NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
______________
No. 21-2608
______________
TAKEDA PHARMACEUTICAL CO LTD; TAKEDA PHARMACEUTICALS USA
INC; TAKEDA PHARMACEUTICALS AMERICA INC
v.
ZYDUS PHARMACEUTICALS (USA) INC; CADILA HEALTHCARE LTD,
Appellants
______________
On Appeal from the United States District Court
for the District of New Jersey
(No. 3-18-cv-01994)
U.S. District Judge: Honorable Freda L. Wolfson
______________
Submitted Under Third Circuit L.A.R. 34.1(a)
December 9, 2022
______________
Before: SHWARTZ, MATEY, and FUENTES Circuit Judges.
(Filed: December 9, 2022)
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OPINION ∗
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∗
This disposition is not an opinion of the full court and pursuant to I.O.P. 5.7 does
not constitute binding precedent.
SHWARTZ, Circuit Judge.
Zydus Pharmaceuticals (USA) Inc. and Cadila Healthcare Ltd. (“Zydus”) appeal
the District Court’s order granting summary judgment to Takeda Pharmaceutical Co.
Ltd., Takeda Pharmaceuticals USA Inc., and Takeda Pharmaceuticals America Inc.
(“Takeda”) on Zydus’s antitrust counterclaims. Because Takeda had an objective basis
for bringing its patent infringement claims, those claims cannot provide a basis for
antitrust liability. We will therefore affirm.
I
A
Takeda manufactures Prevacid SoluTab (“Prevacid”), which is used to treat
gastroesophageal reflux disease. Prevacid dissolves in the patient’s mouth leaving fine
granules that obviate the need for the patient to swallow. Takeda holds four patents
related to Prevacid, including Patent No. 6,328,994 (“‘994 patent”).
In 2009, Zydus filed an Abbreviated New Drug Application (“ANDA”) seeking
Food and Drug Administration (“FDA”) approval to market a generic version of
Prevacid. Pursuant to the Hatch-Waxman Act, Zydus served Takeda with a “Paragraph
IV Certification” asserting that their generic version did not infringe Takeda’s patents.
Within forty-five days of receiving the certification, Takeda sued Zydus for infringement,
triggering the Hatch-Waxman Act’s automatic thirty-month stay on the FDA’s ability to
approve Zydus’s generic version of Prevacid. 21 U.S.C. § 355(j)(5)(B)(iii).
During the ensuing litigation, the District Court construed language in the ‘994
patent stating that Prevacid’s fine granules “hav[e] an average particle diameter of 400
2
µm or less,” App. 261, 1092. It found that the language established a particle diameter
400 µm plus or minus ten percent, such that granules measuring up to 440 µm were
captured by the patent’s language. The Court then held a bench trial at which Zydus’s
expert found the generic drug’s granules averaged between 443 µm and 457 µm because
they had become “agglomerate[d]” or stuck together during the manufacturing process,
App. 98. Takeda’s expert measured the generic drug’s granules when deagglomerated
(i.e. separated) and found that they measured 420 µm. The Court concluded that the
patent required deagglomeration and held that Zydus’s product literally infringed the
patent.
The United States Court of Appeals for the Federal Circuit reversed the District
Court’s claim construction ruling and finding of infringement. Takeda Pharm. Co. v.
Zydus Pharms. USA, Inc., 743 F.3d 1359 (Fed. Cir. 2014). The Federal Circuit
interpreted the patent’s language to require “an average . . . diameter of precisely 400 µm
or less” rather than the ten percent variance imposed by the District Court. Id. at 1363-
65. Because Zydus’s granules were larger than 400 µm, its product did not infringe the
patent. Id. at 1365-66. Judgment was ultimately entered for Zydus. Takeda Pharm. Co.
v. Zydus Pharms. USA, Inc., No. 10-CV-01723, 2014 WL 12629965, at *2 (D.N.J. Oct.
16, 2014).
B
Despite the favorable judgment, Zydus did not immediately obtain FDA approval
to market a generic of Prevacid. Instead, Zydus amended its ANDA with a new
formulation of the product, which addressed the FDA’s concerns regarding a risk of
3
clogging when the drug was delivered via oral or nasogastric tubes by “incorporating new
excipients at the extra-granular manufacturing stage,” App. 1776. It did not make any
changes “to the ingredients or manufacturing of the [granules that] . . . were the focus of
the prior litigation.” App. 1776.
