14‐4353‐cv
Apotex Inc., et al., v. Acorda Therapeutics, Inc.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
August Term, 2015
(Argued: November 12, 2015 Decided: May 16, 2016)
Docket No. 14‐4353‐cv
‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x
APOTEX INC., et al.,
Plaintiffs‐Appellants,
‐ v.‐
ACORDA THERAPEUTICS, INC.,
Defendant‐Appellee.
‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x
Before: JACOBS, LIVINGSTON and DRONEY, Circuit Judges.
This appeal concerns two distinct questions: the circumstances under
which the filing of a citizen petition with the Food and Drug Administration
provides grounds for an antitrust claim, and the scope of false advertising
liability under the Lanham Act. Plaintiffs Apotex Incorporated and Apotex
Corporation appeal from the judgment of the United States District Court for the
Southern District of New York (Swain, J.) that granted defendant Acorda
Therapeutics, Inc.’s motion to dismiss plaintiffs’ Sherman Act claim and that
granted summary judgment in favor of defendant on the Lanham Act claims
(Torres, J.). Because each of these conclusions was sound, we affirm.
KEITH D. PARR (with Joseph N. Froehlich,
Scott B. Feder, Hugh S. Balsam, James T.
Peterka, and Andy J. Miller on the brief),
Locke Lord LLP, Chicago, Illinois, for
Appellants Apotex Incorporated & Apotex
Corporation.
JOHN W. NIELDS, JR. (with Jason C.
Raofield and Colin P. Watson on the brief),
Covington & Burling LLP, Washington,
D.C. for Appellee Acorda Therapeutics, Inc.
DENNIS JACOBS, Circuit Judge:
The parties are rival manufacturers of tizanidine, a drug for treating
spasticity. Plaintiffs Apotex Incorporated and Apotex Corporation (collectively
“Apotex”) allege that defendant Acorda Therapeutics, Inc. (“Acorda”) (i) filed a
sham citizen petition with the Food and Drug Administration (“FDA”) to hinder
approval of Apotex’s competing formulation in violation of Section Two of the
2
Sherman Act, and (ii) violated the Lanham Act’s proscription on false
advertising. As relevant here, the competition between the manufacturers
focused on the relative efficacy of tablets or capsules in controlling somnolence,
one of the side effects of tizanidine.
The United States District Court for the Southern District of New York
(Swain, J.) ruled that the simultaneous approval by the FDA of Apotex’s drug
application and its denial of Acorda’s citizen petition (raising concerns about the
application) was by itself insufficient to support a Sherman Act claim. After
discovery, the district court (Torres, J.) granted summary judgment and
dismissed all of Apotex’s false advertising claims on the grounds that (with the
exception of one graph) no representation was literally false or likely to mislead
consumers; and that, as to that one graph, Apotex failed to show that the false
depiction would meaningfully impact consumers’ purchasing decisions.
Apotex appeals both rulings, arguing that precedent from this Court
allows its antitrust claim to survive dismissal and that material issues of fact
pertinent to Acorda’s representations remain for a jury to decide. We affirm
these rulings.
3
Although precedent supports an inference that a citizen petition is an
anticompetitive weapon if it attacks a rival drug application and is denied the
same day that the application is approved, that inference has been undercut by
recent FDA guidance. As to false advertising, we agree with the district court
that no reasonable jury could have found that Acorda made literally false or
misleading representations in its advertisements, with the exception of a single
representation that Apotex has failed to show affected decisions to purchase.
BACKGROUND
Tizanidine tablets are used to treat spasticity, a symptom of multiple
sclerosis and Parkinson’s disease. One of the tablets’ most common side effects is
somnolence: sleepiness or drowsiness. Tizanidine tablets were first marketed in
the United States by Elan Pharmaceuticals, Inc. (“Elan”), under the trade name
“Zanaflex.” (Elan later sold its rights to Acorda.)
Zanaflex tablets were initially approved for sale by the FDA on November
27, 1996. In October 2001, Elan submitted a New Drug Application (“NDA”) to
the FDA seeking approval to market tizanidine in capsule form. During its
review, the FDA concluded that the absorption of the drug was delayed when
4
tizanidine capsules were taken with food (rather than without), and that the
delay was associated with a mean 20 percent decrease in Cmax, the peak amount
of the drug in a subject’s bloodstream. More importantly, the FDA found that
“[w]hen bioequivalence of the capsule relative to the tablet is examined under fed
conditions [i.e., with food], there is a delay in absorption and the mean Cmax for
the capsule is approximately 2/3 of the mean Cmax for the tablet (Figure 1).”
Joint Appendix at 2230 (emphasis added). The FDA subsequently approved
Elan’s NDA on August 29, 2002.
The significance of this phenomenon, in plain terms, is that the faster the
drug is absorbed, the more drowsy the patient may become, whereas the side
effect may be reduced if absorption is slowed.
While the NDA was pending, Elan filed a patent application for methods
of administering tizanidine capsules to reduce somnolence and Cmax. Less than
a month after the FDA approved the NDA, Elan’s patent issued as United States
Patent No. 6,455,557 (“the ‘557 patent”). Elan then received permission to market
its newly approved tizanidine capsules under the trade name “Zanaflex
Capsules.” In July 2004, Acorda acquired the rights to Zanaflex tablets and
Zanaflex Capsules; in April 2005, it launched the sale of Zanaflex Capsules.
5
Apotex had begun selling its generic tizanidine tablet product in 2004, and was
one of about ten companies to do so. At the time Acorda began selling Zanaflex
Capsules, Apotex’s tizanidine tablet product had a five percent market share.
