UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF NEW YORK 

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SANOFI-SYNTHELABO; : 

SANOFI-SYNTHELABO, INC.; and : 02 Civ. 2255 (SHS) 

BRISTOL-MYERS SQUIBB SANOFI : 

PHARMACEUTICALS : 

HOLDING PARTNERSHIP, : 

: OPINION & ORDER 

Plaintiffs, : 

 : 

-against- : 

 : 

APOTEX INC.; and APOTEX CORP., : 

 : 

Defendants. : 

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SIDNEY H. STEIN, U.S. District Judge.

Defendants Apotex Inc. and Apotex Corp. (collectively, “Apotex”) move pursuant to 

Fed. R. Civ. P. 15(a) and 15(d) to amend and supplement their Third Amended Answer, resulting 

in a Fourth Amended Answer, in this action.1

 The motion is denied to the extent Apotex seeks to 

add the defense of unclean hands and the counterclaim for breach of contract on the grounds that 

adding those claims would unduly prejudice plaintiffs. The motion is granted, however, insofar 

as it seeks to amend and supplement the answer with additional antitrust counterclaims. In 

addition, those antitrust counterclaims are severed pursuant to Fed. R. Civ. P. 21 and stayed 

pending resolution of the issues scheduled for trial commencing January 22, 2007. 

I. Background

On March 21, 2002, plaintiffs Sanofi-Synthelabo, Sanofi-Synthelabo, Inc., and BristolMyers Squibb Sanofi Pharmaceuticals Holding Partnership (collectively, “Sanofi”) filed this 

patent infringement suit against Apotex. The history of this litigation is recounted in the Opinion 

 

1

 The standard to be employed by this Court is identical whether the motion is one to amend or to 

supplement. See Hassan v. Slater, 41 F. Supp. 2d 343, 353 (E.D.N.Y. 1999). 

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dated August 31, 2006 granting Sanofi’s motion for a preliminary injunction, and familiarity 

with that opinion is assumed. See Sanofi-Syntholabo v. Apotex Inc., No. 02 Civ. 2255, 2006 

U.S. Dist. LEXIS 65127, at *5-16 (S.D.N.Y. Aug. 31, 2006). 

On April 12, 2005, the Court denied a motion by Apotex to amend its Third Amended 

Answer. Apotex now moves a second time to amend its Third Amended Answer. Specifically, 

Apotex seeks to assert the equitable defense of unclean hands (Defendant’s Proposed Answer 

(“Prop. Ans.”) at 6-9, ¶ 8) and counterclaims for breach of contract relating to the March 17, 

2006 settlement agreement between the parties (Prop. Ans. ¶¶ 97-109) and additional antitrust 

violations (Prop. Ans. ¶¶ 70-97). In addition, Apotex seeks a declaration that any infringement 

damages awarded to Sanofi be subject to the cap on damages set forth in the May 25, 2006 

settlement agreement.2

II. Legal Standard 

The decision to grant or deny a motion to amend a pleading rests within “the sound 

discretion” of the district court. Krumme v. Westpoint Stevens Inc., 143 F.3d 71, 88 (2d Cir. 

1998). While leave to amend should be given freely, the district court “plainly has discretion to 

deny leave to amend ‘where the motion is made after inordinate delay, no satisfactory 

explanation is made for the delay, and the amendment would prejudice the defendant.’” 

MacDraw, Inc. v. The CIT Group Equip. Fin., Inc., 157 F.3d 956, 962 (2d Cir. 1998) (quoting 

Cresswell v. Sullivan & Cromwell, 922 F.2d 60, 72 (2d Cir. 1990)). Additional factors that a 

court may consider include repeated failure to cure deficiencies by previous amendments or 

 

2

 Sanofi has not specifically opposed the amendment seeking a declaration that infringement damages have 

been capped, and the Court permits that amendment. 

 In its motion, Apotex also asserted the defense of inequitable conduct regarding Sanofi’s alleged failure to 

disclose Canadian patent 1,194,875 to the U.S. Patent and Trademark Office (the “PTO”). Apotex has withdrawn 

that portion of the motion on the basis that those allegations “were included by error.” (Def. Reply Mem. dated Oct. 

23, 2006 at 1 n.1.) 

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futility of the proposed amendments. Foman v Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed. 

