaintiffs are not the first parties to argue that this language creates a cause of action for infringement based solely on the filing of an ANDA. See Warner-Lambert Co. v. Apotex Corp., 316 F.3d 1348, 1355 (Fed. Cir. 2003); Allergan, Inc. v. Alcon Laboratories, Inc., 200 F. Supp. 2d 1219, 1227 (C.D. Cal. 2002). Nevertheless, the Federal Circuit has soundly rejected this argument, holding that HN2 section 271(e)(2) merely creates "an act of infringement" for the purpose of forestalling the argument that no case or controversy yet exists. A plaintiff claiming induced infringement [*8] under section 271(e)(2) must still prove infringement under a traditional patent infringement analysis. Allergan, 324 F.3d at 1330-32; WarnerLambert, 316 F.3d at 1365-66. Accordingly, Novartis now proposes to supplement its claims for induced infringement under section 271(e)(2) by adding the following paragraph: On information and belief, [defendant's] Rivastigmine Tartrate Products if approved, will be administered to human patients in a therapeutically effective amount for treatment of mild to moderate dementia of the Alzheimer's type, which administration constitutes direct infringement of the [relevant] patents. On information and belief, this will occur at [defendant's] active behest and with its intent, knowledge and encouragement. On information and belief, [defendant] will actively induce, encourage, aid and abet this administration with knowledge that it is in contravention of Plaintiff's right under the [relevant] patents.

(Am. Compl., P26). Discussion A motion to amend is governed by Rule 15(a) of the Federal Rules of Civil Procedure, which states that leave to [*9] amend "shall be freely given when justice so requires." Fed. R. Civ. P. 15(a); see Oneida Indian Nation of New York v. City of Sherrill, New York, 337 F.3d 139, 168 (2d Cir. 2003), rev'd on other grounds, U.S. , 161 L. Ed. 2d 386, 125 S. Ct. 1478 (2005). Notwithstanding the liberality of the general rule, "it is within the sound
HN3

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discretion of the court whether to grant leave to amend," John Hancock Mutual Life Insurance Co. v. Amerford International Corp., 22 F.3d 458, 462 (2d Cir. 1994) (citation omitted), and for the proper reasons, a court may deny permission to amend in whole or in part. See Krumme v. Westpoint Stevens Inc., 143 F.3d 71, 88 (2d Cir. 1998). Among the reasons for which a court may deny permission to amend is the "futility of amendment." Foman v. Davis, 371 U.S. 178, 182, 9 L. Ed. 2d 222, 83 S. Ct. 227 (1962). A motion to amend may be denied as futile if the amendment could not withstand a motion to dismiss. See Milanese v. Rust-Oleum Corp., 244 F.3d 104, 110 (2d Cir. 2001); Smith v. CPC International, Inc., 104 F. Supp. 2d 272, 274 (S.D.N.Y. 2000). [*10] n1 HN5 Although the law of the Federal Circuit governs questions of patent law, the law of the regional circuit applies to procedural questions that are not specific to patent law. See Madey v. Duke University, 307 F.3d 1351, 1358 (Fed. Cir. 2002). Thus, Second Circuit law governs the legal standards for pleading under Rule 8(a) of the Federal Rules of Civil Procedure and for dismissal under Rules 12(b)(1) and 12(b)(6). - - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - n1 Because only the futility of the amendment is at issue, I will not address the defendants' arguments to the extent they encompass assertions in the initial complaint. For example, the defendants contend that the plaintiffs' amendments should be denied because the plaintiffs have not pleaded that the use indicated in patents '807 and '176 is an FDA approved use. (Def. Memo. at 17-19). Since the plaintiffs' assertions regarding the uses indicated in the relevant patents and approved by the FDA are contained in the initial complaint, their sufficiency is not at issue here. (Complaint for Patent Infringement against Reddy, PP16, 19, 22). - - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [*11] The defendants argue that Novartis' proposed amendments are futile because they are speculative and because they fail to set out the "specific intent" and affirmative conduct required to state a claim for induced infringement under 35 U.S.C. § 271(e)(2). (Def. Memo. at 20-21). I will address each of these contentions in turn. First, it is not fatal to the plaintiffs' motion that the proposed amendments pertain to "what [the] defendants may do in the future." (Def. Memo. at 20). HN6 "A claim under 35 U.S.C. § 271(e)(2) is, by its very nature, speculative to a certain degree[.]" Allergan, 324 F.3d at 1331. Indeed, in comparing actions brought under section 271(e)(2) and traditional infringement claims brought under section 271(a), the Federal Circuit has stated that "the only difference . . . is that the allegedly infringing drug has not yet been marketed and therefore the question of infringement must focus on what the ANDA applicant will likely market if its application is approved, an act that has not yet occurred." Glaxo, Inc. v. Novopharm, Ltd., 110 F.3d 1562, 1569 (Fed. Cir. 1997). Thus, "while a [*12] section 271 (e)(2) induced infringement claim may be speculative, it is not sufficiently so to contravene the case or controversy requirement." Allergan, 324 F.3d at 1331-32. Second, contrary to the defendants' assertions, the proposed amendments adequately set out the intent and conduct required to state a claim for induced infringement under 35 U.S.C. § 271(e)(2). As noted above, HN7 in order to succeed on an induced infringement claim under section 271(e)(2), a plaintiff must prove infringement under a traditional patent infringement analysis. Such an analysis requires proof that "if the ANDA is approved, the accused infringer will induce a third party to directly infringe the asserted patent and that the accused infringer knows or should know that his actions will induce infringement." Allergan,
HN4

https://www.lexis.com/research/retrieve?_m=4d70dca9303aa6c95744bdd9b6614f0a&csvc=... 3/8/2006

Get a Document - by Citation - 2005 U.S. Dist. LEXIS 7167 Case 1:06-cv-00041-JJF Document 57-4 Filed 03/08/2006

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324 F.3d at 1336 (citing Manville Sales Corp. v. Paramount Systems, Inc., 917 F.2d 544, 553 (Fed. Cir. 1990)). The amendments proposed here address each of these elements; the plaintiffs allege that third parties will directly infringe the '807 and '176 patents at the "active behest" and with the intent of defendants. [*13] The defendants assert that the plaintiffs must establish "specific intent" and allege "affirmative conduct" such as funding clinical studies or employing a sales force. (Def. Memo. at 12). However, HN8 "specific intent" in the induced infringement context requires that a defendant intend specifically to encourage another's infringement, as opposed to merely knowing "of the acts alleged to constitute inducement." Manville Sales, 917 F.2d at 553. And, under the notice pleading standard provided in Rule 8 of the Federal Rules of Civil Procedures, the plaintiffs are not, at this stage in the litigation, required to plead with particularity specific acts of inducement or encouragement of third parties. See Takeda Chemical Industries, Ltd. v. Watson Pharmaceuticals, Inc., 329 F. Supp. 2d 394, 401 (S.D.N.Y. 2004) (holding that plaintiff stated traditional claim for induced infringement where it alleged existence of patent and claimed that defendant "[had] taken and [would] take acts to induce infringement of those patents"). Thus, the proposed amendments are not barred on the grounds of futility. Conclusion [*14] For the reasons set forth above, Novartis' motion to amend is granted. SO ORDERED. JAMES C. FRANCIS IV UNITED STATES MAGISTRATE JUDGE Dated: New York, New York April 25, 2005

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