Zanaflex Capsules on the open market carried an FDA label pertaining
both to the Capsules and the tablets. The preamble to this label invites doctors to
distinguish between tablets and Capsules, and between the drug when taken
with food and without:
PHARMACOKINETIC DIFFERENCES BETWEEN ZANAFLEX
CAPSULESTM AND ZANAFLEX® TABLETS: ZANAFLEX
CAPSULESTM ARE NOT BIOEQUIVALENT TO ZANAFLEX®
TABLETS IN THE FED STATE. THE PRESCRIBER SHOULD BE
THOROUGHLY FAMILIAR WITH THE COMPLEX EFFECTS OF
FOOD ON TIZANIDINE PHARMACOKINETICS (see
PHARMACOKINETICS and DOSAGE AND ADMINISTRATION).
Joint Appendix at 643. The Pharmacokinetics section of the label, under the
subheading “Pharmacokinetic differences between Zanaflex CapsulesTM and
Zanaflex® Tablets,” advises (consistent with the FDA review of the Zanaflex
Capsules NDA) that there is a 30 percent increase in Cmax when the tablets are
administered with food, but that when the Capsules are administered with food,
Cmax decreases by 20 percent. “Consequently, the mean Cmax for the [C]apsule
6
when administered with food is approximately 2/3ʹs the Cmax for the tablet
when administered with food.” Id.
The label contains a graph that figures in a number of the false advertising
claims. Referred to as “Figure 1,” the graph is titled “Mean Tizanidine
Concentration vs. Time Profiles for Zanaflex Tablets and Capsules (2 × 4 mg)
Under Fasted and Fed Conditions.” It displays the mean plasma tizanidine
concentration at various hours from dosing. The peak for the curve representing
tizanidine capsules (taken with food) is lower, and occurs later than the peak for
the curve charting concentration over time for tizanidine tablets (taken with
food).
The label then explains, in the Dosage and Administration section, that
pharmacokinetic differences between the fed and fasted state may affect the
7
frequency and onset of certain adverse events. (The text is in the margin.1)
Somnolence is explicitly identified as one of these adverse events.2
In 2007, Apotex filed an Abbreviated New Drug Application (“ANDA”)‐‐a
filing that seeks generic drug approval for an existing licensed medication or
approved drug‐‐in order to sell generic tizanidine capsules which would provide
competition to Acorda’s Zanaflex Capsules. In the ANDA, Apotex certified that
it was not encroaching on any validly claimed intellectual property rights
because the ‘557 patent was invalid. In predictable response, Acorda filed a
patent‐infringement suit in 2007. After a seven‐day bench trial, the United States
District Court for the District of New Jersey (Brown, J.) ruled in September 2011
1 “These pharmacokinetic differences may result in clinically significant
differences when [1] switching administration of the tablet between the fed or
fasted state, [2] switching administration of the capsule between the fed or fasted
state, [and] [3] switching between the tablet and capsule in the fed state . . . .
These changes may result in increased adverse events or delayed/more rapid
onset of activity, depending upon the nature of the switch. For this reason, the
prescriber should be thoroughly familiar with the changes in kinetics associated
with these different conditions . . . .” Joint Appendix at 646.
2 The FDA’s Medical Review of the Zanaflex Capsules NDA observed: “The
most problematic potential situation is that of patients switching from the
capsule formulation to the tablet formulation in the fed state, where there is a risk
of more severe side effects with excessive hypertension and somnolence.” Id. at
2102 (emphasis omitted).
8
that the ‘557 patent was invalid. See Acorda Therapeutics Inc. v. Apotex Inc., No.
07‐4937 (GEB‐MCA), 2011 WL 4074116, at *27 (D.N.J. Sept. 6, 2011).
Soon after that ruling, Acorda filed a citizen petition with the FDA raising
problems with Apotex’s ANDA. The citizen petition is a means afforded by the
FDA for raising concerns about products the FDA reviews; any individual may
file such a petition concerning scientific or legal issues before or while the
product is on the market. See 21 C.F.R. § 10.30. Conceptually, citizen petitions
provide an avenue for public input into the drug approval process; but the
process has been abused by pharmaceutical companies that file meritless
petitions intended to delay approvals sought by their competitors and inhibit
competition. Acorda’s citizen petition objected to (1) Apotex’s statement that its
product was bioequivalent to Reference Listed Drugs (RLDs) in the fed state; and
(2) allegedly misleading or untrue statements in the proposed label for the
Apotex ANDA.
The FDA denied Acorda’s citizen petition on February 3, 2012. That same
day, the FDA approved Apotex’s ANDA. The Sherman Act claim relies
principally on the FDA’s simultaneous dispositions.
9
With the green light from the FDA, Apotex launched its product. Acorda
countered with its own authorized generic version of Zanaflex Capsules. Apotex
contends that in the course of Acorda’s marketing: (1) its representatives
misrepresented to doctors that Zanaflex Capsules reduced Cmax‐‐in comparison
with the tablets‐‐and then improperly used reduction in Cmax as a proxy for a
corresponding decrease in somnolence; and (2) Acorda distributed written
promotional materials to the same effect. In total, Acorda’s advertising efforts
contributed to sales of more than $240 million attributable to its version of
Zanaflex Capsules.
Apotex commenced this lawsuit in December 2011, amending its complaint
in February 2012 to include the FDA’s denial of Acorda’s citizen petition. Acorda
countered with a motion to dismiss, which the district court (Swain, J.) granted
with respect to the Sherman Act claim and denied with respect to the Lanham
Act claims. The district court observed that Apotex’s Sherman Act claim relied
purely on temporal proximity‐‐the denial of Acorda’s citizen petition on the same
day the Apotex ANDA was approved‐‐and concluded that was insufficient to
state a claim in view of recent legislation making the requirements for delaying
an ANDA application more stringent: “Congress’[s] explicit directive that ANDA
10
processing should not ordinarily be delayed by a citizen petition, coupled with
its narrowing for the grounds for any such delay and the statutory notice
requirement, strongly undermines any inference that mere simultaneity of
ANDA and citizen petition decisions is indicative of the delay of one by reason of
pendency of the other.” Apotex Inc. et al., v. Acorda Therapeutics, Inc., No. 1:11‐
cv‐8803 (S.D.N.Y. Feb. 7, 2013), Doc. 45 at 7 (Swain, J.) (“Apotex I”) . Apotex
moved for leave to amend, but the motion was denied in the interest of judicial
economy.