Zydus sent Takeda a new Paragraph IV Certification, explaining that the amended
ANDA “still requires that its fine granules . . . [measure] not less than 440 µm,” App.
453–54. Takeda nonetheless sued Zydus for infringement of the same patents, which
again triggered Hatch-Waxman’s thirty-month stay period. Zydus counterclaimed,
alleging Takeda’s suit was a sham meant to foreclose Zydus’s entrance into the market in
violation of the Sherman Act and New Jersey’s antitrust laws.
After testing Zydus’s product and concluding that it did not infringe its patents,
Takeda dismissed its infringement claims. Zydus did not, however, dismiss its antitrust
counterclaims and the parties eventually both moved for summary judgment on those
claims. The District Court granted Takeda’s motion, and denied Zydus’s cross-motion,
because it concluded that Takeda was immune from antitrust liability under the Noerr-
Pennington, explaining that (1) Takeda had an objective basis for believing that Zydus’s
reformulated drug directly infringed its patents based on the parties’ prior litigation,
Zydus’s course of dealing with the FDA, and Takeda’s experience with other
manufacturers’ attempts to create a generic version of Prevacid, Takeda Pharm. Co. v.
Zydus Pharms. (USA) Inc., No. 18-CV-01994, 2021 WL 3144897, at *12–14 (D.N.J.
July 26, 2021); (2) even if it had none of this information, Takeda still had a valid
infringement claim under the doctrine of equivalents, id. at *15; and (3) Takeda had a
4
subjective basis for the claim based primarily on a pre-filing letter from its outside
counsel which “recite[d] several legitimate grounds for” bringing suit, id. at *17–19.
Zydus appeals.
II 1
Under the Noerr-Pennington doctrine, “[a] party who petitions the government for
redress generally is immune from antitrust liability.” Cheminor Drugs, Ltd. v. Ethyl
Corp., 168 F.3d 119, 122 (3d Cir. 1999) (citations omitted). This immunity extends to
those who petition the courts by initiating litigation. Cal. Motor Transp. Co. v. Trucking
Unlimited, 404 U.S. 508, 510–11 (1972). It does not apply, however, where a lawsuit is
a “mere sham to cover what is actually nothing more than an attempt to interfere directly
with the business relationships of a competitor.” E. R.R. Presidents Conf. v. Noerr Motor
Freight, Inc., 365 U.S. 127, 144 (1961).
To determine whether a lawsuit is a “sham,” courts apply a two-part test. Pro.
Real Est. Invs., Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 60 (1993). “First, the
lawsuit must be objectively baseless in the sense that no reasonable litigant could
1
The District Court had jurisdiction under 28 U.S.C. §§ 1331, 1337, 1338(a), and
1367. We have appellate jurisdiction under 28 U.S.C. § 1291 because Takeda dismissed
its patent infringement claims, leaving only antitrust counterclaims that do not involve a
substantial question of patent law. FTC v. AbbVie Inc, 976 F.3d 327, 346–50 (3d Cir.
2020) (concluding that the Federal Circuit did not have exclusive jurisdiction over an
antitrust suit that was based in part on a sham-litigation theory of anti-competitive
conduct).
Our review “of a grant of summary judgment is plenary.” Watson v. Eastman
Kodak Co., 235 F.3d 851, 854 (3d Cir. 2000) (citation omitted). Summary judgment is
appropriate where “there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).
5
realistically expect success on the merits.” 2 Id. Second, “[o]nly if [the] challenged
litigation is objectively meritless may a court examine the litigant’s subjective
motivation” to determine “whether the baseless lawsuit conceals an attempt to
interfere . . . with . . . a competitor.” 3 Id. at 60–61 (citations and quotation marks
omitted).
Here, we need only evaluate the first prong because Takeda had two objectively
valid bases for bringing its second patent infringement suit against Zydus: (1) literal
infringement and (2) the doctrine of equivalents. 4
A
At the time it filed its second infringement suit, Takeda had a reasonable basis for
its literal infringement claim. See FilmTec Corp. v. Hydranautics, 67 F.3d 931, 938 (Fed.