2d 222 (1962). The court also has discretion to deny leave to amend “where the belated motion 

would unduly delay the course of proceedings by, for example, introducing new issues for 

discovery.” Grace v. Rosenstock, 228 F.3d 40, 42 (2d Cir. 2000) (citing Ansam Associates v. 

Cola Petroleum, Ltd., 760 F.2d 442, 446 (2d Cir. 1985). As to prejudice, the Court considers 

factors including whether the new claim would “require the opponent to expend significant 

additional resources to conduct discovery and prepare for trial” or would “significantly delay the 

resolution of the dispute.” Block v. First Blood Associates, 988 F.2d 344, 350 (2d Cir. 1993). 

See also Krumme, 143 F.3d at 88 (quoting H.L. Hayden Co. v. Siemens Medical Systems, 112 

F.R.D. 417, 419 (S.D.N.Y. 1986) (“One of the most important considerations ... is the degree to 

which [allowing amendment] would delay the final disposition of the action.”)). 

III. Discussion

A. “Unclean Hands” Defense and Counterclaim for Breach of Contract 

Sanofi asserts that Apotex’s proposed unclean hands defense and counterclaim for breach 

of contract (together, the “Settlement Allegations”) “relate exclusively to the settlement 

agreements executed by the parties in 2006 and the ensuing review of those agreements by 

government regulators.” (Pl. Mem. in Opp. dated Oct. 13, 2006 (“Pl. Mem.”) at 6.) Sanofi 

further contends that “the utter lack of any relationship” between the Settlement Allegations and 

the issues ready for trial on January 22, 2007—namely, whether U.S. Patent No. 4,847,265 (the 

“‘265 patent”) is valid and enforceable—requires the Court to deny Apotex’s motion as it relates 

to those proposed amendments. Apotex replies that Sanofi’s conduct during settlement 

negotiations relates directly to the validity and enforceability of the ‘265 patent and should 

therefore be included in the January trial. Specifically, Apotex alleges that Sanofi engaged in 

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misconduct during the settlement process in order to “perpetrate a fraud on government 

regulators.” (Def. Reply Mem. at 5.) 

Apotex cites Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 65 

S. Ct. 993, 89 L.Ed. 1381 (1945), to support its contention that “the doctrine of ‘unclean hands’ 

bars the enforcement of a patent by a party who has abused the settlement process as a way to 

shield the patent from judicial scrutiny.” (Def. Reply Mem. at 5.) However, as this Court has 

written previously, Precision Instrument stands for the proposition that unclean hands may bar 

equitable relief when parties “committed perjury before the PTO, or litigation misconduct or 

fraud on the court,” but the decision does not support denial of equitable relief on the basis of 

“alleged wrongdoing during the course of settlement negotiations.” Sanofi-Syntholabo, 2006 

U.S. Dist. LEXIS 65127, at *88. See, e.g., Keystone Driller Co. v. Gen. Excavator Co., 290 U.S. 

240, 244-46, 54 S. Ct. 146, 78 L.Ed. 293 (1933) (fraud on the court); Aptix Corp. v. Quickturn 

Design Sys., Inc., 269 F.3d 1369, 1374 (Fed. Cir. 2001) (litigation misconduct); see also

Republic Molding Corp. v. B.W. Photo Utilities, 319 F.2d 347, 351 (9th Cir. 1963). The 

wrongdoing during the course of settlement negotiations alleged here is unrelated to the 

procurement of the patent itself and will not be part of the January trial on the validity and 

enforceability of the patent. 

Defendants’ reliance on Morton Salt v. G.S. Suppiger, 314 U.S. 488, 62 S. Ct. 402, 86 

L.Ed. 363 (1942) is also unavailing. In Morton Salt, the patentee used its patent to restrain 

competition in related articles on which it did not hold patent rights. Id. at 491. Because the 

patentee’s infringement suit was deemed an effort to further its unlawful monopoly over an 

unpatented article, the Supreme Court determined that the district court had rightly dismissed the 

complaint for patent misuse “for want of equity.” Id. at 494. Morton Salt, however, is 

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inapposite to Apotex’s position. First, the continued validity of Morton Salt is suspect in light of 

the Supreme Court’s recent opinion in Illinois Tool Works Inc. v. Independent Ink, Inc., __ U.S. 