After the case was reassigned to Judge Torres, Acorda successfully moved
for summary judgment on the Lanham Act claims. Judge Torres began the
analysis with the principle that: “[i]n the context of pharmaceutical drugs, courts
have generally rejected Lanham Act claims based on advertisements that merely
repeat labeling information that has been approved by the FDA.” Apotex Inc. v.
Acorda Therapeutics, Inc., No. 11‐cv‐8803(AT), 2014 WL 5462547, at *3 (S.D.N.Y.
Oct. 23, 2014) (Torres, J.) (“Apotex II”) (quoting Mylan Pharms., Inc. v. Proctor &
Gamble Co., 443 F. Supp. 2d 453, 460 (S.D.N.Y. 2006)). The court held that
because many of the allegedly false representations were “consistent with the
product label,” Apotex failed to identify a genuine issue of material fact with
11
respect to falsity of any of Acorda’s representations, except one. Id. at *5. The
remaining representation was Acorda’s placement of Cmax data on Figure 1, as
to which the district court found that “a reasonable juror could determine that the
juxtaposition of this text and image communicates a literally false message.” Id.
at *8. Nevertheless, the claim did not survive because Apotex failed to identify a
material issue of fact as to the representation’s bearing on decisions to purchase.
See id. at *9.
Apotex appeals both decisions.
DISCUSSION
Apotex’s Sherman Act claim was dispatched at the motion‐to‐dismiss
stage, while its Lanham Act claims succumbed on summary judgment. “On a
motion to dismiss, all factual allegations in the complaint are accepted as true
and all inferences are drawn in the plaintiff’s favor.” Littlejohn v. City of N.Y.,
795 F.3d 297, 306 (2d Cir. 2015). We review de novo a “district court’s grant of a
motion to dismiss under Rule 12(b)(6).” Id. And we “review a district court’s
denial of leave to amend for abuse of discretion.” Presbyterian Church of Sudan
12
v. Talisman Energy, Inc., 582 F.3d 244, 267 (2d Cir. 2009).
Summary judgment “is appropriate when, having resolved all ambiguities
and permissible factual inferences in favor of the party against whom summary
judgment is sought, there are no genuine issues of material fact in dispute and
the movant is entitled to judgment as a matter of law.” Baez v. JetBlue Airways
Corp., 793 F.3d 269, 273 (2d Cir. 2015). “A genuine issue of material fact exists ‘if
the evidence is such that a reasonable jury could return a verdict for the
nonmoving party.’” Savino v. City of N.Y., 331 F.3d 63, 71 (2d Cir. 2003) (quoting
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). The grant of summary
judgment in favor of Acorda is likewise subject to de novo review. See Baez, 793
F.3d at 273‐74.
I
The claim that Acorda’s filing of a sham citizen petition constitutes illegal
monopolization arises under Section Two of the Sherman Act, which imposes
liability on: “[e]very person who shall monopolize, or attempt to monopolize . . .
any part of the trade or commerce among the several [s]tates . . . .” 15 U.S.C. § 2.
A complaint alleging that a competitor filed a sham citizen petition with the FDA
13
states a claim under that section. See In re DDAVP Direct Purchaser Antitrust
Litig., 585 F.3d 677, 694 (2d Cir. 2009). For these purposes, a single sham petition
may be analogized to a single sham litigation. “A single lawsuit can violate
antitrust law as long as it is both an objective and subjective sham.” Id. at 686.
“First, the lawsuit must be objectively baseless in the sense that no reasonable
litigant could realistically expect success on the merits . . . . [S]econd . . . , the
court should focus on whether the baseless lawsuit conceals ‘an attempt to
interfere directly with the business relationships of a competitor.’” Prof’l Real
Estate Inv’rs, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 60 (1993)
(emphasis in original) (quoting E. R.R. Presidents Conference v. Noerr Motor
Freight, Inc., 365 U.S. 127, 144 (1961)). Because we conclude that Apotex has
failed to show that Acorda’s citizen petition was objectively baseless, we affirm
on the first ground and do not reach the second.
As relevant here, the factual basis for the claim in DDAVP was “that the
sham petition caused a delay in generic competition, a possibility reinforced by
the fact that the FDA approved the generic drug on the same day that it rejected
the petition.” 585 F.3d at 694. Given the simultaneous grant of the ANDA and
denial of the citizen petition, Apotex argues that a straightforward application of
14
DDAVP justifies reversal: “the possibility that the petition was a sham, and that it
impacted the FDA’s decision, is sufficiently plausible to defeat the motion to
dismiss.” Id. at 695.
However, the FDA issued a new Guidance for Industry (“Guidance”)
explaining how the FDA determines if a petition implicates an issue of public
health, and how the FDA’s decision‐making process is affected by the
simultaneous pendency of an ANDA application and a citizen petition dealing
with the same drug. Although this case partially arises on a motion to dismiss,
we may properly take judicial notice of this document (without converting
Acorda’s motion to dismiss into a motion for summary judgment) because the
Guidance is publicly available and its accuracy cannot reasonably be questioned.
