Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_04-cv-01511/USCOURTS-cand-4_04-cv-01511-3/pdf.json

Nature of Suit Code: 410
Nature of Suit: Antitrust
Cause of Action: 28:1331 Fed. Question: Anti-trust

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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

IN RE ABBOTT LABORATORIES NORVIR

ANTI-TRUST LITIGATION

 /

No. C 04-1511 CW

(Consolidated Case)

No. C 04-4203 CW

ORDER GRANTING

PLAINTIFFS’ RULE

56(F) MOTION AND

DENYING AS PREMATURE

DEFENDANT’S MOTION

FOR SUMMARY JUDGMENT

Plaintiffs John Doe 1, John Doe 2, and the Service Employees

International Union Health and Welfare Fund (SEIU) move, pursuant

to Federal Rule of Civil Procedure 56(f), to deny as premature or

continue Defendant Abbott Laboratories’ motion for summary

judgment. Defendant opposes the motion. The matter was taken

under submission on the papers. Having considered the parties’

papers and the evidence cited therein, the Court GRANTS Plaintiffs’

Rule 56(f) motion and DENIES without prejudice as premature

Defendant’s summary judgment motion.

BACKGROUND

On April 19, 2004, the Doe Plaintiffs filed a class action

complaint against Defendant that initiated Doe v. Abbott

Laboratories, C 04-1511 CW. On June 10, 2004, they filed an

amended complaint alleging (1) actual and attempted monopolization

under section 2 of the Sherman Act, (2) fraudulent, unfair or

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deceptive business practices under California Business and

Professions Code section 17200, et seq., and (3) unjust enrichment.

The Doe Plaintiffs’ amended complaint arises out of

allegations that Defendant, on December 3, 2003, raised by 478

percent the wholesale price of its drug Norvir, which boosts the

anti-viral effects and reduces harmful side effects of protease

inhibitors (PIs), considered the most potent class of drugs to

combat the HIV virus. The amended complaint alleges that the

Norvir price increase constituted an illegal attempt to achieve an

anti-competitive purpose in the “boosted market,” which the amended

complaint defines as the market for those PIs that are prescribed

for use with Norvir as a booster. Defendant is a participant in

the boosted market; its drug Kaletra comes in the form of a pill

that contains both Defendant’s PI lopinavir and Norvir.

On October 21, 2004, the Court denied Defendant’s motion to

dismiss. On October 25, 2004, Plaintiff SEIU filed a complaint

against Defendant, which is almost identical to the Doe Plaintiffs’

amended complaint, that initiated SEIU v. Abbott Laboratories, 

C 04-4203 CW. The Court denied a motion to dismiss filed by

Defendant in that case on March 2, 2005. On May 2, 2005, the two

cases were ordered consolidated. In its answers to the complaints

in each case, Defendant has asserted as an affirmative defense that

its Norvir-related patents confer upon it immunity from Plaintiffs’

anti-trust claims.

On June 1, 2005, Defendant filed a motion for summary

judgment. On June 27, 2005, Plaintiffs filed their Rule 56(f)

motion. The parties acknowledge that discovery in this litigation

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has not been completed.

LEGAL STANDARD

Rule 56(f) states:

Should it appear from the affidavits of a party opposing

the motion that the party cannot for reasons stated

present by affidavit facts essential to justify the

party's opposition, the court may refuse the application

for [summary] judgment or may order a continuance to

permit affidavits to be obtained or depositions to be

taken or discovery to be had or may make such other order

as is just.

Fed. R. Civ. P. 56(f). The district court should deny or continue

a motion for summary judgment if the opposing party makes a good

faith showing by affidavit that the continuance is necessary to

obtain facts essential to oppose the motion. State of California

v. Campbell, 138 F.3d 772, 779 (9th Cir. 1998) (citing McCormick v.

Fund American Cos., Inc., 26 F.3d 869, 885 (9th Cir. 1994)). 