Cir. 1995) (explaining that the objective baselessness prong “requires an inquiry into the
reasonableness of the” litigation when it was filed). Indeed, even though Zydus certified
its product did not infringe Takeda’s patents in its Paragraph IV Certification, Zydus’s
ANDA submission is, “by statutory definition, an infringing act.” In re Wellbutrin XL
2
Where, as here, there is no dispute over the predicate facts underlying the legal
proceeding, the reasonableness of the suit is a question of law. Pro. Real Estate, 508 U.S.
at 63; see also In re Wellbutrin XL Antitrust Litig. Indirect Purchaser Class, 868 F.3d
132, 151 (3d Cir. 2017).
3
Zydus had the burden of proving that Takeda is not entitled to Noerr-Pennington
immunity, In re Wellbutrin, 868 F.3d at 148 n.18, but “[b]ecause our decision in this case
does not hinge on the standard of proof,” we need not determine whether Zydus was
required to make its showing by a preponderance of the evidence or by clear and
convincing evidence, id.
4
For the same reason, we need not analyze the substance of Zydus’s antitrust
claims.
6
Antitrust Litig. Indirect Purchaser Class, 868 F.3d 132, 149 (3d Cir. 2017); see also 35
U.S.C. § 271(e)(2)(A) (“It shall be an act of infringement to submit . . . [an ANDA] for a
drug claimed in a patent . . . .”). Thus, Takeda’s literal infringement claim “could only be
objectively baseless if no reasonable person could disagree with [Zydus’s] assertion[] of
noninfringement . . . in [its revised Paragraph IV] [C]ertification.” In re Wellbutrin, 868
F.3d at 149.
It was reasonable for Takeda to disagree with Zydus’s assertion of
noninfringement. Zydus’s Paragraph IV Certification stated that it amended the
formulation of its generic product. Takeda reasonably inferred the new formulation
addressed clogging risks, which other generic manufacturers had experienced by
including smaller granules that could fall within Takeda’s patents. Thus, Takeda had a
basis to perceive a reasonable chance of success in its patent infringement claim. See id.
at 150 (explaining patentee need only have evidence to suggest “the non-infringement
theory . . . was, or at least could be, infirm”).
Zydus argues its amended ANDA renders Takeda’s suit unreasonable because it
specified that Zydus’s granules would measure 440 µm or more and Takeda’s patents, as
construed by the Federal Circuit, only capture granules measuring 400 µm or less. This
argument fails for two reasons. First, the language in Zydus’s ANDA does not control
the infringement inquiry, which is instead “focused on [the product] likely to be sold
following FDA approval.” Glaxo, Inc. v. Novopharm, Ltd., 110 F.3d 1562, 1568 (Fed.
Cir. 1997); see also Tyco Healthcare Grp. LP v. Mut. Pharm. Co., 762 F.3d 1338, 1344
(Fed. Cir. 2014) (“[I]t is not unreasonable for a patent owner to allege infringement . . . if
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the patent owner has evidence that the as-marketed commercial ANDA product will
infringe, even though the hypothetical product specified in the ANDA could not
infringe.”); Abbott Labs v. TorPharm, Inc., 300 F.3d 1367, 1373 (Fed. Cir. 2002) (“It is
also possible, at least in theory, that other evidence may directly contradict the clear
representations of the ANDA and create a dispute of material fact regarding the identity
of the compound that is likely to be sold following FDA approval.”).
Second, Takeda reasonably discounted Zydus’s description of its own product
based on the events in the first infringement case. In that case, Zydus asserted in its
ANDA that its granules measured at least 450 µm but its own expert found that some of
its granules measured less than 450 µm. This history gave Takeda reason to be skeptical
of the revised ANDA’s statement that the granules were now no smaller than 440 µm,
and Takeda reasonably acted on this skepticism by seeking to test Zydus’s product. 5 See
5
To the extent Zydus faults Takeda for failing to test Zydus’s product prior to the
litigation, its argument is unavailing because Takeda’s actions were consistent with the
Hatch-Waxman Act. Nothing in the Act requires a brand name manufacturer to conduct
a pre-suit investigation that includes testing the drug. Rather, the Act’s “design and
intent” is to “incentivize[] brand-name drug manufacturers to promptly file patent
infringement suits by rewarding them with a stay of up to 30 months if they do so.” In re
Wellbutrin, 868 F.3d at 157–58. This “file-now, discover-details-later policy”
contemplates that the brand name manufacturer cannot know every detail about the
generic drug before it files suit. Id. at 151 n.22. Litigation provides a forum for learning
these details, and for the prompt resolution of the infringement claims, before the generic
goes to market. FTC v. AbbVie Inc., 976 F.3d at 339. Takeda followed the Act’s intent
here—in only five months, Takeda brought suit, used the discovery process to obtain
Zydus’s product, tested the product, and then dismissed its claims after its testing
indicated that the product did not infringe. See In re Terazosin Hydrochloride Antitrust
Litig., 335 F. Supp. 2d 1336, 1357–58 (S.D. Fla. 2004) (explaining that a brand
manufacturer’s suit was not objectively baseless where it sued to “obtain additional
information about the proposed generic products” and then dismissed the suit “[a]fter
8
Tyco, 762 F.3d at 1344 (explaining patentee may have “a reasonable expectation of a
favorable outcome even though the generic manufacturer’s ANDA application describes
a generic drug with characteristics that [could] take it outside the patent’s claims” in
situations where “the ANDA is based on faulty testing or screening procedures”); see
also Takeda, 743 F.3d at 1367 n.3 (recognizing, in the previous litigation between these
parties, that “there is the potential for inconsistent results” when measuring the product’s
granules). Thus, Takeda had an objective basis to sue Zydus for literal infringement.