__, 126 S. Ct. 1281, 1288 164 L.Ed. 2d 26 (2006). Second, the facts of Morton Salt, which deal 

specifically with the misuse of a patent to restrain trade beyond the scope of the patent, differ 

substantially from allegations of misconduct arising out of the negotiation of an agreement 

between patentee and potential licensee. 

The Court has previously written in this litigation that “[t]he conduct of the parties during 

settlement negotiations does not affect the validity of the patent or the veracity of submissions to 

this Court.” Sanofi-Syntholabo, 2006 U.S. Dist. LEXIS 65127, at *89. That statement holds 

true today. Exclusion of the unclean hands defense that Apotex seeks to introduce into this 

action does not prevent Apotex from arguing at trial that Sanofi engaged in inequitable conduct 

during the prosecution of its application for the ‘265 patent before the PTO, to the extent Apotex 

has already alleged that inequitable conduct. In contrast, whether Sanofi attempted to conceal 

inequitable conduct dating to its application to the PTO in the late 1980s by entering into 

settlement negotiations with Apotex in 2006 is an unnecessary and inappropriate diversion from 

the question presented for trial: whether the ‘265 patent is valid and enforceable. 

Indeed, the lack of connection between the Settlement Allegations on the one hand and 

the issue of the validity and enforceability of the ‘265 patent on the other suggests why inclusion 

of the Settlement Allegations at this stage would unduly prejudice Sanofi. The Settlement 

Allegations would of necessity require the reopening of discovery since the negotiations 

surrounding the settlements were not part of the prior discovery proceedings. Apotex asserts that 

additional discovery would be feasible between now and the trial date—a period of less than 

three months—but the history of time-consuming discovery in these litigations demonstrates that 

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permitting discovery on new issues at this late date would risk further delay and expense in this 

four year-old litigation.3 Under these circumstances, allowing the proposed amendments would 

prejudice Sanofi. See, e.g., Zubulake v. UBS Warburg LLC, UBS, 231 F.R.D. 159, 162-63 

(S.D.N.Y. 2005); Cartier, Inc. v. Four Star Jewelry Creations, Inc., No. 01 Civ. 11295, U.S. Dist. 

LEXIS 989, at *9-11 (S.D.N.Y. Jan. 28, 2004). Accordingly, Apotex’s motion is denied to the 

extent it seeks to add the Settlement Allegations to this litigation. 

B. Allegations of Additional Antitrust Violations

Apotex also seeks to include additional antitrust counterclaims (the “Antitrust 

Allegations”). Specifically, Apotex seeks to allege that Sanofi entered into an agreement with a 

third party, Prasco Laboratories or Prasco LLC, to market an authorized generic with the goal of 

excluding Apotex from the market for clopidogrel bisulfate. Like the Settlement Allegations, the 

Antitrust Allegations relate to agreements and conduct that are distinct from the narrow question 

of patent validity and enforceability. Furthermore, the Antitrust Allegations will also require 

additional discovery, particularly given the alleged involvement of third parties. Nonetheless, as 

both parties acknowledge, antitrust counterclaims have already been asserted in this litigation, 

and have been severed pursuant to Fed. R. Civ. P. 21 and stayed pending the outcome of the 

January trial. See Joint Pre-Trial Order dated July 11, 2005, at 5. 

In exercising its discretion to sever claims, the Court considers “(1) whether the claims 

arise out of the same transaction or occurrence; (2) whether the claims present some common 

questions of law or fact; (3) whether settlement of the claims or judicial economy would be 

 

3

 In addition, if the Settlement Allegations are added to this litigation, the result may be that the entire action 

would need to be stayed, since the events surrounding the settlement negotiations are under investigation by the 

Department of Justice, see Pl. Mem. at 7-8, which has the ability to seek a stay of these proceedings if it believes 

they would compromise an ongoing criminal investigation. See, e.g., SEC v. Chestman, 861 F.2d 49, 50 (2d Cir. 

1988); SEC v. Downe, No. 92 Civ 4092, 1993 WL 22126, at *11 (S.D.N.Y. Jan. 26, 1993). Although the possibility 

of a stay is speculative at this point, it weighs against adding the Settlement Allegations to this litigation. 

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