Parties seeking a continuance must show: "(1) that they have set

forth in affidavit form the specific facts that they hope to elicit

from further discovery, (2) that the facts sought exist, and 

(3) that these sought-after facts are 'essential' to resist the

summary judgment motion." Campbell, 138 F.3d at 779.

DISCUSSION

In its summary judgment motion, Defendant argues that

Plaintiffs cannot satisfy the necessary elements of their

monopolization or attempted monopolization claims under the Sherman

Act. A monopolization claim under section 2 of the Sherman Act

requires a plaintiff to prove “(1) possession of monopoly power in

the relevant market, (2) willful acquisition or maintenance of that

power, and (3) causal ‘antitrust injury.’” Rutman Wine Co. v. E. &

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J. Gallo Winery, 829 F.2d 729, 736 (9th Cir. 1987). An attempted

monopolization claim requires “(1) specific intent to control

prices or destroy competition in the relevant market, (2) predatory

or anti-competitive conduct directed to accomplishing the unlawful

purpose, and (3) a dangerous probability of success.” Id.

Defendant argues that Plaintiffs’ claims fail as a matter of law

because (1) Kaletra’s falling market share establishes a lack of

monopoly power, (2) Plaintiffs cannot establish anti-competitive

conduct, and (3) Defendant’s patents, which it contends cover the

boosted market, provide immunity from Plaintiffs’ anti-trust

claims.

I. Monopoly Power

Plaintiffs argue that they need further discovery relating to

the existence of barriers to market entry and the effect on

competitors’ ability to increase output, both of which are

important factors, along with market share, in determining monopoly

power. See Image Technical Servs., Inc. v. Eastman Kodak Co., 125

F.3d 1195, 1202 (9th Cir. 1997). Plaintiffs cite several cases

from this circuit, including Greyhound Computer Corp. v. Int’l Bus.

Machines Corp., 559 F.2d 488 (9th Cir. 1977), holding that a

declining market share does not as a matter of law defeat a finding

of monopoly power.

Relying on Image Technical, 125 F.3d at 1206, Defendant argues

that, even if Plaintiffs could show barriers to market entry or the

restricted ability of competitors to increase output, it is still

not disputed that Defendant currently has less than a sixty-five

percent share of the boosted market, which Defendant claims is

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generally required for a monopolization claim. Defendant has

submitted evidence that its current share of the boosted market is

forty-nine percent. However, as Plaintiffs note, the Ninth Circuit

has held that a market share as low as forty-four percent is

sufficient to establish a triable issue of fact regarding market

power for an attempted monopolization claim. See Rebel Oil Co.,

Inc. v. Atlantic Richfield Co., 51 F.3d 1421, 1438 (9th Cir. 1995). 

Plaintiffs’ sworn affidavit establishes that additional

discovery relating to Defendant’s market share during the relevant

time period and to additional factors affecting market power is

required to oppose properly Defendant’s summary judgment motion,

and meets the Rule 56(f) standard.

II. Anti-competitive Conduct

Plaintiffs’ sworn affidavit states that they have not deposed

any of Defendant’s employees, and thus cannot support their

argument that Defendant engaged in anti-competitive or predatory

conduct in the boosted market when it significantly raised the

wholesale price of Norvir. 

Defendant argues that its subjective intent in raising the

Norvir price is irrelevant to the determination of anti-competitive

conduct under section 2 of the Sherman Act, and concedes for

purposes of this motion that a triable issue of fact regarding its

subjective intent does exist. However, Defendant contends that

raising the price on a patented product cannot, as a matter of law,

qualify as anti-competitive conduct.

The Court rejected an identical argument in its orders denying

Defendant’s motions to dismiss in the consolidated cases. While

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conceding that Defendant holds patents covering its use of Norvir

as a booster, Plaintiffs allege, relying on the monopoly leveraging

theory recognized in Image Technical, 125 F.3d at 1208, that

Defendant’s Norvir price increase constituted impermissible anticompetitive conduct in the boosted market.