See FED. R. EVID. 201(b); Staehr v. Hartford Fin. Servs. Grp., Inc., 547 F.3d 406, 425
(2d Cir. 2008) (“Although the general rule is that a district court may not look
outside the complaint and the documents attached thereto in ruling on a Rule
12(b) motion to dismiss, we have acknowledged that the court ‘may also consider
matters of which judicial notice may be taken.’” (quoting Kramer v. Time Warner
15
Inc., 937 F.2d 767, 773 (2d Cir. 1991))).3
The Guidance explains: “If a petition requests that the Agency take an
action related to a specific aspect of a pending application, we will consider the
review status of the affected application(s) in determining whether it would be
appropriate for the Agency to respond to the request to take the action requested
in the petition within the 180‐day timeframe.” Joint Appendix at 530 (emphasis
added). Such consideration is necessary because of the differing procedural
rights of an ANDA applicant and the writer of a citizen petition. “[T]he Agency
must give the [ANDA] applicant notice of an opportunity for a hearing on
whether the application is approvable, with a specific timeframe and process
should the applicant request such a hearing.” Id. at 531. FDA decisions
adjudicating citizen petitions, on the other hand, “are subject to immediate
review by the courts. They therefore carry with them none of the procedural
rights for the affected applicants that attach to a decision to deny approval of an
application.” Id. To bring these procedural arrangements into sync, the FDA
3 The document can be accessed at the following website: Food and Drug
Administration, Citizen Petitions and Petitions for Stay of Action Subject to
Section 505(q) of the Federal Food, Drug, and Cosmetic Act‐Guidance for
Industry (June 8, 2011),
http://www.regulations.gov/#!documentDetail;D=FDA‐2009‐D‐0008‐0011.
16
states that it is preferable not to issue a decision on a citizen petition until it
issues a decision on the corresponding ANDA application. See id. (“If we were
to respond substantively to a petitioner’s request regarding the approvability of
. . . the application as a whole, such [a] response could interfere with the statutory
and regulatory scheme governing the review of applications and related
procedural rights of applicants.”).
Although it remains conceivable, notwithstanding the Guidance, that a
citizen petition might cause anticompetitive delay, the Guidance tends to
undermine the inference (drawn in DDAVP and advocated now by Apotex) that
when a citizen petition is denied simultaneously with the grant of an ANDA
petition, the citizen petition was a sham and an anticompetitive weapon. The
Guidance favors contemporaneous adjudications to safeguard the procedural
rights of ANDA applicants such as Apotex.4
4 While DDAVP was pending on appeal, Congress promulgated the Food and
Drug Administration Amendments Act (“FDAAA”), which provides in part that
consideration of a citizen petition shall not delay FDA approval of an ANDA
unless a “delay is necessary to protect the public health.” 21 U.S.C. §
355(q)(1)(A)(ii). If the FDA determines that delay is necessary, it must give notice
to the applicant “not later than 30 days after making such [a] determination”
along with a brief summary of the “specific substantive issues raised in the
petition which form the basis of the determination.” Id. § (B). However, it is not
evident that the FDAAA has curbed all abuses of the citizen petition process.
17
Apotex has pled no other facts from which it can plausibly be inferred that
Acorda’s petition was a sham. Apotex alleges that, in the patent trial, Acorda
falsely mischaracterized testimony and scientific evidence relating to the
bioequivalence of Apotex’s product. But that allegation shows that Apotex
disagreed with the arguments Acorda advanced in its citizen petition (which is
hardly surprising), not that the Acorda citizen petition was a sham.5
The FDA letter rejecting Acorda’s citizen petition reinforces this
conclusion.6 Although Acorda’s objections to Apotex’s ANDA based on
See Michael Carrier & Daryl Wander, Citizen Petitions: An Empirical Study, 34
CARDOZO L. REV. 249, 283 (2012) (“[W]hat is clear is that the 2007 amendment has
not been successful in achieving its stated purposes . . . . [T]o date, the
amendment has not reduced the number of unsuccessful (in other words, denied
or essentially denied) citizen petitions that appear to be filed to delay generic
competition.”). We cannot foreclose the possibility that Sherman Act liability
might be predicated on the time taken for the FDA to decide whether a citizen
petition raises a legitimate public health concern. But, for reasons explained
below, Apotex has not plausibly pled any such anticompetitive delay here.
5 Apotex’s assertions that Acorda falsely mischaracterized trial testimony and
misrepresented Apotex’s bioequivalence studies are legal contentions, not factual
allegations, and therefore need not be credited. See Bell Atl. Corp. v. Twombly,
550 U.S. 544, 555 (2007) (“[O]n a motion to dismiss, courts ‘are not bound to
accept as true a legal conclusion couched as a factual allegation.’” (quoting
Papasan v. Allain, 478 U.S. 265, 286 (1986))).
6 We may consider this document because the pleading “‘relies heavily upon
its terms and effect,’ which renders the document ‘integral’ to the complaint.”
Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002) (quoting Int’l
18
bioequivalence left the FDA unpersuaded, the grounds for rejection were: (1)
Acorda’s use of arithmetic mean values for Cmax instead of geometric mean
values; and (2) Acorda’s reliance on a cross‐study comparison. Nowhere does
the FDA find that Acorda misrepresented testimony in the Apotex‐Acorda patent
litigation. See Joint Appendix at 416‐17 n.5 (“The Agency is not a party to that
proceeding, and statements made in private litigation are not directly relevant to
FDA’s statutory obligation to determine the approvability of Apotex’s ANDA.”).
Similarly, with respect to Acorda’s labeling argument, the FDA
“disagree[d]” with Acorda that the Cmax of Apotex’s product in the fed state
was increased compared to the RLDs. Id. at 420. Apotex elides the distinction
between arguments that fail to move the FDA and arguments that are false and
objectively baseless. As the Supreme Court has cautioned, courts need to “‘resist
the understandable temptation to engage in post hoc reasoning by concluding’
that an ultimately unsuccessful ‘action must have been unreasonable or without
foundation.’” Real Estate Inv’rs, 508 U.S. at 60 n.5 (quoting Christiansburg
Garment Co. v. Equal Emp’t Opportunity Comm’n, 434 U.S. 412, 421‐22 (1978)).