B
Takeda also had an objective basis for bringing suit under the doctrine of
equivalents. Unlike a literal infringement claim, which requires a plaintiff to show that
the accused product contains every component of the asserted claims, Presidio
Components, Inc. v. Am. Tech. Ceramics Corp., 702 F.3d 1351, 1358 (Fed. Cir. 2012),
under the doctrine of equivalents, “a product . . . infringe[s] if there is ‘equivalence’
between the elements of the accused product . . . and the claimed elements of the patented
invention,” Warner-Jenkinson Co. v. Hilton Davis Chem. Co., 520 U.S. 17, 21 (1997)
(quoting Graver Tank & Mfg. Co. v. Linde Air Prods. Co., 339 U.S. 605, 609 (1950)).
Put differently, the doctrine states that a product not captured by the patent’s language
may still infringe “if it performs substantially the same overall function or work, in
substantially the same way, to produce substantially the same overall result as the
receiving that information”). Imposing antitrust liability on Takeda in this situation
would “punish behavior that Congress sought to encourage.” In re Wellbutrin, 868 F.3d
at 158 (citation omitted).
9
claimed invention.” Dolly, Inc. v. Spalding & Evenflo Cos., 16 F.3d 394, 397 (Fed Cir.
1994). In the previous litigation, Takeda’s expert testified that a deviation in granule size
of up to ten percent was “universally accepted,” which could reasonably indicate that
granules measuring as low as 440 µm are “insubstantially different” from Takeda’s
product.
Zydus argues Takeda’s doctrine of equivalents theory was objectively baseless
because of two related limitations on the doctrine: (1) prosecution history estoppel and
(2) specification disavowal. Relevant here, these limitations bar a patent holder from
using equivalency to capture product elements or specifications it had previously
disavowed, or which are explicitly excluded by the language in its patent. See Festo
Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722, 733–34 (2002)
(discussing prosecution history estoppel); Dolly, 16 F.3d at 400 (discussing specification
disavowal). For each of these limitations, Zydus relies on the Federal Circuit case.
Zydus argues that, in the previous litigation, the Federal Circuit recognized that Takeda’s
patents create a “clear dividing line between the ‘fine’ granules of 400 µm or less (which
avoid a feeling of roughness in the mouth) and ‘conventional’ granules of 400 µm or
more (which do not).” Takeda, 743 F.3d at 1364. According to Zydus, the Federal
Circuit’s reasoning means it was unreasonable for Takeda to now argue that granules
greater than 400 µm were equivalent to Prevacid.
Contrary to Zydus’s view, the Federal Circuit’s ruling does not render Takeda’s
doctrine of equivalents claim unreasonable. First, the Federal Circuit evaluated an earlier
formulation of the product and its reasoning there does not make the present suit based
10
upon a different formulation objectively unreasonable. Second, the Federal Circuit
provided no opinion about whether Zydus infringed under the doctrine of equivalents.
Thus, while the patent’s language and the Federal Circuit’s reasoning may have limited
Takeda’s success on its infringement claim, there was still a reasonable chance that it
would succeed. See Pro. Real Estate, 508 U.S. at 62-63. As a result, Takeda’s suit against
Zydus was not objectively baseless.
III
For the foregoing reasons, Takeda is entitled to immunity from antitrust liability
under Noerr-Pennington and so we will affirm the order of the District Court.
11