Plaintiffs are entitled to discovery relating to whether

Defendant engaged in anti-competitive conduct in the boosted

market.

III. Asserted Anti-trust Immunity

Plaintiffs contend that additional discovery is also required

to address Defendant’s affirmative defense of immunity stemming

from its Norvir-related patents. Specifically, Plaintiffs argue

that they are entitled to discovery relating to (1) the patents’

validity and enforceability, (2) the patents’ scope and application

to the boosted market, and (3) whether, even if Defendant’s actions

were protected by its patents, its enforcement of the patents was

merely a pretext for anti-competitive activity. 

Defendant correctly notes that Plaintiffs have not identified

any facts that they hope to obtain from discovery relating to the

Norvir patents’ validity, nor have they alleged in this litigation

that Defendant’s patents are invalid. However, Plaintiffs have

satisfied the Rule 56(f) requirements for the remaining discovery

that they identify which relates to Defendant’s affirmative defense

of immunity. Defendant argues that its Norvir patents cover the

boosted market. However, the Image Technical court stated that,

while the relevant market for determining a patent grant may be

governed by patent law, the “relevant markets for antitrust

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1

 The Court GRANTS Defendant’s motion for leave to file a

supplemental brief in support of its opposition (Docket No. 134).

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purposes are determined by examining economic conditions.” 125

F.3d at 1217. The court in that case noted that the markets in

each context may be defined differently. Id. Plaintiffs state in

their affidavit that they have yet to conduct discovery, which may

include deposing third-party manufacturers of PIs that are sold in

the boosted market, on the economic conditions in the boosted

market to determine whether products upon which that market is

based fall within the grant of the Norvir patents.

Second, Plaintiffs are entitled to discovery relating to the

issue of whether Defendant’s Norvir price increase was a pretext

for anti-competitive conduct in the boosted market. Defendant

argues that Plaintiffs’ pretext argument is irrelevant because the

Court is bound, not by Image Technical, but by In re Indep. Servs.

Orgs. Antitrust Litig., 203 F.3d 1322 (Fed. Cir. 2000), in which

the Federal Circuit ruled that exercising legitimate patent rights

can never support anti-trust liability. That argument is not welltaken; Plaintiffs’ claims arise under the Sherman Act, not federal

patent law, and Ninth Circuit precedent applies. See In re Indep.

Servs. Orgs. Antitrust Litig., 203 F.3d at 1325. Defendant also

relies upon a district court’s July 12, 2005 ruling granting its

motion to dismiss in Schor v. Abbott Laboratories, No. 05 C 1592

(N.D. Ill.).1 However, that court expressly declined to follow the

Ninth Circuit’s ruling in Image Technical that recognized the

monopoly leveraging theory. Image Technical is binding on this

Court.

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Thus, Plaintiffs are entitled to conduct discovery relating to

Defendant’s asserted anti-trust immunity affirmative defense. 

Defendant’s summary judgment motion is premature.

CONCLUSION

For the foregoing reasons, Plaintiffs’ Rule 56(f) motion

(Docket No. 118) is GRANTED and Plaintiffs may proceed with

discovery. Their Motion to Compel Compliance With Case Management

Conference Minute Order (Docket No. 144) is DENIED as moot. 

Defendant’s motion for summary judgment (Docket No. 105) is DENIED

without prejudice as premature. Defendant’s motion for leave to

file a supplemental opposition to the Rule 56(f) motion (Docket No.

134) is GRANTED.

Defendant shall file a motion for summary judgment no later

than December 30, 2005. Defendant may re-file this summary

judgment motion or file an amended motion. Plaintiffs shall file

their opposition no later than January 13, 2006, and Defendant

shall file its reply no later than January 27, 2006. The matter

will be heard on February 10, 2006, at 10:00 a.m.

IT IS SO ORDERED.

Dated: 9/12/05

 

CLAUDIA WILKEN

United States District Judge

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