Accordingly, the objective component of Apotex’s claim is lacking; so there is no
Audiotext Network, Inc. v. Am. Tel. & Tel. Co., 62 F.3d 69, 72 (2d Cir. 1995)).
19
need to evaluate Acorda’s subjective motivations in filing the petition.
Apotex relies on In re Suboxone Antitrust Litig., 64 F. Supp. 3d 665, 690‐91
(E.D. Pa. 2014), which is inapposite. The district court in Suboxone held that a
Section Two claim based on the filing of a sham citizen petition survived
dismissal because of the many indicia that the petition was objectively baseless.
Among the indicia: the “FDA acknowledged in its ruling that it had no authority
to grant much of [the] requested relief,” id. at 689; and the competitor that filed
the citizen petition requested that “the FDA investigate why Suboxone tablets
had been withdrawn from the market” even though the competitor “was
continuing to sell the product at that time.” Id. at 690. It was therefore plausibly
pled that the petition was “objectively baseless in that no reasonable litigant
could have realistically expected success on the merits.” Id. Here, however, the
only fact Apotex has pled other than the timing of the FDA’s decision on
Acorda’s citizen petition is that Acorda’s citizen petition was ultimately fruitless.7
7 Apotex’s reliance on Tyco Healthcare Grp. LP v. Mut. Pharm. Co., 762 F.3d
1338 (Fed. Cir. 2014) is misplaced. The Federal Circuit found a disputed issue of
fact as to whether Tyco’s citizen petition was objectively baseless because the
FDA’s response stated that the petition “relie[d] entirely on uncorroborated
generalities and theoretical speculation” and “fail[ed] to provide any evidence at
all” on a key issue. Id. at 1347. Furthermore, Mutual provided an expert who
testified that the citizen petition was baseless. See id. In contrast, the FDA’s
20
In the alternative, Apotex argues that the district court’s denial of leave to
amend the antitrust claim was based on a misapplication of the rules set forth in
the Southern District’s Pilot Project Regarding Case Management Techniques for
Complex Civil Cases (“Pilot Rules”). However, the district court denied the
motion to amend in the interests of judicial economy, not because of Apotex’s
noncompliance with the Pilot Rules. Apotex sought to amend in order to cite the
FDA’s fourth annual report to Congress, issued in December 2012, detailing the
ineffectiveness of the FDAAA. The district court found that this report was
available to Apotex before its decision issued dismissing Apotex’s claims in
February 2013, that Acorda expressly relied on the FDAAA in its initial motion to
dismiss Apotex’s Sherman Act claim, and that Apotex brought the FDA annual
report to the district court’s attention only after Acorda’s motion to dismiss was
adjudicated. Because Apotex delayed seeking leave to include the FDA’s fourth
annual report until March 2013, and because the general findings of the report
were largely immaterial to Apotex’s specific claim, the district court concluded
that the interests of judicial economy warranted denial of Apotex’s motion. We
letter to Acorda provided no such language indicating the citizen petition was
wholly baseless, and Apotex did not plead any other facts that would indicate
baselesness.
21
have consistently afforded district courts latitude to deny leave to amend on this
basis. See Ruffolo v. Oppenheimer & Co., 987 F.2d 129, 131 (2d Cir. 1993)
(“Where it appears that granting leave to amend is unlikely to be productive,
however, it is not an abuse of discretion to deny leave to amend.”).
In sum, Apotex has not stated a claim under Section Two of the Sherman
Act, and the district court did not abuse its discretion in denying Apotex leave to
amend. The district court’s decision dismissing Apotex’s antitrust claim is
affirmed.
II
The Lanham Act’s prohibition on false advertising states:
Any person who, on or in connection with any goods or services . . .
uses in commerce . . . any . . . false or misleading description of fact,
or false or misleading representation of fact, which . . . in commercial
advertising or promotion, misrepresents the nature, characteristics,
qualities, or geographic origin of his or her or another person’s
goods, services, or commercial activities, shall be liable in a civil
action by any person who believes that he or she is likely to be
damaged by such act.
15 U.S.C. § 1125(a)(1). False advertising claims based on this proviso contain two
components.
22
First (and obviously), a plaintiff bringing a false advertising claim must
show falsity. There are two ways to do that. First, a “plaintiff can demonstrate
that the challenged advertisement is literally false, i.e., false on its face.” Time
Warner Cable, Inc. v. DIRECTV, Inc., 497 F.3d 144, 153 (2d Cir. 2007).
“[C]onsumer deception is presumed, and ‘the court may grant relief without
reference to the advertisement’s [actual] impact on the buying public.’” Id.
(quoting Coca‐Cola Co. v. Tropicana Prods., Inc., 690 F.2d 312, 317 (2d Cir. 1982)).
This inquiry requires evaluating “the message conveyed in full context.” Id. at
158 (quoting Castrol Inc. v. Pennzoil Co., 987 F.2d 939, 946 (3d Cir. 1993)). “If the
words or images, considered in context, necessarily imply a false message, the
advertisement is literally false and no extrinsic evidence of consumer confusion is
required.” Id. Importantly, however, “‘only an unambiguous message can be
literally false,’”; “if the language or graphic is susceptible to more than one
reasonable interpretation, the advertisement cannot be literally false.” Id.
(quoting Novartis Consumer Health, Inc. v. Johnson & Johnson‐Merck Pharms.
Co., 290 F.3d 578, 587 (3d Cir. 2002)). One kind of literally false claim is a claim of
test‐proven superiority. The premise is that the “defendant’s ad[vertisement]
explicitly or implicitly represents that tests or studies prove its product superior”
23
and “plaintiff satisfies its burden by showing that the tests did not establish the
proposition for which they were cited.” Castrol, Inc. v. Quaker State Corp., 977
F.2d 57, 63 (2d Cir. 1992).
“Alternatively, a plaintiff can show that the advertisement, while not
literally false, is nevertheless likely to mislead or confuse consumers.” Time
Warner, 497 F.3d at 153. Such an implicit falsity claim requires “a comparison of
the impression [left by the statement], rather than the statement [itself], with the
truth.” Id. (quoting Schering Corp. v. Pfizer Inc., 189 F.3d 218, 229 (2d Cir. 1999)).
“[W]hereas ‘plaintiffs seeking to establish a literal falsehood must generally show
the substance of what is conveyed, . . . a district court must rely on extrinsic
evidence [of consumer deception or confusion] to support a finding of an
implicitly false message.’” Id. (second alteration in original) (quoting Schering
Corp., 189 F.3d at 229).
Falsity alone does not make a false advertising claim viable; “[u]nder either
theory, the plaintiff must also demonstrate that the false or misleading
representation involved an inherent or material quality of the product.” Id. n.3.
Such a “requirement is essentially one of materiality, a term explicitly used in
other circuits.” S.C. Johnson & Son, Inc. v. Clorox Co., 241 F.3d 232, 238 (2d Cir.
24
2001) (quoting Nat’l Basketball Ass’n v. Motorola, Inc., 105 F.3d 841, 855 (2d Cir.
1997)). This Court has defined materiality as “likely to influence purchasing
decisions,” a definition in harmony with other Circuits’ use of the term. Nat’l
Basketball Ass’n, 105 F.3d at 855 (quoting Am. Tel. & Tel. Co. v. Winback &
Conserve Program, Inc., 42 F.3d 1421, 1428 n.9 (3d Cir. 1994)).8
A majority of Apotex’s claims attack Acorda’s representations as
inconsistent with the FDA‐approved label for Zanaflex Capsules. A prior
question is whether representations that are wholly consistent with an FDA label
8 See also Grubbs v. Sheakley Grp., Inc., 807 F.3d 785, 798 (6th Cir. 2015)
(defining “material” in the false advertising context as likely to “influence the
deceived consumer’s purchasing decisions”) (quoting Am. Council of Certified
Podiatric Physicians & Surgeons v. Am. Bd. of Podiatric Surgery, Inc., 185 F.3d
606, 613 (6th Cir. 1999)); Cashmere & Camel Hair Mfrs. Inst. v. Saks Fifth Ave.,
284 F.3d 302, 311 (1st Cir. 2002) (“The materiality component of a false
advertising claim requires a plaintiff to prove that the defendant’s deception is
‘likely to influence the purchasing decision.’”) (quoting Clorox Co. P.R. v. Proctor
& Gamble Commercial Co., 228 F.3d 24, 33 n.6 (1st Cir. 2000)); ALPO Petfoods,
Inc. v. Ralston Purina Co., 913 F.2d 958, 964 (D.C. Cir. 1990) (noting that to
succeed on a false advertising claim, a plaintiff must show that representations
were “material in their effects on buying decisions”); Taquino v. Teledyne
Monarch Rubber, 893 F.2d 1488, 1500 (5th Cir. 1990) (“To succeed, it must be
proved that . . . the deception is material, in that it is likely to influence the
purchasing decision . . . .”); 5 MCCARTHY ON TRADEMARKS AND UNFAIR
COMPETITION § 27:35 (4th ed. 1996) (“Plaintiff must make some showing that the
defendant’s misrepresentation was ‘material’ in the sense that it would have
some effect on consumers’ purchasing decisions.”).
25
are subject to Lanham Act liability. This Court has yet to so hold, although a
number of district courts in this Circuit have sensibly adhered to this principle.9
We agree with these courts and now hold that representations commensurate
with information in an FDA label generally cannot form the basis for Lanham Act
liability.10
Such a rule reflects proper “deference to the expertise” of the FDA as the
regulatory agency responsible for issuing the label by respecting the exhaustive
process preceding the issuance of a label. Am. Home Prods. Corp. v. Johnson &
Johnson, 672 F. Supp. 135, 144 (S.D.N.Y. 1987) (Conner, J.); see also Smithkline
Beecham, 1996 WL 280810, at *13. This principle rightfully insulates
pharmaceutical companies from liability when they engage in First Amendment
9 See Mylan Pharms., 443 F. Supp. 2d at 460 (Castel, J.) (“In the context of
pharmaceutical drugs, courts have generally rejected Lanham Act claims based
on advertisements that merely repeat labeling information that has been
approved by the FDA.”); Smithkline Beecham Consumer Healthcare, L.P. v.
Johnson & Johnson‐Merck Consumer Pharms. Co., No. 95 Civ. 7011, 1996 WL
280810, at *13 (S.D.N.Y. May 24, 1996) (Baer, J.) (“[T]o enjoin SmithKline Beecham
from claiming that TAGAMET HB works faster than PEPCID AC on the basis of
package [labeling], would substitute this Court’s discretion for that of the FDA in
approving package [labeling] for over‐the‐counter medications.”).
10 Lanham Act liability might arise if an advertisement uses information
contained in an FDA‐approved label that does not correspond substantially to the
label, or otherwise renders the advertisement literally or implicitly false.
26
speech that is consistent with the directive of the regulatory body having
oversight of product labels.
We “have been careful not to permit overextension of the Lanham Act to
intrude on First Amendment values.” Groden v. Random House, Inc., 61 F.3d
1045, 1052 (2d Cir. 1995). Accordingly, in order to avoid chilling speech that
ought to be protected, Acorda’s advertisements cannot form the basis for
Apotex’s claims to the extent they were in line with the FDA‐approved label.
Apotex, however, goes further and contends that Acorda’s advertisements
exceeded the boundaries imposed by the FDA label. Each of Apotex’s specific
Lanham Act challenges is now considered.
1. Statements by Acorda’s Sales Representatives
Apotex challenges statements, attributable to Acorda sales representatives,
that patients taking Zanaflex Capsules with food enjoy the benefits of reduced
Cmax, including dosing flexibility and diminished somnolence. Representative
samples of these sales pitches include the following:
Upon learning of the ability to decrease somnolence . . . by using
Zanaflex Capsules, the doctors agreed to give it a try.
27
Joint Appendix at 3072;
I explained to [the doctor] that the [C]apsule[] [is] really unique in
that it counteracts a lot of the drowsiness when you dose it with
food. He said he would give that a try and see how well it works for
his patients.
Joint Appendix at 3093.
When Acorda learned that its representatives may have made unauthorized
promotional claims for Zanaflex Capsules, Acorda’s head of sales sent a
memorandum to the sales team explicitly forbidding promotions that Zanaflex
Capsules had fewer side effects and less sedation than the tablets.
Apotex specifically objects to representations that Zanaflex Capsules
provide more flexibility than the Capsules’ counterpart‐‐the tablets‐‐a point on
which the FDA label is silent. However, statements that Zanaflex Capsules
reduce Cmax when taken with food are fully consistent with the FDA label, as
the district court correctly found, and Lanham Act liability therefore cannot
attach to these statements. See Apotex II, 2014 WL 5462547, at *5. To the extent
Apotex challenges statements about dosing flexibility, it misconstrues its burden.
It is not enough to show that Acorda made representations absent from the FDA
label; instead, Apotex must show that these comments were inconsistent with the
28
FDA label in a manner sufficient to support a false advertising claim. See Procter
& Gamble Co. v. Chesebrough‐Pond’s Inc., 747 F.2d 114, 119 (2d Cir. 1984)
(“[E]ach plaintiff bears the burden of showing that the challenged advertisement
is false and misleading, not merely that it is unsubstantiated by acceptable tests
or other proof.” (internal citations omitted)). Apotex has adduced no evidence
that Acorda’s promotion of dosing flexibility was either literally false or likely to
cause consumer confusion.
Apotex next argues that Acorda’s sales representatives used Cmax as a
proxy for somnolence and improperly claimed that Zanaflex Capsules reduce it.
Critically, Apotex relies on a test‐proven superiority argument‐‐that the
representations relied on tests or studies allegedly proving the superiority of
Zanaflex Capsules. The district court, however, properly rejected liability under
the test‐proven superiority theory.
The theory comes into play only when the “defendant’s ad[vertisement]
explicitly or implicitly represents that tests or studies prove its product superior
. . . .” Castrol, 977 F.2d at 63 (emphasis added). Apotex proffers no evidence that
sales representatives referred to tests or studies when they discussed the
potential of Zanaflex Capsules to reduce somnolence. At most, Acorda’s
29
representatives used Figure 1 (or a similar graph of pharmacokinetic results) as a
tool to aid their reduced somnolence pitch. There is no record evidence that
Acorda representatives used graphs of pharmacokinetic results to represent that
Zanaflex Capsules reduced somnolence. Consider one of the statements at issue:
Talked to Dr. Corondan for the first time. I asked him about the
most common complaint with Zanaflex tablets and he said the
drowsiness and then we went to the graph and I discussed the
[C]apsules (which is how I love a call to work out).
Joint Appendix at 1520. At no point in this passage is it explicitly stated or
implied that Figure 1 necessarily shows that Zanaflex Capsules reduce
somnolence; instead, the graph was used as a tool for further discussion. The
district court’s reasoning on this issue was sound: “[a]t most, the statements
suggest that, due to pharmacokinetic differences between the products, Zanaflex
[C]apsules cause less somnolence than Zanaflex tablets when taken with food.
The statements do not, by contrast, ‘explicitly or implicitly represent[] that tests
or studies prove’ that there is less somnolence with Zanaflex [C]apsules.”
Apotex II, 2014 WL 5462547, at *7 (third alteration in original) (quoting Castrol,
977 F.2d at 63). Unable to identify a misrepresentation based on test‐proven
superiority, Apotex is left to find a genuine issue of material fact on falsity on
30
some other theory‐‐something it has failed to do. It is immaterial that no study
has shown a reduction in somnolence associated with Zanaflex Capsules;
Chesebrough makes clear that Apotex must show falsity, not merely uncertainty.
Moreover, Acorda’s somnolence representations find a harbor in the FDA label,
which states that increased adverse events, such as somnolence, may occur when
switching between the tablets and Capsules in the fed state. Reinforcing this
conclusion, the FDA’s medical review concluded that the most problematic
situation in terms of exacerbating somnolence was switching from the Capsules
to the tablets in the fed state. In other words, the FDA has given some support to
Acorda’s representations; more importantly, however, there is no evidence that
the representations are false. There is no basis to disturb the grant of summary
judgment relating to Acorda’s sales representatives’ statements.
2. Acorda’s Promotional Materials
Supplementing representations by Acorda’s sales team were written
promotional materials heralding the benefits of Zanaflex Capsules in a manner
Apotex believes was false and misleading. Apotex specifically attacks Acorda’s
“gatefold brochure,” a piece of advertising that Acorda disseminated in the
thousands. The front cover announces: “Flexible Control in a Capsule” directly
31
above two images of the sun and the moon with the words “DAY” and “NIGHT”
printed underneath. The bottom of the front cover urges: “For Treatment of
Spasticity When Relief is Most Important.” The second page contains Figure 1
juxtaposed with relevant Cmax data, along with additional text at the bottom of
the graph. The text reads:
Effects and Adverse Events are Dose Related to Plasma Levels of
Tizanidine.
• Significant pharmacokinetic changes including plasma level
differences occur when administering Zanaflex Capsules or
tablets with food.
• These (pharmacokinetic) differences can result in clinically
important differences in effectiveness and adverse events.
Joint Appendix at 3327‐28. See Appendix A.
Apotex asserts that the brochure is misleading as a whole because the sun
and moon imagery, with the text underneath the graph on page 2 of the
brochure, delivers the message that Zanaflex Capsules undoubtedly reduce
Cmax and somnolence.
Although Acorda argues that it merely reprinted the graph from the FDA
label in its advertisements (including the gatefold brochure) Apotex accuses
Acorda of manipulation because the following text is superimposed on the
32
graph: “30 % INCREASE FOR TABLETS”; “20 % DECREASE FOR CAPSULES.”
Joint Appendix at 3258. Apotex argues that the graphic, as a whole, conveys a
false message because Figure 1 depicts mean tizanidine concentration, which is
the average drug concentration at different points in time, while the text relates to
Cmax data, which is the maximum drug concentration at different time points
and, by definition, different from the mean drug concentration. See Appendix B.
With the exception of the version of Figure 1 with superimposed text,
Apotex fails to create a triable issue of fact as to the falsity of the brochure.
Literal falsity cannot be shown because no unambiguous message is conveyed by
the remainder of the brochure; Apotex argues that the presence of the sun and
the moon implies that the drug is equally effective during the day and at night
and thereby implies efficacy in combating somnolence. This conclusion is
plausible, but it is not unambiguous, especially because the cover never mentions
somnolence. Nor has Apotex shown extrinsic evidence of consumer confusion
with respect to the sun‐moon imagery. Apotex relies on internal marketing
statements from Acorda focusing on reduced Cmax and somnolence; but
Acorda’s motivations for launching the gatefold brochure do not constitute
extrinsic evidence as required.
33
Apotex contends that the district court erred by examining the brochure in
isolation while ignoring the context of Acorda’s launch letters and other
documents detailing Acorda’s marketing efforts. True, a “district court
evaluating whether an advertisement is literally false ‘must analyze the message
conveyed in full context.’” Time Warner, 497 F.3d at 158 (quoting Pennzoil Co.,
987 F.2d at 946). But the relevant context of the advertisement is the overall
message conveyed by the brochure. The district court was not required to
consider external marketing documents. A review of the brochure in its entirety
does not change the conclusion reached here: there is no unambiguous message
that Zanaflex Capsules reduce somnolence nor has Apotex proffered evidence of
consumer confusion on this point.
Acorda’s use of the version of Figure 1 with superimposed text, seen on the
second page of the gatefold brochure, raises a closer issue.
! Figure 1 shows the average concentration for a group of subjects
over time after the drug is administered (i.e., the mean drug
concentration); while
! Cmax is the maximum concentration of the drug that is reached in a
subject, which varies from subject to subject and is not correlated
34
with the time elapsed from administration of the drug.
Since Cmax values are not time‐dependent, and Figure 1 displays mean drug
concentration over time, Figure 1 cannot display mean CMax values. We
therefore agree with the district court that “a reasonable juror could determine
that the juxtaposition of this text and image communicates a literally false
message.” Apotex II, 2014 WL 5462547, at *8. However, falsity is not enough;
Apotex must also raise a factual issue as to materiality. “Under either theory, the
plaintiff must also demonstrate that the false or misleading representation
involved an inherent or material quality of the product.” Time Warner, 497 F.3d
at 153 n.3 (emphasis added). Apotex contends that it is not required to show that
the relevant misrepresentation would have an effect on consumers’ purchasing
decisions. This argument ignores precedent from this Court which endorsed that
definition of materiality‐‐in line with the vast majority of our sister circuits. See
Nat’l Basketball Ass’n, 105 F.3d at 855. Apotex counters that, when an
advertisement is literally false, “consumer deception is presumed, and ‘the court
may grant relief without reference to the advertisement’s [actual] impact on the
buying public.’” Time Warner, 497 F.3d at 153 (alteration in original) (quoting
Coca‐Cola Co., 690 F.2d at 317). The argument conflates falsity with materiality.
35
Once literal falsity is proved, there is no requirement of extrinsic evidence
showing consumer deception. But Apotex is not thereby relieved of the burden
of showing materiality, which requires that the allegedly “false or misleading
representation involved an inherent or material quality of the product,” id. n.3‐‐
i.e., that the representation was “likely to influence purchasing decisions,” Nat’l
Basketball Ass’n, 105 F.3d at 855 (quoting Am. Tel. & Tel., 42 F.3d at 1428 n.9).
Applying the materiality standard, the district court concluded that, at
most, Acorda “overstated the increase in mean tizanidine plasma concentration”
but that this evidence ultimately “does not reveal anything about the impact on
consumers’ purchasing decisions.” Apotex II, 2014 WL 5462547, at *9. This
conclusion was sound; the only plausible effect attributable to the
misrepresentation in the graph was an exaggeration of the scale of the mean drug
concentration curves, or an improper conflation of the mean Cmax with the
highest mean drug concentration for a given treatment. However, there is no
record evidence that this inaccuracy would dissuade consumers from purchasing
Zanaflex Capsules. Certainly, Apotex has provided none. Apotex’s showing on
this point consists of generalized evidence that Acorda’s increased sales of
Zanaflex Capsules stemmed from its advertisement efforts. Apotex fails to make
36
the necessary showing that the specific misrepresentation in the graphic‐‐in any
of Acorda’s advertisements‐‐was likely to influence consumers’ purchasing
decisions.
The remainder of Apotex’s attacks on Acorda’s promotional materials
suffer from a common flaw: although Acorda unquestionably made statements
that were not drawn from the FDA label, the thrust of Chesebrough is that this
fact is insufficient to show falsity. A pharmaceutical company is entitled to make
advertising statements outside the four corners of an FDA label so long as none
of its representations is inconsistent with it.
In sum, the district court correctly granted summary judgment on all of
Apotex’s false advertising claims.
CONCLUSION
For the foregoing reasons, we AFFIRM the judgment of the district court.
37